E-commerce model faces challenge

Alibaba founder Jack Ma is now the richest man on the Chinese mainland. But factors restricting the growth of e-commerce have prompted many to speculate how long Ma will retain such a status, says an article in Beijing News. Excerpts:

Jack Ma hit the headlines once again thanks to Alibaba's initial public offering on the New York Stock Exchange. The IPO, according to Hurun Rich List 2014, helped Ma replace property tycoon Wang Jianlin, chairman of Wanda Group, as the richest man on the mainland.

Alibaba leads China's Internet business, together with Baidu and Tencent, because of its business strategies that exploit the latest Internet trends such as the C2C (consumer-to-consumer) model. But Alibaba is only a follower, not the pioneer, of C2C in China. Therefore, it remains to be seen how long Taobao, the largest C2C online shopping website started by Alibaba, and Alipay, the third-party online payment method, can maintain their edge in this fast changing Internet era.

True, more people will turn to online shopping. But many commodities and services still cannot be traded on the Internet, which could become a big factor restricting Taobao's and Alibaba's further growth.

And given that Taobao and Alibaba neither have a management model nor expertise that cannot be duplicated, the possibility of some of their competitors catching up cannot be ruled out.

Besides, Taobao, which to a certain extent squeezed out traditional real retail stores, has benefited from the government policies adopted to support e-commerce. But then the government could adopt other policies and measures to impose higher tax on online stores to protect real retailers.

These, if true, will squeeze the space for Alibaba's growth.

The rise of Taobao and Alibaba can be attributed to the extensive management model of e-commerce in the country, but this is sure to change in the future as part of the efforts to better regulate the sector.