By Jose Miguel
THE winds seem to be blowing a bit differently in Southeast Asia. Despite the territorial disputes in the South China Sea, claimant nations appear to be able to find ways to cooperate in some other ways. Just weeks after Philippine President Rodrigo Duterte announced collaborations with China after a state visit, Malaysian Prime Minister Datuk Seri Najib Tun Razak announced that Chinese mogul Jack Ma has been appointed as the country’s digital economic adviser.
Malaysia and Chinese Partnerships Seen
The announcement comes during a week-long visit to China. Najib revealed Ma’s appointment during the launch of the Alitrip Malaysia Tourism Pavilion – an e-commerce platform that seeks to attract Chinese travelers to browse Malaysia’s tourism products. Relaxed visa requirements for Chinese tourists to Malaysia have been extended until the end of 2017. Alitrip is created by Ma’s Alibaba Group.
— Tourism Malaysia (@TourismMalaysia) November 4, 2016
Several personalities in Malaysian tech scene were excited by the news, including Azran Osman-Rani, CEO of iflix and VML Malaysia head of digital Lee Chin Chuan. They believe that Ma’s expertise, as seen with the growth of Alibaba as a dominant e-commerce force in the region, will benefit Malaysia.
Among the other projects from this partnership is the Digital Trade Zone, which aims to provide online services that seek to bolster Malaysia’s participation in international e-commerce and spur more tech and web ventures.
Alibaba Expansion Imminent
Ma is considered as the richest person in China, with a net worth of around US$28 billion. Ma has been lauded for his foresight in focusing on B2B and building his business there first before expanding Alibaba to a B2C model. Alibaba allowed entities access to Chinese manufacturers, regardless of their size. Companies could buy in bulk with Alibaba essentially vouching for the deals.
Alibaba held a successful IPO last year for a record US$25 billion in 2014. Today, Alibaba has expanded to consumer-facing business like Taobao and even expanding towards payments with Alipay. Alipay alone accounts for nearly half of digital payments in China.
With this development, the industry will most likely see more expansion of Alibaba in the region. Alibaba has already expressed intentions of taking control over the Lazada Group from Rocket Internet, essentially giving Alibaba access to Lazada’s existing markets in Malaysia, Indonesia, Singapore, the Philippines, Vietnam, and Thailand.
Opportunities in China for Malaysian SMEs
Even with the growth of e-commerce in the region with entries of players like the Lazada Group and even Amazon in Singapore by next year, retail penetration still stands at 3 percent or around US$6 billion in sales. That is quite a meager figure compared to China’s e-commerce market is projected to grow to US$1.1 trillion by 2020.
Najib hopes that with this appointment, Ma could help connect Malaysian businesses with the Chinese market. With links to China, Malaysian tech ventures could shift their sights on more regional targets than attempting to compete in the global market using broad efforts.
— Carrie 캐리 ♡ (@chickubaby) November 7, 2016
Malaysia can also benefit from Chinese business. By promoting Malaysian tourism across the Chinese population, Malaysia hopes to see their tourism-related business flourish. The introduction of Alipay in Malaysia would also enable Chinese tourists to transact using the payments platform. Outbound Chinese tourists reached 59 million in the first half of 2016 alone.
An emerging superpower not only in the region, but in the global context, China is seen to be a viable source of investments and business partnerships moving forward. India has been observed to be courting China as a destination for foreign direct investments, as well as capital infusion into businesses. It is the same case with other emerging economies.
The question now will be how big an impact Jack Ma’s expertise in digital ventures will have in building synergies between China and Malaysia.
***This article first appeared on Tech Wire Asia