Today in a Tekedia Live session, our faculty from Beijing noted one key thing: the success of Alibaba can be partly traced to the fact that China makes things which people want to buy. The small manufacturers provide the depth which Alibaba rides upon. He mentioned Alibaba Village and how the ecommerce powerhouse is putting its brand reputation on small manufacturers even as those manufacturers are making it valuable to China and the world. As he spoke, you could see one thing: when a nation can build, produce or make things, the stars align.
According to Quartz, the US e-commerce experienced 10 years of growth in the first quarter of 2020. Amazon led that redesign after its obsession with customer satisfaction drove innovation such as fast shipping and streamlined ordering, and at the end seemed like a perfect menu for a pandemic economy.
But behind that Amazonian success, you can see many other players. Yes, Amazon holds the title as the top corporate power purchase agreements holder. In other words, those power companies made Amazon better and Amazon made its customers greater. Simply, behind the websites, great things are happening. So, if you just see the shiny website, you may not understand that Amazon is powered by the old economy which must run very well for the new economy to thrive.
Yes, like in China, those makers have to do well for Alibaba to thrive. And in America, the power companies have to execute for Amazon to thrive. You get it: you cannot leapfrog the physics of commerce: readily available and optimized supply chain. The websites of Nigeria, and Africa cannot advance the region unless we still fix that power, water and support makers to make things in our economy.
So, when you see those posts, postulating on how an app could help Africa leapfrog the West, think again. When you download an ambulance finder app, remember that someone needs to have an ambulance in the city before the app offers any value. People, we need to return to the basics – and stop the illusion of leapfrogging.
Dr. Chan explained deeper why Alipay does more transactions than Visa and Mastercard combined. Alipay does $18 trillion while Visa and Mastercard combine for $16 trillion. He explained that a merchant will lose about 2-5% with Visa or Mastercard while Alipay will pick about 0.6%. With that construct, China went ahead of the West on the adoption of digital payment even though Visa has been around for decades before Alipay.
There is nothing ant-like in these numbers. Yes, Alibaba’s affiliate fintech company, Ant Group (of Alipay), does generate more payment volume than Visa & Mastercard combined! Ant does $18 trillion while the American giants bring in $16 trillion. Ant operates primarily in China while Visa and Mastercard run around the world!
If you are in Tekedia Mini-MBA, I challenge you to watch Dr. Chan one-hour session. As he was speaking, our members from a Chinese city provided live insights.
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