Alibaba is offering manufacturers from Bangladesh the chance to promote their merchandise to overseas buyers via its platform for an annual fee. It is particularly focused on small and medium-size enterprises (SMEs), according to a proposal submitted to the Bangladeshi Commerce Ministry in Dhaka and seen by Nikkei Asia.
A wave of companies signing up to Alibaba from one of the world’s top garment producers would give the website a boost, while offering Bangladesh another channel to generate export earnings as it grapples with dwindling foreign currency reserves and a huge gap in its balance of payments.
“Alibaba wants to help promote products of Bangladeshi SMEs and submitted its proposal to us,” said Sayed Ali, a deputy secretary at the Commerce Ministry. “We have sent copies of the proposal to [business] chambers and associations seeking their opinions.”
The Chinese company has been operating in Bangladesh for two decades but so far has only around 160 companies supplying products through its platform. That compares with a total of 3,000 in neighboring Pakistan and India.
In what it describes as a “special package,” Alibaba is proposing that participating companies pay a $5,000 annual membership fee, if the number of newly listed suppliers reaches 30 or more. The fee will drop to $4,800 if 50 or more suppliers sign up, according to the proposal.
However, companies said at a meeting with the ministry on Feb. 16 that the charge was “very high,” and that they wanted to push for a discount, according to minutes of the event seen by Nikkei Asia.
Alibaba has offered to create a “Made in Bangladesh” page on its website to showcase goods from the country. Alibaba said its platform would help Bangladeshi companies gain “rapid access to nontraditional export markets, [as well as developing] a buffer to face the impact of recession, climate change and geopolitical reordering.”
It added that it would help Bangladesh become the “No. 1 apparel production and sourcing destination for e-commerce websites, retailers and online marketplaces across the world.”
In an emailed response to a request for comment from Nikkei Asia, an Alibaba representative said the company sees “great growth potential” for the business-to-business cross-border e-commerce market in Bangladesh, and that SMEs would have “a variety of options on membership packages.”
Apart from expressing concerns over the annual fee, representatives of many SMEs broadly welcomed Alibaba’s proposal at the meeting, which was attended by nearly 20 people.
“Alibaba is a [well] reputed site, and if it creates a separate page for Bangladesh to highlight our products, our small entrepreneurs will get a huge benefit,” said Mirza Nurul Ghani Shovon, president of the National Association of Small and Cottage Industries of Bangladesh.
There is no recent data available on the number of SMEs in Bangladesh, but analysts and observers said the figure must now be much higher than the 7.8 million SMEs recorded in a 2013 national census. At that time, such companies employed about 25 million people.
Bangladesh is the world’s second-largest apparel exporter, after China, with ready-made garment manufacturers contributing around a fifth of the country’s gross domestic product and more than 80% of its export earnings. Strong clothing exports are vital to Bangladesh as it struggles with falling foreign exchange reserves despite a dose of economic relief earlier this year when the International Monetary Fund approved a $4.7 billion loan program.
Some manufacturers noted smaller companies, which often operate as subcontractors for larger manufacturers, would have the opportunity to reach buyers more directly if they sign up with Alibaba.
“Since we are moving towards a digital and smart Bangladesh, the more we can be connected to digital platforms, [the more] our market access will increase,” said Shafiul Islam Mohiuddin, former president of the Federation of Bangladesh Chambers of Commerce and Industry.
“It’s a good sign that such a big player” is expanding in Bangladesh, Mohiuddin said. “[It] will enhance the business image of the country.”
Meanwhile, Mustafizur Rahman, a scholar with the local think tank the Centre for Policy Dialogue, said it was unclear how the proposed fee compares with Alibaba’s agreements with other countries. “A cross-country study needs to be carried out about the fees, facilities and conditions,” he said.
Source: Asia Nikkei
