Alibaba's Presence in Malaysia (Photo : Getty Images)
Chinese e-commerce giant Alibaba prefers to expand and develop e-commerce in nascent markets such as India and South East Asia rather than compete directly with other players, such as Amazon, in the U.S., according to an article by Nasdaq.com.
Aside from Alibaba acquisitions, its plan to expand in South East Asia also includes helping budding economies to create and develop their e-commerce infrastructure.
The report said that Alibaba, which saw the region's strong potential, has a strategy to make the region as a long-term growth driver for the company.
South East Asia's e-commerce market was estimated to be about $5.5 billion in 2015 and it is predicted to grow to nearly $90 billion by 2025, according to a study conducted by Google and Temasek.
But e-commerce growth in the region has been prevented by the lack of infrastructure, online payments ecosystem and cross-border e-commerce services.
By partnering with South East Asian countries, the e-commerce titan hopes to provide solutions to the issues and as soon as the needed infrastructures are in place, e-commerce is expected to grow significantly in the region.
The company has slowly established its operations in the four countries in the region: Thailand, Singapore, Indonesia and Malaysia.
Following the signing of a cooperation agreement with the Thai government, Alibaba announced that it is partnering with Malaysia to establish and develop an e-hub called the Electronic World Trade Platform.
The e-fulfillment hub, which will be built near the Kuala Lumpur Airport, will facilitate cross-border trade and the hub will be linked to Hangzhou through an online cross-border trading services platform.
The Chinese e-commerce giant will also build a cloud computing platform in the country to help small and medium enterprises as well as provide financial support for business to business (B2B) trade in the two countries.
In Singapore, Alibaba brought Taobao to Singapore consumers by acquiring Lazada for $1 billion. The move enabled Singapore consumers to shop directly on the e-commerce website.
The company eliminated the difficulties faced by consumers by building a dedicated online store that is linked directly to Taobao, while Lazada managed the orders from consumers. Alibaba's initiative resulted in higher revenues from Singapore.
