Last week, when Alibaba (BABA, Financial) disclosed its final-quarter results of the fiscal year 2015, it also announced a change of leadership at the topmost level of the Chinese ecommerce firm that was welcome by the Street as the stock moved up after the announcement. The company announced the replacement of Jonathan Lu with Daniel Zhang as the new CEO of the ecommerce honcho. Almost a week after the announcement, Mr. Zhang established his significance by informing the employees on May 13 that international expansion is the top priority of the new fiscal year 2016. He added that the company “must absolutely globalize” as reported by the company site, Alizila. Let’s take a glance at what the new CEO had to say regarding the future plans of the company which is linked to growing globally in the coming year.
The speech had all the details
Zhang stated, “We will organize a global team and adopt global thinking to manage the business, and achieve the goal of ‘global buy and global sell’…” He emphasized the requirement of investing heavily in the new and existing operations of the firm which included AliExpress, an online marketplace aimed in selling Chinese goods globally and Tmall Global, which aids in foreign brands selling their products online directly to Chinese consumers.
He commented that the company is currently pursuing the journey of globalization and marked this venture as highly important for survival in the future. Unless Alibaba successfully globalizes it won’t last for more than 100 years –Â this was one of the major lines stated during the strategy session at the company’s Hangzhou, China campus.
Jack Ma, the founder of Alibaba, has carved several ambitions and one of them is reaching the $1 trillion in annual gross merchandise volume (GMV) by 2020 through improvement of sales in Alibaba’s ecommerce marketplaces. In the fourth quarter of the fiscal year 2015, the company has reported $394 billion as GMV on its China’s retail marketplaces. So, the $1 trillion mark is not an easy affair as the company is already approaching the 2016 fiscal year. Thus, Alibaba would need to focus on building sustainable businesses to grow its GMV in the years ahead.
Mr. Zhang stressed on the importance of forming an international workforce while he said, “We need to have global talent. We will have employees from all over the world that look different from each other. We have to take the time to understand them, to understand their habits, cultural differences, and way of thinking. This is how we become a truly international company…”
Among Alibaba’s diverse businesses, Zhang has singled out Aliyun, the company’s cloud-computing arm which has potential of future growth. The company already has around 1.4 million customers in China for the Cloud-computing arm and now it believes that it would require taking the inorganic growth mode to grow this business further as Cloud computing is a preferred option in today’s tech-oriented corporate sector. Hence, just recently, Alibaba has signed a joint venture in Dubai to enhance its cloud and big-data analytics technology.
In fact, as the Chinese economy is projected to grow at a slower rate going forward, Alibaba’s overseas expansion seems to be even more important beginning this fiscal year.
Concluding note
It is to be noted that majority of the analysts speculating the Alibaba stock have a bullish opinion and thus Alibaba’s stock holds a lot of promise for the investors. With the globalization program becoming the chief focus of the company, going forward, we are bound to see better days for the Chinese ecommerce firm that knows how to create new strategies to remain a dominant player in its diverse business operations.
