Alibaba.com’s U.S. expansion hinges on wooing mom-and-pop shops

E-commerce giant Alibaba.com is setting its sights on America’s mom-and-pop businesses.

Founded in 1999 by Jack Ma and 17 of his friends, Alibaba.com became an e-commerce behemoth that connects suppliers with business owners who can use it to bulk-buy and resell anything from forklifts for a warehouse to clothes for a boutique store. The early success of the wholesale business contributed to Alibaba Group’s rise as one of the world’s most valuable and diverse tech conglomerates, with interests ranging from e-commerce to entertainment, AI, and cloud computing. Transactions on Alibaba.com have grown from about $100 million a year in 2017 to more than $50 billion. Pandemic travel restrictions also helped attract new customers who would otherwise tour factories in person.

Recently, though, fierce competition at home and weak consumer spending have pushed Chinese tech giants to look for new growth drivers abroad. China’s tech industry is facing slow economic growth and regulatory crackdowns . Ma, Alibaba’s once-flamboyant founder, has retreated from public view after Chinese regulators halted the massive IPO of Alibaba affiliate Ant Group.

Alibaba.com is focusing on the U.S., its top market, where it has 8 million users. The platform wants to show more American businesses that sourcing from global factories can be as easy as shopping online.

In September, Alibaba.com hosted a conference in Las Vegas, drawing more than 2,000 attendees — from jewelry distributors to farm owners. Company officials shook hands with business owners and shared tips on AI-assisted factory sourcing, as participants toured a variety of supplier stalls.

Alibaba.com president, Kuo Zhang, sat down with Rest of World at the event. Zhang worked for IBM and Microsoft in Beijing as a computer scientist before joining Alibaba. He started off at the company building merchant tools for Chinese shopping site Taobao, and became the president of Alibaba.com in 2017.

Zhang discussed the enduring significance of the U.S. market, competing with Temu, navigating geopolitical tensions, and why he thinks global trade is alive and well even if the next president imposes more tariffs.

This interview was translated from Mandarin Chinese. It has been edited for length and clarity.

What made you want to join Alibaba, and has the company changed now that Jack Ma is keeping a low profile?

Teacher Ma [Jack Ma] was very inspiring with his mission of “Make it easy to do business anywhere.” I figured I could create more value with my work. I didn’t know much about e-commerce, and gradually learned about how marketing and merchant systems worked.

Teacher Ma is a very idealistic person. Every decision here is about making it easier to do business, serving everyone instead of a small group of elites. We think about how to democratize AI, financial services, and logistics. His mission remains highly regarded.

How has Alibaba.com changed since you joined in 2017?

When I joined Alibaba.com, it was a directory without many transactions happening online. We built its payment system, logistics services and export-import compliance systems. Alibaba.com used to be PC-focused, since we assumed business clients were working in front of a computer. But later we shifted to mobile.

Global trade has become more decentralized thanks to the internet. In the past, it was mainly agencies in port cities like New York or Los Angeles conducting international trade. And they supplied things to smaller businesses. Now, small and medium-sized enterprises [SMEs] are doing the trade themselves. Orders are becoming more fragmented. In the past, suppliers might export several containers of goods in one go, but now, they need to be more flexible and better at customization.

Now there is AI. On the supplier side, AI-powered tools can solve problems such as language barriers, time differences, and how you promote products to people from different cultural backgrounds. On the buyer’s side, AI tools help them understand the important metrics of a product and what specifications they should look out for while sourcing.

Why is the U.S. a primary target market for Alibaba.com?

GDP is the top factor. For a B2B company, the growth ceiling needs to be high enough. Second, the U.S. has a stable policy environment compared with many other places. Despite all the news headlines, decisions are made with ample consideration, in accordance with the law, and they last for a long time.

Third, the U.S. has relatively high economic growth rates and high digital penetration. All these make the U.S. an important market for internet businesses globally.

We are now seeing a trade war and countries talking about onshoring the production of strategic products. Some people say globalization is dying. What do you think?

Let’s pay more attention to facts instead of words. The fact is, globalization makes life better. No country can make everything themselves. And historically, tariffs are never the only factors that drive the rise and fall of industries.

Global trade is about supply and demand. If a buyer concludes that even with extra tariffs, they should still buy from a certain supplier, then the trade will still happen. We need to make sure Alibaba.com provides a variety of suppliers to match the trade conditions in different places.

You worked at IBM and Microsoft, but both companies appear to be reducing their R&D teams in China. What do you think of this tech decoupling?

I think those are probably business considerations. IBM might have found their business in China getting more difficult because of growing competition. Companies make these decisions based on multiple factors instead of one.

We are very proactive in going global. The number of Alibaba.com employees overseas is growing much faster than in China. We have 100-strong teams in Southeast Asia, South Korea, Europe, and the U.S.

Chinese companies are facing growing hostility and suspicion overseas. It is rare for a Chinese tech executive to attend public events in the U.S. What is your strategy for coping with this climate?

Alibaba has adopted a pragmatic strategy. Number one is to follow the laws and regulations on products, intellectual property protection, and data. Second, we need to serve our customers and generate value for them. If we don’t generate enough value, it won't work no matter how good the relationship between two countries is. As long as this global commerce exists, I believe we have value here.

We came here to meet our customers. Our managers are here to understand what customers here are experiencing, and when they go back, they are more motivated in product development.

How do you compete with Shein and Temu? If the cross-border shopping sites are taking away business from local merchants in the U.S., they may source less from Alibaba.com.

There will be some impact, but our target customers are very different. We cover a larger variety of products from cranes to consumer goods. In the 20-trillion-dollar global trade industry , every platform looks very small right now. The penetration of e-commerce remains very low. We want to get the mom-and-pop stores to participate in global trade.

What policy issues are you paying attention to during this year’s U.S. presidential election? Is there anything that concerns your business?

I have no say here. People talk a lot about Trump and his tariffs. But this would not be the first time. Our view stays the same as in around 2018 [when Trump started a tariff war with China]: It all goes back to supply and demand. The absolute value of U.S.-China trade has increased since 2018. As long as there’s demand, we focus on supporting the competitiveness of SMEs. If they do well, we do well. ▰

Viola Zhou is a reporter for Rest of World covering China's tech scene. She is based in New York City.