South China Morning Post Purchase Is Perfect For An Alibaba That Wants To Go Global

EnterpriseMerger and acquisition

Alibaba can only benefit from a better portrayal of Chinese business in the West

In a move remarkably similar to Amazon CEO Jeff Bezos’ buyout of The Washington Post, Chinese e-commerce giant Alibaba and its boss Jack Ma have confirmed the purchase of Hong Kong’s South China Morning Post.

In the $266m (£176m) deal, Jack Ma will also get control of all of the Post’s subsidiary publications such as the Hong Kong versions of Esquire and Cosmopolitan, and other fashion and lifestyle magazines.

Biased Lens

According to the New York Times, Alibaba said the purchase was the result of a desire to “improve China’s image and offer an alternative to what it calls the biased lens of Western news outlets”.

Alibaba“Our business is so rooted in China, and touches so many aspects of the Chinese economy, that when people don’t really understand China and have the wrong perception of China, they also have a lot of misconceptions about Alibaba,” Joseph C. Tsai, Alibaba’s executive vice chairman, said in an interview with the New York Times.

Alibaba even claims that its shares are detrimentally impacted by negative news reports of China in the western press. Alibaba has its shares listed on the New York Stock Exchange.

For Ma and his company, the purchase comes at a time when it’s trying to go global. Alibaba’s cloud business, Aliyun (akin to Amazon’s Amazon Web Services) has made no secret of its expansion ambitions.

“Our goal is to overtake Amazon in four years, whether that’s in customers, technology, or worldwide scale,” Aliyun president Simon Hu said in an interview in the summer. “Amazon, Microsoft and others have already laid the groundwork for us by educating the markets about cloud in the U.S. and Europe, so we have an even better opportunity to join in the competition.”

Along with other multimillion pound investments and data centre openings in the Middle East and Silicon Valley, Alibaba is directly taking on western rivals and it knows that a major obstacle to this is the negative portrayal of Chinese firms in the West.

As of July this year, Alibaba was already shipping more parcels than Amazon, 12 million a day compared to Amazon’s 3 million a day. Of course, Alibaba dominates e-commerce in China with an 80 percent share of the market, a market of 1.4 billion people, compared to just 319 million in the US. But any expansion into the West would tap into giant economic benefits for Alibaba. Amazon reported $89 billion of revenue in 2014, compared to Alibaba’s $12 billion.

Tsai furthered his case in a letter to South China Morning Post readers published here.

“Our vision is to grow the readership globally. We believe we can do this because the SCMP, from its base in Hong Kong, is uniquely positioned to report on China with objectivity, depth and insight, a proposition that is in high demand by readers around the English-speaking world – from New York to London to its home in Hong Kong – who care to better understand the world’s second-largest economy,” he wrote.

“We think the world needs a plurality of views when it comes to China coverage. China’s rise as an economic power and its importance to world stability is too important for there to be a singular thesis.”

This latest move by Alibaba should confirm more than ever that Western rivals shouldn’t be resting on their laurels. Massive spates of growth and entrepreneurship over the last five years have boosted Alibaba into the world’s spotlight, and continued growth looks inevitable. Ma is not to be underestimated, as Alibaba’s motivations have now hit the headlines.

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