Gazumped by the Kiwis again

What a difference a week makes. On April 13, Australia’s first ever Special Trade Envoy Andrew Robb took about 300 Australian business people to visit the headquarters of Alibaba, China’s pre-eminent ecommerce company, which is presently finalising plans to fling open its office doors in Australia.

The most popular leg of the government’s gala business week in China Robb could only scare up only Alibaba vice-chairman Joseph Tsai, served up for the attending throng

Just five days later, New Zealand Prime Minister John Key showed up at Alibaba HQ to be greeted by founder and chairman Jack Ma, gazumping the Australians, and then scoring bonus points with a freshly-inked strategic partnership with the Hangzhou-based company.

On the move: Alibaba has spent US$1 billion on Singapore-based Lazada

As Australia companies worry about still-emerging new cross-border ecommerce rules for China, those in New Zealand would be feeling on a much firmer footing, now that they’re inside the Alibaba tent.

The New Zealand deal also underscores long-held criticism that Australia’s government trade arm Austrade underperformed compared with those of most other OECD nations.

And that has always included New Zealand Trade and Enterprise which in this case has bested its cross-Tasman rival again.

Yet it’s not just the Australian market that Alibaba and its rapidly multiplying subsidiaries are targeting.

In fact, the company has set a goal of earning 50 per cent of its revenues from outside China, and took a significant step towards doing this when it made it largest overseas acquisition.

In between visits from antipodean admirers, Alibaba moved to spend US$1 billion on a majority stake in Lazada, a Singapore-based online retailer, which emerged in recent years as the most formidable player in the 700 million person strong Southeast Asian market.

The deal valued Lazada at US$1.5 billion, and is a huge payday for investors lead by German technology investment fund Rocket Internet, which has targeted Southeast Asia as a key region for investment.

The deal paid Rocket back 15 times its original investments. Rocket is selling a 9.1 per cent stake in Lazada and keeping an 8.8 percent slice giving it some skin left in a potential float of the company.

It’s a terrific return for a company that was only founded in 2011 by German brothers Alexnder and Oliver Samwer, and underscored how quickly the online game is moving in Asia – and the enormous potential in Southeast Asia.

One also has to ask, where are the Australians in this game and why are Germans beating us to the punch right on our doorstep?

The deal gives Alibaba instance access to six major Southeast Asian markets Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

And while there has yet to emerge a dominant Southeast Asian ecommerce group, Lazada has is at the front of the pack as the number one e-commerce site in all those countries except Vietnam and Singapore.

The deal also highlights how attractive a location Singapore is for technology companies.

Do you know more? Contact James Riley via Email.

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