Alibaba's Jack Ma has given the clearest indication yet that the world's largest ecommerce group is ready for a bigger play in India's online retail industry, likely making the country one of the fiercest battlegrounds for global consumer Internet companies.
Ma, speaking at an event organised by business grouping Ficci, pledged to invest "more" in India, and he told ET that he would be back again soon, signalling Alibaba's interest in diversifying its business here.
"We will invest more in India and work with Indian entrepreneurs and technologists to improve the relationship of the two nations and to improve the lives of human beings," said Ma, Alibaba's founder, who is China's wealthiest man with an estimated net worth of $30 billion (Rs 1.8 lakh crore).
"I was a college teacher. The Internet changed me and it changed China. India is a great nation with so many young people, and the Internet will change India too," he said at a 'business cooperation' conference involving his home province Zhejiang in eastern China.
Flipkart, founded by IIT-Delhi graduates Sachin Bansal and Binny Bansal, is the market leader in India, but it is dwarfed by Alibaba, which only sells to businesses here, as well as USbased Amazon, which is scaling up retail operations rapidly. In its latest round of funding, Flipkart was valued at $7 billion, compared with a market cap of $155 billion for Amazon and $282 billion for Alibaba.
"They (Alibaba) will disrupt the market. Look at what Amazon did. That is exactly what Alibaba will do. Lot of noise and immensely deep pockets," said Avinash Raghava, co-founder and fellow at technology think tank iSpirt. In September, Alibaba listed on the New York Stock Exchange, raising $25 billion in the largest public market debut in history.
Just a day after Flipkart won $1 billion in funding in July, Amazon vowed to invest double that amount in India, illustrating the importance of a market where 300 million people are already online out of a population of 1.2 billion. Nomura estimates that India's ecommerce market will be worth $43 billion by 2019, of which online retail will account for $23 billion.
Ma told ET that he is meeting several Indian entrepreneurs, but did not provide details. But Kunal Bahl, the founder of Snapdeal that competes against Amazon and Flipkart, is one of them, according to people aware of the specifics of Ma's visit. Japan's SoftBank is an investor in both Alibaba and Snapdeal. "Yes, I am meeting some businessmen, and will be back in India soon," Ma, 50, said.
India does not allow foreign investment in online retail, but Alibaba's model of not owning inventory but only providing a marketplace means it will face no policy roadblocks in India. "He was absolutely gung-ho about India and wants to invest heavily here. He is already in talks with several Indian companies. We asked him to also involve companies that make hi-tech products in India and assured him of a stable policy environment," said a senior government official who interacted with Ma.
The diminutive Ma, who wore a black blazer but not a tie, stood apart from his fellow Chinese delegates, who were more formally dressed for the occasion. Alibaba.com India Ecommerce, the Indian unit of Alibaba, made a profit of around Rs 1 crore on sales of Rs 20 crore in the year ended March 2013, according to the latest financial numbers available with the Registrar of Companies. More than 1.3 million suppliers are listed on Alibaba's Indian website, second just to its home market China's 8.2 million.
"Sellers from India are ranked just behind Chinese traders. Our platform was never designed for them (Indian SMEs), but their capabilities in taking advantage of opportunities is fantastic, and we have to build platforms to ensure more of them use it," said Ma, who launched his company from his apartment in 1999. About PM Narendra Modi, he said, "I have heard the prime minister's speech and it is very passionate and inspiring."
A former tour guide who is the son of musician-storytellers, Ma said there were 4.3 lakh Chinese consumers currently buying products, varying from chocolates to tea and spices, from Indian sellers on the platform.
"Over the next three years, one of the key strategies for Alibaba is to globalise and to make sure that we can help more small businesses around the globe use our services to do businesses," he said. R Chandrasekhar, the president of software and services grouping Nasscom, said Alibaba expanding its India presence is good news for domestic businesses. "A company that brought ecommerce to doorsteps of Chinese consumers holds many lessons for Indian ecommerce ventures which are relatively new to the game and have a long way to go," he said.
Related Tags:online retail industry, global consumer Internet companies, business grouping Ficci