Jack Ma: Free trade a human right, small firms need more help

Suggesting a need for "WTO 2.0", Alibaba's founder Jack Ma urges global efforts to focus on providing more support for small businesses to conduct international trade online.
Written by Eileen Yu, Senior Contributing Editor

Governments and large enterprises can do more to help smaller businesses globalise, making it easier for them to trade with consumers via the internet.

Alibaba's founder and chairman Jack Ma said globalisation, over the past 10 years, bolstered economies and provided tremendous growth for big organisations and developed countries. Developing nations, however, did not benefit enough from it, said Ma, during his speech at the APEC CEO Summit 2015 this week in Manila, the Philippines.

Stressing the need to support these economies and small businesses, he suggested a need for a new WTO (World Trade Organisation) or what he coined, "WTO 2.0 or eWTO", in which trade agreements should be formed between businesses, rather than governments, so political considerations would not come into play.

Ma said: "Free trade is the best tool to help people understand each other. Trade isn't about the trading of products but of culture, passion, innovation, and creation. Regardless of the country or size of the company, trade is about freedom. Trade is a human right. It shouldn't be used as a tool against other nations."

Noting that the WTO over the past two decades had provided much support to major companies, he said its efforts for the next 20 years should now be focused on "the small guys", which he believed provided the most innovation.

He related how Alibaba had faced much scepticism during its early days some 10 years ago, when it sought funds from venture capitalists who pointed to China's poorly developed e-commerce market. The country then lacked proper banking, logistics, or infrastructure to support the ecosystem.

China, however, progressed rapidly with the emergence of the internet, eventually building an infrastructure that was robust and sophisticated. Pointing to how the Chinese e-commerce market had since surpassed the US, Ma said: "In the US, because there was Walmart and Kmart and other retailers, e-commerce was like just a dessert. In China, e-commerce had become like the main course."

This year, Alibaba's sales in China alone are about US$500 billion, which is almost on par with Walmart's. During the recent Singles Day shopping festival, Alibaba sold US$14.5 billion worth of goods, processing more than 600 million packages and taking orders from consumers in 200 countries. According to Ma, it had to slow down sales in the afternoon to prevent China's logistics network from crashing.

Each day, 120 million shoppers buy from Alibaba's e-commerce sites via their mobile, browsing a catalogue of 1 billion products. The founder said he would like more SMBs including those from other nations to tap the company's platform to sell and communication with customers worldwide. "We believe if this model can work in China, why can't it work in other countries," he said, noting that Alibaba was created to provide an online platform on which any merchant can trade.

Stressing again the role of global trade, he added: "WTO [currently] is [about establishing] an agreement between governments, [but] a real trade treaty should be about an agreement between businesses. The businesses agree, and the governments follow." Left to politicians, businesses would go nowhere because "governments hate each other", he said. "That's why we've been waiting for the DOHA Round for so many years."

A next iteration of WTO, or WTO 2.0, could better drive support for smaller organisations and enable small businesses in any nation, such as Africa and Norway, to cross-trade, he added. Governments, for instance, could help by not collecting taxes from companies that sell less than 1 million euros into their country.

"People say it would be too complex and require too much negotiation between governments. I say let's just do it online first," Ma urged. "If we had negotiations with other governments, it would go nowhere because no one would agree with each other."

"We have to build a world that's more transparent, more inclusive, more caring of others and that empower others. I believe in trusting and empowering the younger generation because we're entering a world that should be innovative."

Philippine startup gives light from seawater

At the APEC CEO Summit, Ma also joined a panel discussion moderated by US President Barack Obama and included fellow panelist and Filipino engineer, Aisa Mendejo. Together with her brother, Mendejo founded sustainable energy startup, Salt, which developed a lamp that generated power from saline or seawater. A glass of water and two tablespoons of salt are sufficient to power the lamp for eight hours, according to the company's website. Containing no flammable materials, the lantern taps Galvanic cell--the basis for making batteries--and can be used also to charge low-power mobile devices such as smartphones.

Mendejo was inspired to seek a safe, cost-effective, and sustainable lighting alternative after watching Buscalan villagers, residing among the mountains of Kalinga, trek six hours just to access kerosene to power their traditional lamps. The Philippines comprises more than 7,000 islands, most of which have no access to electricity.

Obama noted the role of governments, particular in the early stages of development, in providing tax incentives for the production of clean energy. The development of solar energy, for instance, initially relied heavily on subsidies, but these became less necessary when the cost per BTU reduced significantly over the past several years.

He added that while most businesses had dedicated budget for R&D (research and development), these were mostly focused on commercialising relatively proven technology. "Governments can help with front-end basic research that doesn't necessarily have immediate payoff, but serves as a laboratory for young people to discover new ideas," Obama explained.

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