The Business Expansion of Alibaba Group to Indonesia

  ABSTRACT:Expanding business operations to other countries or foreign countries is a strategic agenda for many companies. This is because expanding abroad has significant implications for maximizing the growth of the company’s business. Alibaba Group Holding Ltd is one of the multinational corporations that is currently rapidly developing in the digital business (ecommerce) sector. Alibaba Group is actively expanding its business operations in various parts of the world. The European and American regions have successfully become the target of their expansion. Since 2015, Alibaba Group has started to expand its business operations network to the Asia-Pacific region. Interestingly, Indonesia has become their main target market for ecommerce in the AsiaPacific region. Alibaba Group has developed a series of aggressive expansion strategies to initiate its expansion into Indonesia. These strategies include investing in Lazada and Tokopedia’s stock, totaling up to US$6.2 billion, making it the largest business expansion abroad (Crunchbase, 2019). Making Indonesia the largest business expansion destination holds a unique value for Alibaba. This is because in 2015, Indonesia’s e-commerce market only accounted for 0.6% (Singapore Post, 2015). Furthermore, the logistics infrastructure to support ecommerce business in Indonesia is still considered weak and limited (Supriyadi et al., 2016). Alibaba Group has many options of countries in the Asia-Pacific region that have a much larger e-commerce market, which is above 5% and supported by better logistics infrastructure and e-commerce ecosystem, such as Japan, South Korea, and Australia. Therefore, the question that arises in this research is: “Why did Alibaba Group decide to expand its biggest business to Indonesia?”.

KEYWORDS:Alibaba Group Holding Ltd, e-commerce, Lazada, Tokopedia, Indonesia, China