E-commerce hemmed by national boundaries

Ma's global vision worthy of consideration

Since last year's record-breaking IPO, Alibaba founder Jack Ma Yun has made no secret of plans to expand his company's global reach. Indeed, speaking on January 23 at the World Economic Forum in Davos, Ma described his dream of serving 2 billion consumers and 10 million small businesses outside of China.

"My vision is, if we can help a small business in Norway sell things to Argentina, and Argentine consumers can buy things online from Switzerland, we can build up an electronic World Trade Organization (WTO)," the charismatic Chinese business mogul said.

Ma himself offered little to flesh out his vision, which would clearly require a tremendous amount of international political will to implement. Still, Ma's remarks make clear his ambition to turn Alibaba into a global powerhouse. What's more, they highlight the patchwork of local policies and interests which prevent development of a free and open global e-commerce market.

Despite a massive investment push to attract overseas vendors and consumers, Alibaba remains little used and relatively misunderstood outside of China. Although it has a larger market value than US tech titan Facebook, overseas reports and commentaries frequently describe Alibaba in terms of its similarities to other global e-commerce names, including Amazon, eBay and PayPal.

In some ways, it's easy to view Alibaba's international aspirations in terms of past efforts to reach the global goals. Broadly speaking, the history of Chinese firms using e-commerce to connect with overseas markets can be divided into two epochs.

When it launched in 1999, Alibaba gained early success by helping foreign buyers find suppliers in China. It was not alone during this initial era. Rival platform operators at the time included made-in-china.com and dhgate.com, both of which focused on the same business-to-business market as Alibaba.

Alibaba struck new ground though in 2003 when it launched its popular consumer-to-consumer platform Taobao. This heralded the start of a new period as operators used their experience dealing with overseas business buyers to meet China's nascent online consumer market. But while overseas companies like Amazon and eBay moved relatively quickly to reach Chinese e-commerce shoppers, it took a while for Chinese companies to start formulating coherent global growth strategies.

As Alibaba's consumer business grows, its focus on growth at home speaks to the continued appeal of the Chinese market, where online retail turnover grew by some 45 percent last year according to official figures. To name just one noteworthy achievement, Alibaba reported $9 billion in sales during last year's Singles' Day, the busiest online shopping day of the year in China. These results compare to $5.75 billion in 2013. Last year also saw Alibaba take steps toward making Singles' Day a worldwide phenomenon with its AliExpress and Tmall Global services. Such services were said to have been popular with consumers in places such as Russia (specific data is still lacking on Alibaba's global sales), yet logistics and customs barriers present a clear problem.

At this point, Alibaba - not to mention other players in the online shopping industry - could benefit greatly from eased restrictions on international e-commerce. The existing WTO offers member states and regions freedom from arbitrary intervention and local protectionism. Borrowing the principles of the WTO and applying them to a specialized framework tailored to the needs of the e-commerce industry could spur global competitiveness by allowing small business owners to reach a wider market.

The development of such a framework would require extensive revision of capital control policies and trade regulations in many different jurisdictions. While the Internet has made the world smaller in many ways, online consumers and sellers are still very much stuck in a world of borders and boundaries.

As technology spreads and lifestyles change, perhaps it is time to start thinking seriously about a trade architecture that supports global payments and logistics in online shopping. Ma, a man who knows a thing or two about e-commerce, is already mulling such a global vision. Maybe others should do the same.