Alibaba Group Holdings Company

Alibaba Group Holdings Company Limited is a Chinese e-commerce business that provides its customers with a range of services (Broad 2014, p.14). It provides services for consumer to consumer, business to business, and consumer to business sales, for instance. The biggest online shopping site in the world is Alibaba, which has a strong reputation. Despite having a number of rivals like Amazon and eBay, none of them can match its standards. Many regions of the world, including Europe, the United States, and most recently Australia, have seen the opening of branches for Alibaba. Although the company has opened a branch in Australia, it is still facing some challenges especially those are grounded on the institutional differences between the two countries; China and Australia. The company since its launch in 1999 by the CEO Jack Ma has been expanded and spread to various other parts of the world apart from China where its main operations take place. The company has opened branches in Australia, USA, Europe and some other regions too (Broad 2014, p.31). The greatest issues which have been raised by the online commerce platform are with regards to the differences exhibited by the countries which the company is being newly established. There are a number of differences for instance which exist between China and the rest of the host countries of Alibaba Company branches. Such differences include; the institutional differences for example between China and Australia (Broad 2014, p.43). These institutional differences have a direct impact on the pay systems, benefits as well as the compensation for the employees who work for the company both in China and Australia.

Institutional Differences between China and Australia

Pay Systems Employed by Alibaba

Alibaba Company has employed and is committed to a pay system that is secure to the international users and the rest of the consumers in the respective countries where the business operates (Xin-Zen 2016, p. 9). The Company mainly uses online payment method for the services and goods it offers to its customers (Xin-Zen 2016, p.11). At the moment, Alibaba accepts various online payment methods which as a company, they have deemed more secure. These payment methods according to Xin-Zen (2016, p.17) include; Visa/MasterCard which accepts maximum order for USD 50000, Bank Transfer which has not maximum order amount but a minimum order amount of USD 20, Western Union which accepts a maximum of USD 5000 and a minimum Order amount of USD 20, WebMoney which accepts a maximum order amount USD 10000, QIWI method, and lastly Boleto online payment method. However, there is another form of payment security that Alibaba has introduced and the company believes it would help in securing consumers from fraud. The payment is called virtual reality (VR) where the buyer uses the face detection gadget as the security before commencing any monetary transactions. The payment method has been viewed as a success and will be incorporated in various online shopping which simulates the physical going to the shop and carrying out transactions (Mozur and Esther 2014, p.29). These payment methods are however not accepted in all the countries where Alibaba operates its business maybe because of the institutional differences which are existent in those very countries. The Alibaba Company operates in different countries across the world where they offer various types of goods and services to various customers. The strong policies imposed by the governmental organizations enable it to adopt strict business policies with the trade partners.

In a different perspective, it is clear that the Chinese e-commerce has continued to exhibit growth in the past years (Mozur and Esther 2014, p.23). The Chinese online commerce was already well established in the past, and it is still being improved by newer innovations and technologies both in payment methods of goods and services, for example, Alibaba introducing VR payment method which recognizes the face as a way of dealing with fraud. This is a boost to the already well-established platform (Wang, Lamond, and Worm, 2015, p.19). On the other hand, Australia has not been so established institutionally in the e-commerce. The consequence of this is that for a start, methods for payment which are universally acceptable and security guaranteed to the people of Australia must be used. This would in return impact the company because it will not be able to accept other methods of payment if the Australians do not have guaranteed security about them. One aspect that is very important to the online buyers is that they have to sure about the safety of their money and security of the bank account information (Chohan 2014, p.35). For instance, in the case of Bank Money Transfer, the customer must be assured that the information about their bank account will not be shared by a third party. The procedures of the bank or other business transactions in different companies have significant differences, a scenario that might interfere with the smooth business operations.

The Difficulty of Introducing Taobao and Alipay in Australia

Taobao is one of the associate companies of Alibaba. On the other Alipay is an online payment that the Alibaba Company uses for payment for goods and services they offer. However, the big question remains if the Chinese consumers in Australia will be able to pay for services and goods from Alibaba using Taobao and Alipay (Glender 2017, p.57). Many reviews have projected that as much as Alibaba will try marketing and selling the idea of Alipay to the Australians, it would face several faces several difficulties. First and foremost, Professor Shi in his analysis reports that Alipay will have to properly conform to regulations and policies about payment which have been established by the Australian Government (Glender 2017, p.61). Compliance with these regulations and policies may not be a soft rock to break. It will appear to be one of the major setbacks to the Company’s strategies for payment option available at the disposal of the consumers and customers of Alibaba (Glender 2017, p.72). The Alibaba Company will have to comply with the Australian Security and Investment Commission. Another important body that the Company has to ensure they comply with is Prudential Regulatory Authority.

The second institutional difference which could also impact negatively promotion of Alipay and Taobao in Australia is the population density. Australia is sparsely populated, and the shipping cost would be higher compared to China which has a very high and dense population (Chohan 2014, p.61). Another important aspect which has to be looked at keenly is the fact that in case many small businesses in Australia run Taobao shops, many consumers will have to comparison in terms of prices and most cases, they may end up buying counterfeit products. However, it is believed that Alibaba will act on this and have a lasting solution.

Alipay is so successful and widely used in China because institutionally, credit cards are not accepted in there as opposed to Australia where credit cards are accepted and widely used by buyers and consumers of various goods and services. This is another very evident institutional different which is existent and impacts on the payment system that Alibaba as a company could use. Reviewing the payment options that Alibaba accepts; MasterCard, PayPal, Western Union, Bank Transfer, QIWI, Boleto, and WebMoney, Credit cards are not mentioned. To mean, being that this is a Chinese company and the institutions in China do not accept Credit Cards, it could affecting payment for goods in Australia where Credit Cards are accepted and used. An alternative way to ensure they remain relevant in Australian markets, the company should diversify so that it allows the use of Credit Cards although in specific geographical locations where they are accepted.

To conclude on this, Alibaba Company can do more especially with regards to building a healthy e-commerce environment in Australia and any other location in the world where it has opened its branches. Particularly in Australia, Alibaba can encourage more players of the Chinese origin to join the business and enhance the communication between the e-commerce companies in both China and Australia. The sharing of the business activities can enable the Alibaba to adopt new ways of institutional operations. The globalization of the business operation is an important factor that the Chinese government needs to advance on.

Question 3

Currently, Alibaba Company does all its operations in China as the main Headquarters. Although there was a proposal to build a headquarter in Melbourne Australia, the question remains whether it will be possible to transfer all the operations including those of the Human Resource Management to Australia in the headquarters built in Melbourne City (Jackie 2017, p.27). When Jack Ma visited Australia during the launch of Alibaba said that Australia is still a clean country; with good environment, clean soils, and plenty of natural resources such as oil (Jackie 2017, p.54). Could this mean that these fascinated him and he thought of transferring the HRM operations to Australia? That is a question he has its best answers as we can just anticipate or guess that maybe he liked the country. The transfer of the Alibaba’s services to Australia would require the acquisition of the foreign workers, a situation that might lead to the loss of the domestic jobs and transfer of different opportunities to the foreign country i.e. Australia.

Transferring the HRM operations of Alibaba has a number of known impediments which could make it impossible to relocate the activities of Human Resource Management to a different country. Being that Alibaba is an online business which relies on the internet is not just a walk in the park (Jackei 2017, p.19). It involves a lot of risks and disadvantages that as the businesses owner, Jack Ma has to critically examine before he makes any decision lest he faces extinction from the business world. There are a number of issues which could hinder relocation, and these include the following;

The Government of China owns all the Infrastructures

The Government of China owns everything including the internet that Alibaba uses in its daily activities. It means therefore that the company greatly relies on the Chinese government and is therefore not independent (Max 2014, p.31). Access to the internet in China is controlled by the state-owned telecommunications companies through supervision and administrative control by the Ministry of Industrialization.

The second issue is getting along with the restrictions laid by the Chinese Government about foreign investment (Max 2014, p.62). China has set very strict rules about foreign ownership of businesses. For instance, foreign investors are not allowed to own more than half of the equity in national value-added telecom. Alibaba is an example of such investments which gets most of its revenues from businesses owned by other investors in other countries. This means that it is risking keeping certain sections of its business under the control of China (Max 2014, p.67). Transferring its executive operations or even a section of its more important organs, for instance, the Human Resource Management could see this being complicated even more (Max 2014, p.41). This is, therefore, a limiting factor to the Company spreading its operations to other countries like Australia because of the risk that China as a country can take control of various sectors. Being an international body, Alibaba experiences a variety of customers and operational managers that are linked to various activities within the firm. All the above features of the business depend on the Chinese government that controls all the activities of its businesses. The transfer of the Alibaba’s activities to Australia may go against the government regulations. In most cases, the Chinese government usually prefers the creation of opportunities for the Chinese people, a situation that is causing the increased income for the government. The transfer of the domestic services to Australia would mean the transfer of the domestic jobs to the foreign country (Australia).

Conclusion

In conclusion, Alibaba is one of the most established online stores across the globe. It has various other competitors such as Amazon and eBay but which still cannot match its standards. Alibaba has opened branches in many parts of the world such as Europe, United States of America, and recently in Australia. Although the company has opened a branch in Australia, it is still facing some challenges especially those are grounded on the institutional differences between the two countries; China and Australia. First and foremost, it faces a challenge regarding the payment method acceptable in Australia. As an online business, the Company relies fully on online payment using methods such as Credit Cards. However, Australia does not allow the use of credit cards. Additionally, the population distributing in Australia is so sparse compared to China which is densely populated. Sparse population means that shipment fees would increase. Such differences have impacted negatively on the payment method the company should adopt and how its employees can benefit. It is also evident that transferring the HRM operations from China to Melbourne in Australia could be faced with myriad challenges which mostly are emanating from the Chinese Government, for example, the state management and control of vital; infrastructures such as the Internet and various policies on foreign ownership of business. There are a number of differences for instance which exist between China and the rest of the host countries of Alibaba Company branches. Such differences include; the institutional differences for example between China and Australia. These institutional differences have a direct impact on the pay systems, benefits as well as the compensation for the employees who work for the company both in China and Australia.

References

Broad, M. (2014). Alibaba: What Exactly does it do? BBC News.

Chohan, A. (2014). Financial Innovation in China: Alibaba’s Leftover Treasure. McGrill University Press.

Glender, K. (2017). Alibaba’s new Australian Office will bring more China-focused Business. The Australian Newspaper.

Jackie, K. (2017). China’s Online Retail Giant Alibaba launches Australian Operation. The Guardian Newspaper.

Max, N. (2014) Four Problems that Irritate Amazon but Threaten Alibaba’s Existence. Weekly Business Review: NY; New York City.

Mozur, P., and Esther, F. (2014). Alibaba to Pay $692 Million for Stake in Real Time Retail. Wall Street Journal

Solomon, S. (2014). Alibaba Investors will Buy a Risky Corporate Structure. New York Times; Dealbook.

Wang,G.W., Lamond, D., and Worm, V. (2015). An Institutional Theory Perspective on Chinese HRM Research. Journal of Chinese Human Resource Management Vol. 6 No. 1.

Xin-Zen, K.L. (2016). China: An Insider’s Advice. RagTrader News.