Ever since Jack Ma’s Alibaba took control of Lazada in a $1 billion deal last year, there’s been speculation about what the e-commerce titan might do next.
I think the natural choice is Daraz, an online store for Pakistan, Bangladesh, Myanmar and Sri Lanka, which encompasses a combined market worth $610 billion.
Here’s how acquiring Daraz fits in.
First, Chinese companies aren’t averse to following their government’s lead. McKinsey notes that “government policy continues to be the critical shaping force” of the economy, with the state “possessing levers” to dictate the pace of economic growth.
The government’s pivot to Africa is now several years old. But now China’s embarking on a much more ambitious project through which it wants to establish itself as the central hub of global trade. Dubbed “One Belt, One Road”, the project aims to build road and railway links from Chinese industrial hubs to European capitals via Central and South Asia.
An important part of this new Silk Road is Chinese investment in Pakistan, Bangladesh, Myanmar and Sri Lanka.
Lurking in these frontier markets of Pakistan, Bangladesh, Myanmar and Sri Lanka is Daraz. Alibaba officially doesn’t have a presence in these countries yet — they’re serviced by AliExpress.
If Jack Ma does decide to buy Daraz, it’s likely the value of the transaction would probably be in the range of $100 to $150 million. Daraz could be a significant coup for the self-made billionaire. With one swipe of his pen, he would have access to markets that are firmly on the priority list of his government. That’s a good way to maintain close ties with Chinese bureaucrats — and it makes business sense too.
This is an excerpt from Tech in Asia. You can read the full article here
This is an excerpt from Tech in Asia. You can read the full article here