As one of the most prominent conglomerates in the world, the Alibaba Group often makes the headlines due to its skyrocketing stock values, impressive growth rates, and scale of the services it provides. Indeed, since April 2016, Alibaba has held the mantle of the world’s largest and most valuable retailer, with a presence in over 200 countries. Naturally, Alibaba is often compared with its largest rival, Amazon.com, Inc, and this rivalry is almost always framed in economic terms.
A recent CNBC article reduced the relationship Alibaba has with Amazon into the following headline: “Alibaba vs Amazon: The Race to $500 billion.” Thus, Alibaba is regarded as another giant company that makes staggering amounts of profit every year.
However, the tendency of the public to regard Alibaba purely as an economic powerhouse obscures its true nature, aspirations, and impact. Much more than a prominent conglomerate, Alibaba has made extensive forays into information technologies, entertainment and culture, and politics. In a world where international relations are characterized as much by economic strength as they are by military might, Alibaba’s position as the Chinese business community’s de-facto leader draws powerful links between the fields of economics and politics.
It is becoming clear that Alibaba is an emerging socio-economic entity, one whose rapidly expanding clout in the realms of economics, information technologies, and culture renders it the ultimate modern-day exemplar of soft power.
What is the Alibaba Group?: An Examination on Its Economic Clout
Alibaba Group Holding Limited is a Chinese-based, multinational conglomerate founded in 1999 by Jack Ma. Known for its consumer e-commerce services, Alibaba also provides consumer-to-consumer, business-to-consumer, and business-to-business transaction services via various internet mediums.
Alibaba is used for online auction hosting, online money transfers, and mobile commerce. Several of its affiliated entities include Alibaba.com, the world’s largest online business-to-business trading platform for small to medium sized businesses, Taobao Marketplace, China’s largest consumer-to-consumer online shopping medium and the platform most often associated with Alibaba Group, and Alipay, a third-party online transaction medium that allows users to operate without transaction fees. AliExpress, a more recently added service, operates as an online retail platform comprised mainly of small-scale Chinese businesses which offer products to international consumers.
As one of the world’s top 10 most valuable companies, Alibaba has a market cap of $527 billion USD and has overtaken Amazon as the world’s largest e-commerce company.
“Chinese consumers spent $485 billion on Alibaba’s marketplaces in fiscal year 2016, while the e-commerce giant nearly tripled its profits.”
With Alibaba’s largest source of revenue still being Chinese markets, its monumental growth is fueled in large part by China’s burgeoning middle class and in general, China’s economic growth. Moreover, the relationship between Alibaba and China’s economy is symbiotic in nature; as China’s economic might propels Alibaba ahead of rivals such as Amazon, Alibaba in turn facilitates the circulation of money throughout the various institutions and actors of the Chinese economy. The degree to which Alibaba can influence the economic growth of China is predicated on its own economic successes. Alibaba accumulates more power within the Chinese business community, the more it begins to reach into the realms of national and international politics. Thus, Alibaba’s impressive economic growth and expansion should be regarded as the means to a much grander, political end.
Into the Realms of Information Technologies and Entertainment
While Alibaba’s mainstream economic activities lay the foundations necessary for economic leadership, its ventures into the fields of information technologies and entertainment have allowed it to exert some form of influence on Chinese society more generally.
Harnessing the momentum garnered by the popularity of its e-commerce services, Alibaba has also released its own instant messaging software – Aliwangwang. While intended as a medium for customers and clients to communicate with one another, the number of Aliwangwang users exceeded 50 million in 2014, making it the second largest messaging tool in China. A year later, Alibaba acquired the South China Morning Post and other media assets for US$266 million.
Despite asserting that the newspaper would retain editorial independence, vice-chairman Joseph Tsai has said, “Alibaba believes that the world needs a plurality of views when it comes to China coverage. China's rise as an economic power and its importance to world stability is too important for there to be a singular thesis.”
These are just two instances of China’s forays into the field of information technologies, both of which highlight the potential for influence Alibaba would have over how information is produced, disseminated, and received. If one considers Alibaba’s position of leadership within China’s business community and the tendency for the Chinese Government to be on close, working terms with China’s more powerful institutions, Alibaba’s investments in activities so far removed from e-commerce should be regarded with more nuance and complexity.
Alibaba Chairman/Chinese business magnate/investor/philanthropist Jack Ma
This notion is buttressed by Alibaba’s ventures into the entertainment industry, a phenomenon one article described as showcasing China’s “ambition in seizing Chinese people’s leisure time.” In September 2017, Alibaba’s Digital Media and Entertainment Group founded its live entertainment business group. This organization takes on the roles of ticketing, content creation, and live experience. In view of previous forays Alibaba has made into the entertainment industry, this new group may certainly be regarded as one more piece to “the entertainment empire Alibaba is trying to build that will help the titan go beyond e-commerce.” For example, the giant’s movie entity Alibaba Pictures has formed a strategic partnership with Amblin Partners, a Hollywood company led by Steven Spielberg.
In wondering why Alibaba would invest so heavily in the entertainment industry, one could evaluate the organizations official stance, which is to “allow those who have fun shopping at Alibaba to truly live at Alibaba.”
Whether Alibaba’s intentions are as innocuous as it claims, Alibaba’s forays into entertainment and information technologies are emblematic of an ambition to exert some influence over Chinese society. In context of the giant’s close ties with the Chinese Government, however, Alibaba’s non-economic activities could be regarded as a means to a political end.
Political and Sociological Implications
Alibaba Group, like its rivals Amazon, is an economically formidable entity that continues to break records and dominate stock markets. It provides consumers and producers with a platform to carry out commercial transactions on an enormous scale; however, Alibaba’s influence on Chinese society, which emanates from its economic clout, extends beyond far beyond customer service.
Firstly, Alibaba’s increasingly potent role in China’s economy and business community is essentially a modern-day manifestation of state-owned enterprises. Long a perennial problem faced by China’s communist leaders, China’s state-owned enterprises represent the inefficiencies the CCP endeavors to eliminate. Whereas issues such as economic patronage, moral hazard, and the limits of command-style economics plague state-owned enterprises, super conglomerates such as Alibaba operate as private sector entities. These companies are driven by the profit motive and are characterized by a plethora of capitalistic, free-market elements. They are competitive, optimized, and, with each passing year, more and more integral to China’s economy. The sheer volume of currency transfers they engender acts as a constant source of economic and financial stimuli, keeping the economy healthy and active even during times of slowed growth.
Hence, Alibaba represents a new breed of economic entities that form the commanding heights of modern China’s economy. When one considers the close ties Alibaba and the Chinese Government share, the conglomerate essentially reinforces the CCP’s doctrine of tight political control while maintaining free-market economic principles and the economic efficiencies they engender.
In addition to being the new commanding heights of China’s economy, conglomerates like Alibaba have begun to take the role of influencing and organizing the non-economic aspects of Chinese society. With progressive ventures into the realms of information technologies and entertainment, Alibaba shows an unusual interest in such non-economic matters. As things stand, Alibaba’s diversification initiatives may seem innocuous and enterprising.
That being said, never before has a modern-day institution of any kind been so successful in exerting influence over so many aspects of society. The collectivization efforts of the Soviet Union and Mao’s China, Nazi Germany’s totalitarian regime, and India’s Cold-War era administrative centralization efforts all attempted but failed at consolidating influence and control over society as a whole. And yet, today in China it is pedestrian to see consumers shopping, communicating, and accessing their sources of entertainment through a single, common conglomerate.
Through its increasingly integral role in China’s economy and close ties with the Chinese government, Alibaba’s success essentially marries private-sector economics with state politics as it takes on the mantle of China’s commanding heights of the economy. In turn, its economic clout allows Alibaba to embark on initiatives awarding it novel degrees of influence over multiple aspects of society.
This new form of social organization and governance poses massive implications for the field of sociology as the very definition of states is challenged. In politics, authoritarianism is universally frowned upon. Yet, as the modern-day exemplar of soft power, Alibaba seems to have found a way to influence the daily lives of people without coming off as oppressive.