Jack Ma: One of the Major Investor in Indonesia is Laying Low

by | Feb 10, 2021 | Study Insight | 0 comments

A story of Jack Ma, his investment in Indonesia, and his current disappearance.

Source: Yicai Global

Jack Ma had been missing since October 2020 and was reported off the radar by several Chinese run media outlets. Surprisingly he made an appearance in a video published by Chinese state media in January 2021. He has been laying low after reports speculating about Jack Ma’s whereabouts. Apart from the news that reported Ma is missing, he is now the richest person in China and ranked 20th among the Forbes’ wealthiest people in the world. Ma’s influence in Indonesia makes a lot of things connected to his Alibaba Group in the loop.

With Ma’s influence, e-commerce policy will remain unclear as the government has yet to disclose his job description. But there are things we can expect such as lifestyle change in shopping, focus on small and medium enterprises (SMEs), and investment in Indonesia’s e-commerce transactions are to triple to US$24.6 billion this year from 2013 and Ma is expanding his presence in and partnerships with Southeast Asia.

The exponential growth of technology leads to many emerging tech companies around the world. Numerous tech companies were born and competed to keep growing to dominate the global market. One of them is China’s Alibaba Group. Founded in 1999 as core commerce, the company has expanded rapidly and serves several business segments such as financial technology, cloud computing, digital media and entertainment, financial technology, innovation initiative, and others (Forbes, 2021). Its founder, Jack Ma, expanded his business by investing in several major companies, not only in China but in several countries including Indonesia. Jack Ma made several investments in the countries. Keep reading to learn the reasons why one of the biggest tech companies is so interested in investing in Indonesia. 

Alibaba Group as Biggest E-commerce Platform

Alibaba is the world’s biggest e-commerce platform. People scooped up approximately USD 420 million, with an amount of USD 485 billion worth of stuff last financial year on Alibaba’s sites. The corporation went public in 2014, raising USD 25 billion — over than Facebook — within the most extensive offering in the new york stock exchange history. 

Alibaba, as the commerce platforms, is about though the majority of its transactions are generated domestically. At its heart is Taobao, a Chinese consumer-to-consumer website very similar to eBay. Then, there is Tmall, which offers merchants official storefronts to consumers in China. The last one is Alibaba.com and AliExpress that connect businesses in China with buyers worldwide (Billboard, 2016).

Now Alibaba may be a huge eCommerce success that grows, and it reaches in revenues annually (that’s USD 54 billion) (The Street, 2020). Alibaba has their decision to expand and continue building its e-commerce empire has undoubtedly proven successful.

It reported in March 2020, quarterly and yearly fiscal earnings showed revenue growth of 35% year over year (YoY), which was bolstered by its cloud computing and retail businesses. Some of the significant well-known subsidiaries of Alibaba include:

Taobao

Taobao (or named Taobao Marketplace) uses the power of technology to supply consumers access to personalized shopping experiences that can preferably be sometimes unavailable.

As the largest Alibaba’s business line of so many subsidiaries, Taobao focuses on consumer-to-consumer (C2C), which incorporates a thriving social community where consumers can interact with one another and merchants on a more personal level.

Consumers can live to stream their shopping, directly chat with a seller, and share their recent purchases, all of which help to spice up engagement on Taobao’s site.

This combination of unique social engagement and e-commerce has contributed to Taobao’s success and helped launch the Alibaba group of companies to some pretty stellar revenue for the financial year ending in March 2020.

Tmall

Whereas other subsidiaries of Alibaba specialize in smaller businesses, Tmall may be a B2C

e-commerce platform for consumers to get high-quality products from brands that have been established, including products that aren’t even available in brick-and-mortar retail stores. Brands can find out “storefronts” in Tmall (that accompany a fee) during which buyers can engage during a premium shopping experience, likened to the way shoppers peruse through a high-end mall.

Another Alibaba subsidiary and offshoot of Tmall called Tmall global, which allows international brands to promote to the Chinese. For brands looking to open on Tmall a storefront, it must be ready to pay the pricey registration fees. But when the brand is established, brands can begin marketing and selling from their Tmall storefront.

Ant Group

Ant Group started in 2014 as to how to manage Alipay, a digital payment service employed by Chinese consumers. As one of Alibaba’s subsidiaries, Ant Group offers financial services to consumers and small businesses, many of which can be underserved.

These services include a variety of digital options like payment services and lifestyle services.

Global partners as the collaboration, Ant Group strives to innovate financial services. it’s pursued such initiatives as blockchain, contributing to its ubiquitous use, which incorporates over a billion users. It was recently announced that Ant Group is planning a dual IPO in Shanghai and Hong Kong, with the set at USD 200 billion.

However, Jack Ma is proved one of the richest businessmen in the world. He succeeded in expanding his business to varied countries, including Indonesia. Until September 2019, Lazada, Tokopedia, J&T Express, and TrueMoney became Jack Ma’s companies in Indonesia (VOI, 2021).

Indonesia’s E-commerce Industry

Indonesia has a promising e-commerce industry for foreign investors. The country has a burgeoning consumer market riding on the growing accessibility of mobile internet in the country and has more than 130 million internet users. Indonesia is also known as Asia’s foremost mobile-first nation and offers retailers a unique opportunity to dominate its online retail market.

Indonesia’s Information and Communications Technology Ministry expects the country’s e-commerce market to grow to USD130 billion in 2020, with the recent shift in consumers’ spending patterns towards online purchases. Shopee, Lazada, Bukalapak, and Tokopedia are the leading general e-commerce websites in Indonesia. The government of Indonesia recently opened up the sector for foreign investment, to focus on the development of the e-commerce potential of the country.

Alibaba Group emphasized it wants to expand in Southeast Asia and Indonesia is the main target for the Alibaba Group. The e-commerce industry of Indonesia is expected to develop strongly considering the rapid growth of Indonesia’s internet and smartphone penetration. Indonesia’s online marketplace was valued at USD 5.3 billion in 2016. Ma’s position as Alibaba Group owner takes this as the opportunity to take part in the Indonesian e-commerce market. 

Jack Ma’s Investment in Indonesia

Tokopedia Shareholder

Tokopedia announced the acquisition of an investment of USD 1.1 billion on 17 August 2017. Alibaba aims at developing its wings in the country and Tokopedia is one of the e-commerce companies to invest in. The investment round was led by the Alibaba Group and made Alibaba one of the shareholders in Tokopedia. This collaboration is believed to make the Tokopedia sellers and partners expand their business to all regions in Indonesia easier. 

Major Shareholder in Lazada

Besides investing in Tokopedia, Ma acquired 67% of Southeast Asia-based Lazada for USD 1 billion in April 2016. This acquisition makes the company as majority shareholder in six countries including Indonesia. Alibaba’s added a capital injection to Lazada Group with a similar value while the business scope resumed in June 2017. Alibaba provided USD 2 billion for Lazada Group in the Southeast Asian market. 

Alibaba also injected USD 2 billion in March 2018, so that makes Alibaba’s total investment reached USD 4 billion in Lazada.

Collaboration with J&T Express 

The business movement is targeting the logistics company, J&T Express. Alibaba and J&T Express collaborated in May 2017 to produce a subsidiary of J&T Alibaba. However, J&T Express is only a partner of Alibaba, not a logistics partner. J&T Alibaba focuses on SMEs in furniture, agriculture, handicrafts, food, and beverages.

Electronic Money Services, True Money

Alibaba founded Ant Financial which was officially founded in 2014 in the financial technology sector. This company operates a payment service owned by Alibaba, named Alipay. Ant Financial briefly provided funding to the company Ascend Money in November 2016, which is the parent company of the electronic money service True Money. The company itself has been present in Indonesia since September 2015 after acquiring the owner of an e-money license in Indonesia, Witami Tunai Mandiri.

Alipay

Ant Financial as the manager of Alipay, merged with the HelloPay Group in 2017, which incidentally is Lazada’s online payment service. After the merger was carried out, HelloPay changed its name to Alipay with the following name of the country where it operates, such as Alipay Indonesia, Alipay Philippines, Alipay Malaysia, and Alipay Singapore.

Indonesia Government Plan for Hire Jack Ma

Jokowi, as President Indonesia, expressed his hope for a giant e-commerce firm to increase its investment in Indonesia (Jakarta Post, 2018). This is regarding Alibaba’s commitment to Indonesia as an adviser e-commerce steering committee to prepare Indonesia’s program with the government.

Help Prepare Reliable Digital Economic Resources

At that time, Indonesia’s Coordinating Minister for Economic Affairs, Darmin Nasution, said that the government of Indonesia and Jack Ma were finalizing the design for the development of digital economy human resources. According to Darmin, capital and human resource (HR) capacity are the keys to facing the digital economy era. Indonesia is also developing Industry 4.0, which relies on technological developments. This requires Indonesia to prepare reliable digital economic resources (Bali IDN Times, 2021).

Increase Indonesia’s exports to China through Electronic Commerce

Indonesia’s Minister of Communication and Informatics, Rudiantara, in a meeting with Alibaba Group founder Jack Ma, also discussed strategies to increase Indonesia’s exports to China through electronic commerce. During the meeting, Ma did not represent the Alibaba Group but his capacity as an advisor to the steering committee.

Alibaba Group-owned shopping site Taobao has agreed to help market Indonesian products for Single’s Day on November 11. Single’s Day is an annual online shopping day initiated by Alibaba. With a value for money, Single’s Day is an annual online shopping day created by Alibaba, with the value of money spent by consumers reaching USD 25 billion in 2017. During the Chinese online shopping day dedicated to single people, a promotional video by Indonesia President Joko Widodo and several Indonesian products will be played on the Alibaba Group electronic commerce site (Bali IDN Times, 2021).

Plans to Open an Institute of Tech Entrepreneurs

Jack Ma as the founder of Alibaba, also plans to open an institute to train thousands of tech entrepreneurs in Indonesia, where he is already an adviser to the government on e-commerce. Jack Ma never says when the Jack Ma Institute of Entrepreneurs would launch, but he said the aim was to train 1,000 tech leaders a year over the subsequent ten years (Bangkok Post, 2018).

Invest and Expand Your Business to Indonesia with BRIGHT Indonesia

With Indonesia’s big trends opportunity in the e-commerce sector, it is potential for foreign investment. In BRIGHT Indonesia, we can give a solution for global companies that want to invest and expand their companies in Indonesia/entering the Indonesian market. BRIGHT Indonesia can assist your business development in Indonesia. 

We focus on supporting private sector clients with the development of corporate or business unit strategies and helping public sector organizations with public policy. We partnered with various leading organizations in the industry to provide the best solution for your market entry strategy. For further information, email to info@brightindonesia.net.  

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