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B2B firms prosper despite slowdown
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The global financial crisis has hurt almost every business, but not Alibaba.

China's online business-to-business (B2B) giant now employs 17,000 people and plans to hire another 5000 this year, according to spokesman John Spelich.

The company handed out "better-than-expected" year-end bonuses and has promised to raise salaries in 2009. While many companies are looking for a bailout, Alibaba boasts cash reserves of US$892.2 million and no debt.

Founded in 1999 by Jack Ma, a former English teacher, Alibaba has grown into the leading on-line marketplace for small and medium-sized companies. It identifies potential trading partners and enables them to do business online.

The company is headquartered in Hangzhou and has offices in more than 30 cities in China, as well as in Europe and the United States.

While many conventional businesses are struggling, Alibaba and other B2B outlets are thriving. The reason, in a word, is economy.

"To cope with the crisis, manufacturers have to cut human resources and other costs as much as possible, without sacrificing assets they will need when their business revives," explained Xiang Xiaoshan, an Alibaba customer manager in Foshan, Guangdong Province.

Xiang just brokered a US$44,000 deal with a steel producer whose regular customers canceled their orders. Online trading is the fastest and most economical means of dealing with overstock inventory, he said.

Other B2B platforms are also thriving. China Network Library plans to hire another 500 associates in anticipation of market growth, according to president Wang Haibo.

"Sooner or later, China's millions of SMEs (small- and medium-sized businesses) will adjust to market conditions and increase production with the help of e-commerce," he said.

Still, some manufacturers resist doing business online.

Jin Jian, a fashion designer in Guangzhou, says that some of the garment makers he works with don't trust online transactions.

"B2B platforms have got to improve their credit-rating systems so as to eliminate dishonest merchants," he said.

Delayed payment is also a problem, according to Jin. Orders from overseas typically pay 60 percent up front, with the balance paid upon delivery. However, domestic orders often pay only 30 percent up front, 30 percent upon delivery, and the balance when the products are sold.

"I hope B2B can speed up the flow of capital and make it more secure. That would help persuade more enterprises to get involved with e-commerce," he said.

(China Daily March 9, 2009)

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