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Alibaba Makes An Advanced Move In China By Partnering With Shanghai General Motors

April 22, 2015 | About:

In a recent move to promote e-commerce in the automotive sector, Alibaba (NYSE:BABA) has inked a deal with Shanghai General Motors (NYSE:GM) to aid in financing of car deals in China. As China is the second largest automotive hub with several foreign players building their base in the country, this move is obviously a commendable one by the Chinese e-commerce firm Alibaba that urges to be a top player in the ecommerce industry by penetrating every prominent sector in the industry. It is to be noted that through this partnership, Alibaba would not be in manufacturing or selling cars, but would aim to provide auto services needed by car owners as highlighted by the CEO of Alibaba’s car division, Wang Licheng. Let’s quickly try to take a glance at what Alibaba aims to achieve through this venture.

The partnership in place

On April 17, a Reuters report indicated that Alibaba would be selling and offering financing for the General Motors vehicles through its ecommerce site Tmall, and would use its data crunching capabilities to target Chinese buyers for General Motors.

Presently some GM brands such as Chevrolet, Buick and Cadillac are already being sold on Tmall’s online marketplace, along with other car brands offered by 10,000 car dealerships. But after this partnership takes shape, Alibaba would offer car loans to GM car buyers, offer after-market services and use its big data abilities to target ads at potential GM car buyers. The online-to-offline (O2O) after-market services is the most directly-consumer related part in the partnership venture. Through this O2O service, consumers would be able to select car maintenance stores on Tmall and make online reservations.

The car financing products that would be offered through this agreement between GM and Alibaba would be available by the end of June this year. Consumers in China would be immensely benefitted through this venture since they would be able to get credit for loans online and also purchase cars from Shanghai GM without commission.

Adding to the reputation of Alibaba

The Alibaba-GM partnership announcement comes close on the heels of Alibaba’s announcement that SAIC, China’s largest automaker by volume, would invest $160 million to jointly develop a concept car with the ecommerce giant which could possibly be rolled out by August 2016. This means that Alibaba would surely witness more visits to its site than normal, and this would aid in building its Chinese consumer base stronger in the next few months.

Since O2O services have gained huge prominence in China as reflected in a report by the government-run China Internet Network Information Center which shared that around 39.2% of Chinese consumers used such services last year, getting into the automobile segment by offering such consumer-oriented services would fit well for Alibaba as its putting all efforts to push its services into the physical world.

While the partnership with SAIC is more focused on advanced technologies, this one with Shanghai GM is more inclined on life-related services such as purchasing and maintenance services.

Final word

Alibaba is a dominant player in the ecommerce space in China and this partnership with the third-largest automaker should not surprise its investors at all. In fact, this is an advanced move opted by the ecommerce giant to grow its dominance stronger at the home turf.

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