As the battle for the ASEAN e-commerce market heats up, Alibaba’s logistics arm zeroes in on Cambodia
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Tech magnate Jack Ma’s Alibaba Group Holding Ltd plans to make Cambodia its central logistics hub for the Greater Mekong region in four to five years. The logistics expansion is necessary as rival Chinese and US tech giants battle it out for the Southeast Asia e-commerce market.
“Cambodia is a good location for a transfer hub because we can service competitive e-commerce markets in Vietnam, Thailand and Myanmar,” Kevin Li, general manager for global delivery at Alibaba’s transnational logistics platform Cainiao Smart Logistics Network Ltd, tells Capital Cambodia.
“As the global parcel network manager for Alibaba, my mission is to set up the network of parcel transshipments from China to countries like Cambodia. I will be involved in the design and implementation of the global logistics network for Southeast Asia,” Li explains.
He adds that only Cambodia has bonded warehouses which enables it to store products from China and other countries, and transport the goods within the local market and to neighbouring countries.
The e-commerce giant has been on an expansion mode in the past year following the acquisition of a controlling stake in Singapore-based e-commerce startup Lazada in 2016, and Tokopedia, an Indonesia-based e-commerce platform last December. This has made Alibaba one of the top three platforms in the region.
In the Greater Mekong region of nearly 300 million population, Amazon.com Inc moved to Vietnam to partner with Vietnam E-commerce Association to make inroads into the market.
Alibaba’s major pivot towards Cambodia is critical for its global strategy.
Li says the Chinese government’s relationship with Cambodia has guaranteed Alibaba the resources and ease of regulations that are not found in neighbouring countries.
“China’s ties with the government is another factor behind this logistics (move). Cambodia is very close to China which makes doing business here easier when one has access to the central government,” Li adds.
In comparison, Vietnam and Thailand have strict customs and foreign business policies, and do not have economic zones and bonded warehouses.
“It’s very difficult to transfer foreign products and store it in those countries but the location here is good as it is in the centre of the Mekong region. That’s why we feel Cambodia has strengths that Thailand and Vietnam can’t compare with,” he adds.
Apart from regulatory advantages, the dollarisation of the Cambodian economy facilitates currency exchanges in US dollars and Chinese yuan, simplifying payment services compared to Vietnamese dong and Thai baht.
“We also service other trading and e-commerce companies where they have a lot of money moving in and out of the country, so it is important that the location we are at has a good policy for money movement,” Li says.