Chinese ‘Digital Free Trade Zone’ gives Alibaba big advantage in Malaysia

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Concerns have been expressed that the new Chinese ‘Digital Free Trade Zone’ will unfairly advantage ecommerce giant Alibaba, especially with regards to trade with Malaysia. In particular fears centre around worries that the Chinese behemoth will swamp smaller Malaysian concerns when the trade area is opened up and Alibaba will enjoy a near monopoly online.

What is the Digital Free Trade Zone (or DFTZ)?

It’s an infrastucture project between China and Malaysia that includes an official belt and road investment, as well as an electronic platform, which is designed to ease trade between Malaysian and Chinese firms. The DFTZ is designed to make cross-region shipping quicker and more affordable for Malaysian small and medium-sized companies seeking to tap into the Chinese market. But critics fear that the Alibaba backed scheme will give them the advantage and also mean that other firms, such as Amazon, can’t get a toehold in the South East Asia region.

The digital marketplace will launch in 2019 and he virtual platform will connect businesses, enable trade, manage cargo administration and assist with customs. A warehouse facility in the Malaysian capital Kuala Lumpur will also help with logistics and fulfilment.

What Alibaba says about the DFTZ

Alibaba denies that they will enjoy a near monopoly because the DFTZ is open to all businesses who want to trade in the region:

This platform is open to any company willing to similarly make their own investment of money and resources to develop the necessary infrastructure, and embrace a public-private partnership model to foster more cross-border trade in Malaysia and elsewhere.
– Alibaba spokesperson

And the Malaysian government agrees there is scope for wider involvement and is keenly seeking more partners:

Alibaba was the natural private-sector partner to establish and kick-start this project, but we are engaged in discussions with several other ecosystem players as well and — in due course — our vision is to see more eCommerce players coming on board as partners to make the most of the DFTZ.
-Datuk Seri Salleh Said Keruak, Malaysia’s minister of Communications and Multimedia.

It will be interesting to watch how this endeavour develops but fears of Alibaba dominance are likely well made. Rather like Amazon elsewhere in the world, it does have an unerring ability to snaffle everything in its path.

2 Responses

  1. Amazon is too big to be stiffled. Between Amazon and Alibaba in the world it will come down to execution and customer services where Amazon will win that battle because Amazon s customer services are exceptional.

  2. Amazon is to big to be stiffled. Alibaba is losing market share in China to Tencent. In the international market the Chinese government can not protect Alibaba in the same way it has inside China at the expense of Amazon. International expansion will be a level playing field where Amazon will beat Alibaba and win. The reason the e because Amazon s execution and customer services are much better than Alibaba.

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