Some Chinese net companies wary after election
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.