Donald Trump called it “a great meeting,” as he and Alibaba executive chairman Jack Ma stood side by side at Trump Tower on January 9 to tout Alibaba plans that would “create one million [US] jobs.” Shortly after, the company clarified: “Alibaba will create one million US jobs by enabling one million American small businesses and farmers to sell American goods to Chin[ese] and [other] Asian consumers on the Alibaba platform.”
Expert observers are not fully buying the pitch. “This is great publicity for Ma as well as Trump, but there is no basis to support Alibaba’s claim [of creating one million jobs],” says Mohanbir Sawhney, director of the Center for Research in Technology and Innovation at the Kellogg School of Management. “While China represents a vast and potentially attractive market for US-based small businesses, they will face stiff competition from local Chinese manufacturers who have lower costs. [Alibaba’s] success has primarily been in the reverse direction—connecting Chinese manufacturers with the US market.”
Ma turned it into great advertising for his ecommerce sites, notably Tmall and Alibaba.com. Some of the biggest US retailers, such as Costco and Macy’s, already have set up Chinese flagship estores on Tmall, notes Maggie Chen, George Washington University professor of economics and international affairs. “But many more, especially small and medium-size companies, could use Tmall as a low-entry-cost intermediary to enter China’s market—and Alibaba.com to enter other Asian markets.”
Stronger trade ties might cool some of the recent hot political rhetoric, too. “Given the extensive economic and policy uncertainties currently looming over US-China relations, a successful partnership between the new US government and one of China’s top businesses could slightly ease some of the anxieties and concerns in the Chinese business community,” says Chen. “However, its implications for overall US-China economic relations would still be very limited.”
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