Alibaba's role in the covid-19 epidemic in China

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April 14, 2020

This month, FEVAD (Federation of e-commerce and distance selling) published an interview of our director Martin Pasquier on its website, in which he talks about the current Covid-19 crisis and its effects on large Chinese companies. Martin Pasquier explains the challenges of e-retailers in China and the solutions provided by the giant Alibaba to face the Covid-19 epidemic.

1 / What explains Alibaba’s involvement in this crisis?

In China, Alibaba is not just an e-commerce leader but rather a large ecosystem that also includes supply chain, payments, many financial services, insurance, groceries delivery, educational training, infrastructure cloud and even citizen rating … Alibaba therefore has data on almost all the daily activities of Chinese individuals and businesses, an asset which has proved useful in tracking citizens and their risk of contagion during the epidemic. This is why it is not surprising that Alibaba is working with the Chinese government to set up a system assigning a color code to each citizen to determine their risk of contagion and allow them to access certain buildings and crossing barriers. The giant had already responded to a similar request from the government to launch Sesame Credit, the social credit rating system that assigns a confidence score to Chinese citizens, by analyzing their behavior.

In addition, in recent years, Alibaba has taken great interest in digitizing the healthcare sector, and in implementing machine learning for medical research. The urgency of the epidemic has enabled it to speed up this digitization through collaboration with hospitals in order to adopt certain solutions that have become essential. From the start of the coronavirus epidemic, Alibaba has taken assistance measures by funding the Jack Ma foundation with $ 16.5 million to research centers to help find a vaccine, by deploying a platform dedicated to selling medical equipment and deploying a rapid virus detection system based on AI.

2 / What have been Alibaba’s initiatives to accelerate the digitalization of commerce in particular?

The epidemic represented an opportunity for the giant to push many of its offers to new customers, especially small local businesses. Thus, Alibaba made available free of charge to citizens and traders its live-streaming services, the online courses of its affiliate Taobao Education, offered discounts to traders on its delivery services, granted 0% loans, and proposed other digital services. Many Alibaba departments have of course recorded a peak in usage, notably its e-commerce site Taobao and its delivery service for fresh products Hippofresh (Hema)

3 / What will be the long-term impact on e-commerce in China?

The crisis accelerated e-commerce in China and in the long term we can expect a growth of e-commerce especially in the Chinese countryside where small and less connected traders had to adopt an online payment system and to try the services Alibaba’s marketing during the crisis. Beyond the seller’s point of view, individuals also had to get used to shopping online and watching live-streamed products. After 3 months of repetitive orders, it is becoming a common habit that will of course continue. Now that the situation is improving in China, Alibaba is also planning to start celebrations with an online shopping festival.

E-commerce, which was already growing strongly in China this year, should continue to grow even more exponentially.