Following an almost $3 billion fine for Alibaba by Chinese regulators, can competing e-commerce firms in the region close the gap?
In the West, all of the up-and-coming e-commerce businesses — such as Etsy or Shopify — have one massive obstacle in their way: Amazon (NASDAQ: AMZN).
However, in the massive Asian market, Alibaba (NYSE: BABA) is the Amazon, but it’s just suffered a blow…
The door is open…
Back in December, Chinese regulators opened an anti-monopoly probe into Alibaba. On Saturday, that probe ended as China’s State Administration for Market Regulation (SAMR) found that its practices stifle competition in China’s online retail market and “infringes on the businesses of merchants on the platforms and the legitimate rights and interests of consumers.”
The result has been a $2.8 billion fine, which is a drop in the water considering it amounts to just 4% of Alibaba’s 2019 revenue. However, the fact that Alibaba is being regulated at all for its monopolistic practices — and punished — is good for its competitors in the region.
E-commerce in Asia is on the ascent, with a staggering projected growth rate of 8.2% between 2020 and 2025, ahead of the Americas and Europe’s projected growth of 5.1% and 5.2% respectively. In 2021 alone, analysts estimate the Asian e-commerce market to reach a value of more than $1.6 trillion.
This means that there is a large total addressable market, and Alibaba certainly doesn’t have unfettered access to dominate anymore. Along comes Sea Limited, Coupang, JD.com, and more. The biggest threat to these businesses’ growth has always been Alibaba, but with Chinese anti-competition watchdogs on the prowl, BABA will have to reign things in or risk monetary damages.
Don’t be surprised to see the competition begin expanding across the massive Asian market soon.
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