Some Chi­nese net com­pa­nies wary af­ter elec­tion

China Daily (USA) - - TOP NEWS -

Chi­nese in­ter­net com­pa­nies face a new re­al­ity af­ter Don­ald Trump’s sur­prise vic­tory in the US pres­i­den­tial elec­tion — and Alibaba Group Hold­ing Ltd has the most to lose.

On the cam­paign trail, Trump promised to up­end global trade, say­ing that China is “killing us” on trade pol­icy and propos­ing tar­iffs on Chi­nese goods of as much as 45 per­cent.

If im­ple­mented, his ideas could lead to “dev­as­tat­ing” re­sults, from global trade wars to higher costs of liv­ing, and “spell the end of glob­al­iza­tion”, ac­cord­ing to Dar­rell West, a vice-pres­i­dent at the Brook­ings In­sti­tu­tion.

“He was very crit­i­cal of Chi­nese trade agree­ments and has threat­ened to rip them up,” West said. “If he did that, the con­se­quences for Chi­nese com­pa­nies would be enor­mous.”

Of China’s web giants — in­clud­ing Baidu Inc, Alibaba and Ten­cent Hold­ings Ltd — Trump’s trade poli­cies, if im­ple­mented, are likely to pose the big­gest threat to e-com­merce op­er­a­tor Alibaba.

While Baidu and Ten­cent fo­cus on the do­mes­tic Chi­nese mar­ket, Alibaba has a sig­nif­i­cant part of its business tied to trade in the US. Higher tar­iffs on Chi­nese goods would de­press de­mand for its AliEx­press site, where Chi­nese re­tail­ers sell to US con­sumers.

En­su­ing trade dis­putes could hurt sales on its Tmall plat­form, in which US and in­ter­na­tional brands sell to Chi­nese con­sumers.

“Given the di­rect and indi­rect risks, the elec­tion prob­a­bly has the great­est im­pact on Alibaba more than any Chi­nese in­ter­net business,” said Gil Luria, an an­a­lyst at Wed­bush Se­cu­ri­ties Inc. “If there are dis­rup­tions in trade, it would im­pact the will­ing­ness and like­li­hood of US brands and re­tail­ers to take an ac­tive part on Tmall.”

Alibaba Vice-Chair­man Joseph Tsai urged the pres­i­den­t­elect to fo­cus on re­la­tions with China, a vast mar­ket for Amer­i­can goods that could cre­ate US jobs as its econ­omy grows.

Tsai, a lieu­tenant to Alibaba co-founder Jack Ma and one of the coun­try’s more prom­i­nent business lead­ers, urged Trump not to adopt an iso­la­tion­al­ist doc­trine, par­tic­u­larly with the world’s No. 2 econ­omy.

“The re­la­tion­ship be­tween China and the US will de­fine our cen­tury,” Tsai told re­porters in Shen­zhen on Thurs­day as the com­pany pre­pared to launch its an­nual 24-hour Sin­gles Day on­line shop-athon.

“If you don’t have Chi­nese con­sumers be­ing en­gaged and buy­ing Amer­i­can prod­ucts, and Chi­nese in­vestors can’t in­vest in the US and cre­ate more Amer­i­can jobs, then you’d be in trou­ble.”

Alibaba’s man­age­ment has said that its pri­mary short­term fo­cus isn’t con­sumers in the US, and that it is try­ing to gain share in devel­op­ing mar­kets first. Trump’s pres­i­dency will prob­a­bly so­lid­ify Alibaba’s de­ci­sion

Yet Trump’s poli­cies could up­set Alibaba’s plan to act as the gate­way for in­ter­na­tional re­tail­ers to reach Chi­nese con­sumers. If new poli­cies caused China to re­tal­i­ate and raise tar­iffs on US goods, that could hurt Alibaba’s Tmall sales in China, Luria said.

“A pos­i­tive re­la­tion­ship be­tween the US and China is im­por­tant for the world,” an Alibaba rep­re­sen­ta­tive said in a state­ment.

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