Amazon and Alibaba persist with Southeast Asia ambitions

Amazon and Alibaba persist with Southeast Asia ambitions

The Ministry of Industry and Trade (MoIT) and Chinese tech giant Alibaba signed an MoU on March 16 at a jointly-organised International E-commerce Conference.

At the event, Alibaba committed focus to technical support for the import-export activities of Vietnamese small- and medium-sized enterprises (SMEs) and foster their digital transformation backed by the platforms’ support system and workshop series.

Speaking at the event last week, Alibaba general director Zhang Kuo said that the company has partnered up with local associations and banks aiming to aid Vietnamese SMEs to improve their digital skills and also those related to operations, customer management, and order fulfilment. “We target to reach more than $100 billion in gross merchandise value, with more than 10 million SMEs across the world, and about 10,000 suppliers in Vietnam in 2024,” said Kuo.

With the support of Alibaba, Vietnamese SMEs will be able to do business online and reach global customers. The MoIT’s Trade Promotion Agency pledged to accompany Alibaba in its activities to improve digital transformation and e-commerce capacities of domestic businesses, especially in international trade.

In the same vein, Amazon Global Selling last December launched a task force in Hanoi to support Vietnamese SMEs and establish a Vietnamese language version of its sellers’ information centre.

At a related webinar last year, Amazon announced its commitment through partnerships with the Vietnam e-Commerce and Digital Economy Agency, the Vietnam E-commerce Association, and others. By the end of last year, around 100,000 Vietnamese SMEs had been launched operations on Amazon, mostly focusing on household goods and fashion.

By targeting the local import-export sector, Alibaba and Amazon are expected to not only aid domestic enterprises in their global expansion plans but also increase their own foothold in Southeast Asia.

Starting in 2019, both Alibaba and US-based Amazon entered Vietnam and focused on the country’s import-export sector. Since then, both e-commerce giants have organised dozens of workshops aiming to support local exporters and importers trading on their platforms.

According to Bloomberg, the US-China trade war is the main reason behind Alibaba’s and Amazon’s penetration in Southeast Asia. In the US, Amazon is occupying 55 per cent of the market share, while Alibaba in China makes up 45 per cent of the e-commerce market.

Both platforms have repeatedly asserted their desire to dominate each other’s markets. However, the trade tensions have altered their directions, consequently leading them to Southeast Asia as a new growth engine because of its vast potential.

According to the Trade Promotion Agency, the scale of cross-border e-commerce will extend to $3.3 trillion in the next two years. Therefore, taking advantage of platforms like Amazon and Alibaba for import-export activities is an inevitable trend and also the best way to help businesses make their orders from overseas.

Vietnam’s e-commerce sector has constantly developed with an average growth rate of 20-30 per cent in the last five years, much higher than in some other regional countries. In 2021, the local e-commerce market is expected to reach $11.8 billion in value, up 18 per cent on-year.