Alibaba Group Holding Limited, the prominent Chinese e-commerce giant, is actively seeking expansion in the Gulf markets, particularly in Saudi Arabia and the UAE.
During a panel discussion at the ongoing World Government Summit in Dubai, Alibaba’s chairman Michael Evans revealed the company’s strategy, emphasizing its commitment to local partnerships as a key aspect of its approach.
Evans highlighted Alibaba’s recent efforts in the Saudi market, indicating concerted efforts to deepen its presence in the thriving e-commerce landscape in the region.
This move signifies Alibaba’s strategic pivot towards collaborative projects following a period of strategic reorganization driven by government scrutiny and leadership changes.
Last December, the Saudi Public Investment Fund injected $200 million through its unit, Saudi Wealth, into EWT Arabia, a technological venture supported by Alibaba.
In 2022, the Public Investment Fund announced a $2 billion partnership with AliExpress, Alibaba’s subsidiary, in the technology sector.
Two years prior to that date, Saudi Telecom Company (STC) entered into a $1 billion partnership with the Chinese group to provide public cloud services by establishing a regional management and training center for Alibaba in Riyadh.
The growing relations between the Gulf states and China, driven by mutual economic interests and investment diversification initiatives, present an opportune moment for Alibaba’s expansion efforts.
However, geopolitical complexities, including increased American scrutiny on entities associated with China, add an additional layer of challenge to Alibaba’s aspirations in the Gulf.
Last year, Saudi Arabia and the UAE were among the few countries invited to join the BRICS bloc in a bid to expand the group, primarily backed by China.
These efforts are complicated by US opposition to entities perceived to be closely linked to the Beijing government.
G42 Group, based in Abu Dhabi, has announced this week that it is scaling back its presence in China, opting to invest in major Western markets in an attempt to allay US concerns.
The success story of Amazon in the United States and Western countries mirrors that of Alibaba’s in China and Asian markets, which has brought about a similar revolution in the retail landscape and has also raised concerns among many players in the sector.
As Alibaba seeks to regain its leading position in the global technology industry, its pursuit of partnerships in Saudi Arabia and the UAE underscores the company’s adaptive approach to international expansion.
The success of these projects could reshape the e-commerce landscape in the Gulf and deepen economic relations between the region and China.
Alibaba Cloud, the main company responsible for digital technology and intelligence within the Chinese group, entered into a cooperation with Dubai Holding at the end of 2023 to develop a data center.
The Chinese company also has a strategic partnership with the Dubai Economic Development Corporation, a subsidiary of the Department of Economy and Tourism in Dubai, to enable and support manufacturers and small and medium-sized enterprises in the UAE.
Alibaba’s focus is now on internal restructuring, initiated by the company last year, although progress in this regard is unstable.
The company has backed down from the separation of its $11 billion cloud computing unit and has not made significant progress since filing for the initial public offering of its logistics services unit, Cainiao.
The Chinese group launched a plan two months ago to establish a company to oversee its investments worldwide.
While Alibaba officials have not clearly identified the assets that may enter that portfolio, analysts expect non-core assets such as physical retail operations to go to the holding company and perhaps be put up for sale.
Alibaba has not released its financial results for 2023, but analysts expect its revenues in the last quarter of last year to increase by about 5.6% annually, although it will be the lowest growth rate in nine months.
These expectations come amid difficult economic conditions and increasing discount rates, especially with the estimated decline in the company’s expected profits by about 4% over the past month.
