Alibaba founder Jack Ma and Donald Trump made headlines with the Chinese entrepreneur’s attention-grabbing pledge to create one million US jobs, but analysts say the move is more about generating good PR than substance.
The splashy promise from Trump Tower was a strategic decision by Ma to win goodwill from the next US president and hedge against political risks to Alibaba’s vast online shopping business over counterfeits, independent e-commerce analyst Li Chengdong told AFP.
“We don’t have to take the one million job promise too seriously,” Li said.
In the short term, economists are sceptical as such a figure would represent almost one percent of all jobs in the United States, making the firm one of the country’s largest private employers, said Christopher Balding, professor at Peking University’s HSBC Business School.
China’s largest online shopping portal has been on the defensive since the office of the US Trade Representative last month put its massive electronic sales platform Taobao on its annual blacklist, saying it was not doing enough to curb sales of fake and pirated goods.
Although inclusion on the blacklist carries no penalties of itself, it dealt a blow to Alibaba’s efforts to improve its image and boost international sales.
“This is more made to relieve its PR pressure, so Alibaba won’t become a target of attack after Trump takes office,” Li added. “As Alibaba’s counterfeits problem is indeed quite serious, it is an easy target.”
This month Alibaba filed a lawsuit in China against two vendors for allegedly selling fake Swarovski watches on Taobao, portraying the move as the first time an e-commerce site had taken a counterfeiter to court in the world’s second-largest economy.
“Jack Ma is a smart guy and if there is anything being a major businessman in China teaches you it is the importance of having good relationships with the leaders,” Balding added.
Alibaba and Taobao have long been accused of providing a platform for the sale of knockoff brand-name goods.
Items for sale include a variety of Trump-related products, including “Make America Great Again” hats that sell for $25 on Trump’s website available for 3.5 yuan (50 cents) Wednesday.
Analysts say Alibaba wants to enhance its imports of US merchandise for Chinese consumers.
“It is not necessarily to create more jobs in the US, it is simply providing one more sales channel for them,” Nell Lu, analyst with Shanghai’s Business Connect China consulting firm told AFP.
Scandals over food safety and milk powder have eroded Chinese shoppers’ confidence in domestic goods, fuelling lively informal grey markets in food, vitamins, and medicines from all over the world.
While dominant in its home market, and making forays into Russia and Southeast Asia, Alibaba’s efforts in the US have so far failed to find the same success.
Its business model as a platform offers US consumers no extra benefits, Li said, and it faces dominant local competitors such as Amazon and eBay.
Even so Ma wants half of Alibaba’s revenue to be international within 10 years.
The firm’s Ant Financial affiliate, which operates digital payments service Alipay, and Tmall International are likely to be its “primary vehicles” for gaining a US foothold, Jeffrey Towson, professor at the Peking University Guanghua School of Management, told AFP.
“Alibaba is serious about the USA,” he said, adding the Trump meeting was “good PR” for the firm and introduced Ma to many Americans who had not heard of him.
“Every business person in China, and globally, now knows that what Trump wants to hear about is US jobs. So that is what they are all now saying.”
After the meeting the two multi-billionaires praised one another, with the Chinese tycoon calling the president-elect “very smart” and “very open-minded”.
Trump’s nominee for the Securities and Exchange Commission, Jay Clayton, has ties to Alibaba from working on its IPO on the New York Stock Exchange, the largest public offering in history.
Chinese media trumpeted the Trump-Ma meeting as a sign of the benefits of the economic relationship between the US and China.
On Wednesday an editorial in the China Daily newspaper said it would reassure those worried about “havoc” from the incoming administration and said it shows Trump was “willing to adopt a less belligerent and more flexible approach than some of his remarks might suggest”.
It added that people should not “rigidly interpret” the jobs pledge to mean full-time corporate positions, but rather focus on how it would help small businesses and American farmers sell to the Asian market.
“This should really be self-evident.”