Alibaba offers reinsurance, working capital for customers

COMPENSATION is available for buyers under a Trade Assurance programme now being offered by China’s e-commerce giant, which has also unveiled a venture with alternative finance provider Capify to provide
short-term working capital for its customers . . .

WITH 1.9 million buyers based in Australia, China’s e-commerce giant, Alibaba, launched two initiatives in July to support its suppliers financially.
An upgraded version of its Trade Assurance programme, a free service designed to give businesses peace of mind when buying from overseas suppliers, was unveiled in Sydney during a visit by Alibaba’s head of Business
Development and Marketing, Michael Mang.
Mang told ATI that the most critical factor in doing business online is trust. Without that, he says, business will not be done.
“Under the Trade Assurance programme, Australian buyers through Alibaba.com will be protected if anything goes wrong with the transaction. They will be compensated. “We cover a transaction from US$2,000 up to US$500,000. Alibaba Group is providing the guarantee out of its corporate account.”
Mang also unveiled what he terms an innovative collaboration with Capify (formerly Ausvance), Australia’s leading alternative finance provider, to provide short-term working capital.
Together with Capify, Alibaba-com can offer buyers working capital up to $400,000 through the Alibaba.com e-Credit line.
“We want to making financing as accessible and efficient as possible for  Australian SMEs that do business through Alibaba.com,” says Mang.
A decision based on an automated credit-scoring model will be made by Capify within 60 seconds of applying allowing borrowers to obtain a line of credit from US$5,000 to US$400,000.
Business can expect to use the approved line of credit to make multiple drawdowns to finance purchases, and to repay with small daily micro repayments or weekly repayments over 12 months. Mang told ATI that payment is then made directly to a supplier for purchases on Alibaba-com.
Alibaba.com has similarly formed partnerships with ezbob and iwoca  — both online alternative funding platforms — in the UK to help British SMEs access trade finance.
It has also formed a strategic alliance with the leading US crowd funder, Lending Club, to provide exclusive point-of-sale business financing of up to US$300,000 for Alibaba.com’s millions of US business buyers. The US is Alibaba’s largest market, and the UK and Australia among the top markets.
“We see the key challenges for e-commerce going forward as trust, finance and logistics — TFL we call it,” he told ATI.  
The first thing is trust, and our Trade Assurance programme will help us build trust between our buyers and suppliers. It gives them the certainty that they will be paid or get their money back if a transaction goes wrong.
Finance is another area, hence the collaboration with Capify. “We understand the pain of SMEs when capital is lacking. Quite often, they are not able to raise money from their banks and they do need new sources of funding.”
On logistics, he says that, to provide more efficient services to its cross-border buyers,
Alibaba is looking to form joint ventures with logistics companies. “In doing so, we hope to give our users a wider choice of logistics operators.”
However, the plan is still being drawn up, and Mang is unable to say who the partners might be. A decision is likely later this year, or in early 2016.
“If our TFL can run smoothly, there will be a lot more acceptance from businesses using online transactions,” Mang says.
Of the 1.9 million Australian users, he estimates that 80 per cent are for B2B transactions. These SMEs, and even sole proprietors, import furniture, apparel, machinery, electronics, packaging materials and so on.
Mang explains that, in the early days of e-commerce, most B2B business was between Chinese manufacturers and the global market. Increasingly, global buyers are sourcing through Alibaba.com products from India, Vietnam, and other countries.
Now, Alibaba is looking to Australia to source niche products to offer its huge user base. Mang visited several small Australian winemakers during his visit to source products.
Using a business to business (B2B) model, Alibaba subsidiary 1688.com is already connecting exporters in Spain to retailers in China (phonetically translated, 1688 means Highway to Prosperity.
As well, Mang is looking to source Australian fresh produce. “We will not be making the imports ourselves, our role is simply to connect importers and exporters,” he says.
Alibaba.com and its sister site, 1688.com (in Chinese language only) have been offering business-to-business online transactions for some 15 years. Mang says that, over that period of time, the company has built up a huge database on all its customers.
The database provides a history of transactions and payment patterns, or problems, of users. Alibaba has come to understand what its users look for in terms of services and
support, he says.