Amid rumours e-commerce giant Alibaba is looking to expand into North America and set up shop in either B.C. or Oregon, experts say the Chinese company may not have such an easy time making inroads here.
Alibaba filed documents for an initial public offering in the U.S. last week, signalling it may be ready to launch business on this side of the Pacific.
The Hangzhou-based company had US$248 billion in sales last year, according to its prospectus, amounting to more than the combined total of Amazon’s (Nasdaq: AMZN) US$75 billion and eBay’s (Nasdaq: EBAY) US$16 billion.
Keith Head, a professor specializing in international trade and the Chinese economy at the University of B.C.’s Sauder School of Business, said setting up shop in Vancouver would make sense for Alibaba if they wanted to tap in to the increasing number of mainland China immigrants.
“These mainland immigrants may be already be accustomed to using Alibaba in their Chinese business operations,” he said, adding the company may begin with this niche market before chipping away at Amazon’s customers.
“Maybe they’re really thinking about this as serving the immigrant populations.”
Alibaba offers services including web portals, shopping search engines, cloud computing, business-to-business trading and online payment, among others.
Head noted that other major Internet companies like Google and Amazon have complained Beijing has curtailed their ability to compete fairly in China against companies like Alibaba.
Instead, those American companies have retained dominance in North America and Europe.
“Alibaba can be a big shot there (in China) in a way that won’t necessarily translate over here,” Head said, adding he’d be surprised if the company planned to immediately set up infrastructure in North American for all the services it offers to Chinese customers.
Instead, he said Alibaba may just choose to zero in on its business-to-business trading platform since it already has all the connections in China that North American companies would want to access.
Despite rumours Alibaba is also considering establishing an office in Portland, the president of the Technology Association of Oregon told Business In Vancouver he hasn’t heard many rumblings his organization’s partners.
“It could go either way,” Skip Newberry said.
“There’s obviously some speculation about Vancouver because of the connection to Asia.”
Like Vancouver, Portland is well known for its high quality of the life. The main difference, according to Newberry, is that Portland has a relatively low cost of living that can attract junior talent.
Kirk Kuester, executive managing director of Colliers's Vancouver brokerage operations, said Alibaba has not approached his firm about securing commercial space for expansion.
He said if the Chinese company was to establish a presence on the West Coast, it would be best to take look to Seattle-based Amazon to see how they’ve set up their facilities in North America.
Kuester added it’s also likely Alibaba would have to build its own distribution centre.
“Those facilities are very specialized,” he said. “There’s nothing (in Metro Vancouver) they could go lease or buy that’s upstanding and ready to go.”
However, office space catering to the tech industry is in good supply in the city’s downtown core, according to Kuester.
A spokeswoman from Alibaba said the company had no comment.
