Why Jack Ma & Alibaba (NYSE:BABA) Want to Create One Million U.S. Jobs

- January 9, 2017

Alibaba Group Holding Ltd (NYSE:BABA) CEO Jack Ma spoke with President-elect Donald Trump on Monday about “how” Ma and his company Alibaba can create one million new jobs. The details from this meeting were kept private, although the company did issue the following statement:

Alibaba will create 1 million U.S. jobs by enabling 1 million American small businesses and farmers to sell American goods to China and Asian consumers on the Alibaba platform.

As we all know, trade agreements between the U.S. and China have always been complicated. Many of America’s largest most successful tech companies, like Facebook, aren’t even allowed to operate in China.

Trump hopes to change that, and having Ma on his side is a big plus. After all, there’s no doubt that Ma has some serious weight when it comes to politics in China.

How to create one million jobs with Alibaba

baba-stock-secret-weaponNonetheless, the plan is simple. Alibaba Group Holding will let American businesses sell their goods to China and Asian consumers via Alibaba’s platform, and the effect on that increased output will be one million jobs.

According to Alibaba, its China retail marketplaces “contributed to the creation of over 15 million job opportunities”. In theory, if American businesses can create enough Chinese commerce to hire one million people, Alibaba’s Chinese business would still be 15x larger than its U.S. business.

With that said, it sure would be nice to have been a fly on the wall of that meeting, because making this happen will require political cooperation on both sides and solving some rather tough problems.

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For one, why would Chinese consumers buy American made products? Don’t American companies outsource jobs to China because it is cheaper? Hence, when you talk outsourcing American made products to China, there is no question the costs are going to be much higher for Chinese consumers. Therefore, what’s the benefit for Alibaba Group Holding?

Jack Ma is looking out for BABA stock

alibaba-stockJack Ma may be acting as an ambassador for China commerce, but to sell his vision to Trump there must have been some promises involved, and also a trade of sorts. One has to wonder what that may be.

One guess is simply growing the Alibaba name among U.S. consumers and businesses. You have to believe that Jack Ma sees Amazon.com (NASDAQ:AMZN) and its valuation, and realizes that BABA stock should be trading at double its current price, or even triple. Don’t forget, no company is larger when it comes to gross merchandise volume.

Therefore, With far more GMV than Amazon.com, a far larger investment portfolio than most investment banks, and plans for a massive Ant Financial IPO later this year, Jack Ma is smart enough to realize that making Alibaba a household name in the U.S., is good business for BABA stock price.

Ultimately, that is what Jack Ma is likely trying to accomplish, and will accomplish with Trump in charge. For BABA stock owners, the one hope is that Alibaba and Jack Ma does not have to give up too much to make it happen.

 

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