Alibaba entry rings data alarm bells

Alibaba entry rings data alarm bells

Alibaba Vs Amazon who will win the global e-commerce war? The battle is just beginning. (Screencap YouTube/The Spoiled celebrity)
Alibaba Vs Amazon who will win the global e-commerce war? The battle is just beginning. (Screencap YouTube/The Spoiled celebrity)

In the world of business, everything that is "given" has to be paid for, one way or another. There's no such thing as a free lunch.

Take the example of the banking sector's recent waiver of online transaction fees. A number of major banks are hoping that offering free digital transactions for life will help them retain customers' data, allowing them to build long-term relationships with their clients and to more effectively cross sell services. As an added bonus, this scheme will help them keep data out of the hands of tech giants, a rising force in consumer banking.

Srisamorn Phoosuphanusorn is Business Editor, Bangkok Post.

This scheme will cost the banks billions of baht in fee revenues. But it will also help them save substantial amounts in expenses on operating tellers and bank branches while expanding their online customer bases.

Another example is Chinese e-commerce giant Alibaba's cooperation with the Thai government, promising to develop a smart digital hub in the Eastern Economic Corridor (EEC) and promote Thailand's tourism industry.

Alibaba recently announced its business model would enable Thai small and medium-sized enterprises (SMEs) to sell products and services abroad through its Taobao marketplace.

On the one hand, this model would allow Thai farmers and SMEs to focus on selling higher-margin agricultural products to China at essentially "zero cost" through this e-commerce platform, instead of producing commodities solely for local consumption.

On the other hand, Alibaba will help Chinese companies push their products in Thailand too since entrepreneurs can also import products purchased on the Chinese platform to sell in the Thai market.

There is no question about it. What Alibaba gives, it can also take away.

Alibaba and another e-commerce giant, Amazon, are only in the initial phases of investing in Thailand. Both companies understand the power of bringing buyers and sellers together through the platform of the internet. The new era of digital globalisation is making the world flat. Soaring flows of data and information now generate more economic value than the global cross-border flows of goods and capital.

E-commerce has been growing by 20% a year for a decade, shaking up industries from logistics to consumer goods. It disproportionately benefits consumers in small and remote places, helping to reduce disparities in living standards.

Through one lens, this is a boon for competition. Alibaba itself lowers barriers to entry by providing a simpler, cheaper way for small manufacturers to distribute goods and find potential buyers, allowing them to compete directly with multinational giants. Consumers are also benefiting as there are a wider range of products with better quality for them to choose from.

Yet, as Alibaba's gigantic e-commerce platform grows, so does unease about its competitive prowess. With access to cheap capital, Alibaba can make big investments in warehouses, artificial intelligence and other firms. Those investments, combined with vast amounts of data on consumers and businesses on its platform, mean that its competitors will struggle to keep up.

With or without Alibaba, Thai companies are at the forefront of the digital market and operations as they try to survive in today's rapidly changing competitive landscape.

A crisis can make room for opportunities. Thai companies must diversify their sources of revenue by making Alibaba's marketplace the centre of activities geared towards reshaping their businesses in a fast-growing economy.

More than 130,000 Thai durians were pre-sold to Chinese consumers during Alibaba's Tmall Thai durian promotion last month, including more than 80,000 Monthong durians in the sale's opening minute.

Thailand's key challenge as it seeks to take full advantage of Alibaba's investment will be to digitise its workforce. Digital talent is a prerequisite for success in the digital world. Companies need to engage with a broader ecosystem encompassing a range of businesses, as well as position themselves to take advantage of emerging technologies such as artificial intelligence and the Internet of Things.

More important, Alibaba's entry is a wake-up call for Thai officials to grasp the importance of data privacy. The government must enact more stringent data management and security policies, which protect individuals whose data is in the hands of corporations.

Digital literacy is essential at every level of society. Every citizens needs to have basic awareness of how to protect personal data properly, particularly through data privacy settings on social networks.

Consumers now live a large part of their lives online, and data protection laws (with an emphasis on increasing cybersecurity and data privacy awareness) are a necessary element of a state that functions well.

Personal data is an asset in countries with stringent data protection laws. If service providers suffer any data breaches here, they should be fined immediately and be obliged to compensate users regardless of whether any damage has already taken place.

Srisamorn Phoosuphanusorn

Business Editor

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