Thailand: The Next Destination In Alibaba’s Global Expansion

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Recently, Alibaba (NYSE:BABA) signed a cooperation agreement with the Government of Thailand to help develop the country’s e-commerce landscape. Under the agreement, Alibaba will provide training for small and medium enterprises (SMEs) and individuals and explore ways to enhance the country’s logistics capabilities to support its digital economy strategies. E-commerce is developing rapidly in Thailand and the value of the e-commerce market in the country was estimated to be around $60 billion in 2015. The government’s national payment system is aimed towards making Thailand a cashless economy, which is likely to boost its e-commerce spending.  The country is being touted as the hub of e-commerce and e-payments in the ASEAN economic community. Alibaba’s involvement in the region at this stage will ensure that the company has a strong foot-hold in the region and is able to gain a decent market share in the growing e-commerce market of the country.

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Thailand’s Fast Growing E-Commerce Market Can Help Alibaba’s Expansion

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As Alibaba looks outside of China for growth and expansion, Asian economies can prove to be growth drivers over the long term. Thailand’s e-commerce market is at a nascent stage, but it is the fastest growing in South East Asia. With around 50% of the population having access to internet, Thailand has around 500,000 e-commerce users.  With the government pushing digital initiatives and the launch of 4G mobile services, the region is likely to witness rapid growth in e-commerce. Thailand is a growing economy in a region that is poised to become one of the world’s fastest growing regions for e-commerce, with revenues exceeding $25 billion by 2020.

While the size of the market might not be significant for Alibaba, it provides an expansion opportunity beyond China to the company and aids in its goal to become a global enterprise. Alibaba is currently heavily dependent on China for its revenues and expansion into other regions will ensure that the company is hedged against any downturn in the Chinese economy. We believe partnering with the government of Thailand allows Alibaba easy access to the Thailand e-commerce landscape and the company can tap into the growth into this region, driving revenues in the long term.

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