The B2B eMarketplace: Empowering your SME Members

6th World Chambers Congress Kuala Lumpur, Malaysia June 2009

All About SMEs!

SMEs are the engines of growth around the world
Big SME* market In China : 42 million SMEs In Europe: 23 million SMEs In US: 22 million SMEs

Critical to global economy and trade

In China: 58% of GDP, 68% of import and export volume, 75% of employment In Europe: over 50% of GDP, 60% of employment, over 100 million jobs

In US: over 50% of GDP, 67% of export volume, 67% of employment

* SME means all employer firms, self-employment nonincorporated and incorporated.

The Importance of SMEs in Developing Countries

Contributing in many ways to the economy
Engine for job creation;

Positive role in poverty alleviation;

Cover almost all (productive) sectors; Are a main source for new products; Diversify the economy and introduce flexibility

Enterprises in Developing Countries in Ecommerce

eCommerce remains limited in developing countries.

Source: UNCTAD Information Economy Report 2007-2008

How online are European SMEs?

And while a majority of European SMEs are connected, and most even have their own websites. . .

Business use of the Internet and websites, as a percentage of businesses with 10 or more employees Source: OECD Science, Technology and Industry Scoreboard 2007 http://dx.doi.org/10.1787/118144527771

European Enterprises in e-Commerce

. . . most are still not fully utilizing the power of the internet to promote themselves and products

In the EU, on average, only 15% of enterprises receive the order online, and 23% purchase online.
Source: UNCTAD Information Economy Report 2007-2008

Crisis or Opportunity?
With the recent downturn an Alibaba survey shows that this recession will serve as a catalyst for economic revival. . .
75% of Americans surveyed believe new
entreprenuers and SMEs will be the key to economic revival 4 out of 5 considered starting their own business 44% who considered starting their own business said not understanding where to find the right suppliers was the top reason for not moving forward

. . .and those who embrace disruptive technology, will survive and thrive while those who do not will die

Traditional Sourcing Work Flow

With the internet, B2B sourcing and selling is much easier

Search/ Discovery

Evaluate

Negotiate

Transact

Average sourcing cycle: 3.3 4.2 months

52% of time spent searching
for/identifying appropriate suppliers 18% of time spent on RFQ development/ RFQ response Traditional Sources of Supplier Information
-Referral (colleagues, associates) -Trade shows -Industry magazines, trade journals -Industry associations -Trade directories -Existing suppliers

20% of time spent on

screening/sorting proposals 10% of time spent on contract negotiations

Source: The Aberdeen Group

A new gateway to global trade

The advent of eMarketplaces has helped to address many of these issues Challenges
Lack of foreign market knowledge

Solutions
Online market research User forums/knowledge sharing Robust global online company database On-Offline partnerships (tradeshows,
buyer-seller matching events)

Lack of confidence in doing international trade

Public-Private partnership (TPOs/TPAs) Cost effective online marketing tools Low cost communication tools
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Limited capital and resources

Alibaba.com B2B

Alibaba.com B2B Marketplaces | Anatomy of the Marketplace

Suppliers
International Marketplace Facilitates global trade between China and international suppliers and buyers 8 mm registered users as of Dec 31, 2008 59,000 paying customers as of Dec 31, 2008

Buyers

International SMEs

International Buyers

China SMEs

China Marketplace Facilitates domestic trade between China suppliers and buyers 30 mm registered users as of Dec 31, 2008 372,000 paying customers as of Dec 31, 2008

China Buyers

Services / Products to suppliers

Keywords & premium placement Third-party authentication & verification Trust profiles info

Community + Marketplace platform

Close to 4.2 mm storefronts of suppliers Instant messaging Trade negotiation Over 200 online community forums for user groups

Services / Products to buyers

Search Directory Inquiry RFI/RFQ forms Post buying leads Tools to manage CRM and
trade info

Tools to manage CRM and trade

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Alibaba.com B2B Marketplaces | Two Major Components of Alibaba.com

1. Marketplace 2. Community

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Alibaba.com B2B Marketplaces | International Marketplace

Key features on product listing page:
1. Search Engine
Keyword Search Product Category

2. Supplier/Product Information
Company Products Company Profile Company Video

2. Value-Added Services (VAS)

Keyword Search Premium Placement Virtual Showroom

4. Real-time Communication & Inquiry

Trade Manager Email

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Global network at your fingertips

A truly global network for importers and exporters of mechandise, finished products, component parts and raw materials
Manufacturers Trading agents Export Alibaba e-marketplace Global Buyers

Manufacturers Import Trading agents Retail shops Alibaba e-marketplace Global Suppliers

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Alibaba.com B2B Marketplaces | International Marketplace

More than 8 million users have registered on Alibaba international B2B marketplace. US, India, Europe (excluding UK), China, UK and Canada are the key countries that the users come from
United States, 16%

India, 11%

Others, 51%

European Union (excluding UK), 9%

China, 7% United Kindgom, 5% Canada, 2%

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Alibaba.com B2B Marketplaces | Key Operating Metrics

# of Registered Users
000 MM
40 35 30 25 20 15 10 5 0

# of Storefronts
4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0

4,600 2,957 2,073 640 2004 1,295 2005 2006 2007 2008

38.0 27.6 19.8 6.0 2004 11.0 2005 2006 2007 2008

# of Paying Members
000 400 300 200 305.5 100 219.1 141.6 2005 2006 2007 2008 432

#1 E-Commerce (Marketplace) Website #1 International Business & Trade Website (Import and Export in China)

77.9
0 2004

Note: 1. Company data as of Dec 31, 2008

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Complementary strength of Alibaba with TPOs and trade associations/chambers

Combining the core strengths of chambers/associations with the marketing reach of an eMarketplace creates new opportunities for members

Key Success Factors of SME online promotion

Associations/ Chambers

Alibaba

Size of global buyers and suppliers

Global Reach

Traffic (critical mass on the B2B emarketplace)

Cost effective marketing channel Local language and culture

Local Knowledge

Understanding of local trade policies Local database of SMEs Deep domain expertise in intl trade Internet technology (website, search,
SEO, etc.)
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Trade knowledge Technology Skill 17

practices, laws and regulations Broad offline network

Practice Sharing Trade Association program in Korea

Partner: Korea International Trade Association (KITA: www. KITA.org) A major business association in Korea with over 65,000 members Partnership Model: KITA and Alibaba.com jointly provide KITA member SMEs with a special package which include Alibaba.com International TrustPass membership and KITAs tradeKorea e-portal. Each SME would be eligible to a subsidy which could only be used against subscribing value-added services to facilitate their listing, such as Korean-to-English translation services. Educational courses on e-commerce and online marketing would also be provided to participating companies for their better utilization of the Internet and Alibaba.com.

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Practice Sharing TPO program in Taiwan

Partner: Taiwan External Trade Development Council (TAITRA, www.taitra.org.tw) A non-profit trade promotion organization in Taiwan which is jointly sponsored by the Taiwan government, industry associations, and several commercial organizations Partnership Model: Alibaba formed partnership with Taiwan Trade Association, and provide for Taiwan SMEs a bundled package which includes membership of both Alibaba.com Gold Supplier and TAITRAs Taiwan trade e-Portal. Those who joined the bundled membership would get a NT10,000 discount off the original total price of the two memberships. Alibaba and TAITRA also jointly host road shows and seminars to help SMEs breakthrough in the downturn of intl trade situation.

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Practice Sharing Government support program in Turkey

Partner: HRACATI GELTRME ETD MERKEZ (IGEME) IGEME is the government run Export Promotion Center for Turkey (http://www.igeme.org.tr/indexe.cfm - in Turkish) Partnership Model: IGEME approved Alibaba on a list of B2B marketplaces that are all qualified for subsidies. Provided you submit the necessary paperwork, IGEME will reimburse you 50% of the membership fee (up to an amount I think of US$3K). SMEs can apply for multiple memberships from different websites until they reach the cap.

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Practice Sharing Government subsidy program in Chile

Partner: Country of Chile Partnership Model: The program with the Chambers of Commerce of Santiago in CHILE is a 3-way deal to be complete by mid-June.

The Chambers of Commerce will work with the Yellow Pages of Chile to compile and provide Alibaba.com with the database of Chilean products. The Chamber of Commerce provides excellent data control and legitimacy in the SME field, and already has the dataset of companies in Chile with product references. The Yellow Pages Company will provide support through their massive outreach program to encourage the integration of additional products to the Chambers Database by SMEs.
Overall about 30,000 companies and 120,000 products are expected to be presented within the program.

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Practice Sharing Government subsidy program in Washington, US

Partner: State of Washington, United States Partnership Model: Individual States in the US have created economic development organizations to promote direct investment as well as companies within the State itself. The logic is simple and practical: the more revenue made by companies within the state, the more tax revenue these companies will be able to generate. The State of Washington is aware of their states value as a brand, and the need to support as well as develop this value to promote commercial activities, which is what the State Your Product program hopes to accomplish. Alibaba.com provides the State of Washington an opportunity to promote their companies via the Transfer Express product integration process to help them bolster the impact of Washington State companies in the global marketplace.

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Practice Sharing The World Chambers Network

Partner: As part of the ICC, the WCN portal officially links the virtual online commerce space to the dynamic and only truly global physical business network of over 14,000 registered Chambers of Commerce and Industry (CCI) that in turn represent over 40 million member businesses worldwide. Partnership Model: Alibaba and the WCN today announced an MOU to cooperate on a number of activities and projects including but not limited to the promotion of WCNs members on a global basis on the Alibaba marketplace, exchanging relevant trade information between the two parties and explore the possibility of increasing the level of trust within the communities by exploring collaboration with Chamber Trust for WCN and Trustpass for Alibaba.com

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Thank you!

brian@alibaba-inc.com

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