Alibaba to expand Supply Network in China
Chinese Internet giant Alibaba Group said it is investing as much as US$4.6 billion to build a network of warehouses across China, as it looks to feed the country’s boom in online shopping.
The move will directly benefit Taobao, an Alibaba unit that is China’s biggest shopping website by transaction volume, and comes at a time when Alibaba says China’s logistics industry has insufficient capacity to meet the needs of the country’s expanding electronic-commerce sector.
Alibaba will commit an initial RMB 10 billion (US$1.52 billion) to the warehouse project and, joined by financing partners, more than RMB 30 billion over three to five years, said Zeng Ming, Alibaba’s chief strategy officer.
The company is making the investment to help speed delivery of products to consumers. “In 10 years, we hope that anywhere in China you can buy a product online, and, at the slowest, it will get to your home in eight hours,” Alibaba Chairman Jack Ma said.
Chinese couriers ship many of the goods bought online in China, and can often deliver items the day after an order for a fairly low price — the equivalent of a few dollars or less. But e-commerce executives complain that the existing infrastructure is often fragmented and inefficient.
The regions Alibaba has chosen for initial warehouse construction include the areas around the northern cities of Beijing and Tianjin, the Yangtze River Delta in east China and the Pearl River Delta in southern China since each is a major population center, the company said.
Alibaba, which is 40% owned by Yahoo Inc., currently plans warehouse facilities in those three regions with total floor space around three million square meters, or the size of 560 football fields, Alibaba said. Logistics partners, Taobao sellers and other business-to-consumer websites will all be able to use Alibaba’s warehouses, it said.
The company said Alibaba.com Ltd., its business-tobusiness commerce platform, will also offer warehousing services to small Chinese exporters.
Online retail transactions in China reached RMB 134.17 billion (US$20.4 billion) in the third quarter, double year-ago levels, and Taobao accounted for 75% of the market.
Taobao operates a consumer auction website similar to eBay.com Inc., but its Taobao Mall retail portal, where merchants can set up online storefronts, is more similar to Amazon.com Inc.
Transactions on Taobao reached almost RMB 400 bil- lion in 2010, Mr. Zeng said, up from RMB 208.3 billion in 2009. Alibaba Group said in 2008 that Taobao broke even, but the closely held company doesn’t disclose its financials.
While several Chinese Internet firms, including smaller e-commerce rival E-Commerce China Dangdang Inc., made strong trading debuts in New York in 2010, Taobao Chief Financial Officer Daniel Zhang said Taobao has no current plans to seek an initial public offering. (Wall Street Journal)
lenovo to Focus on Tablets, Phones for Growth
Lenovo Group Ltd. will form a new business unit focused on mobile Internet and “digital home” devices, it said on January 19, as it continues pushing to expand beyond its core personal-computer business.
Lenovo’s Mobile Internet and Digital Home Business Group will make tablets, smart phones and devices for other categories like smart TV and cloud computing, China’s biggest PC maker by shipments said.
The world’s fourth-biggest computer maker by shipments behind Hewlett-Packard Co., Acer Inc. and Dell Inc. has already joined other PC makers in launching mobile devices to diversify into new areas and boost margins. In May last year, the company launched LePhone, its first touch screen smart phone based on Google Inc.’s Android operating system with a detachable Qwerty keyboard. Lenovo earlier this month also unveiled a hybrid notebook and tablet that combines a high-definition Android-based tablet, called LePad, with a keyboard base that enables the product to operate Windows 7.
Lenovo bought International Business Machines Corp.’s (IBM) PC business in 2005 to boost its business in developed markets, but in 2009 it announced restructuring measures to refocus on China and other emerging markets. The company’s focus on mobile Internet comes as it is still also investing heavily to build its market share in emerging markets like Latin America, India and Southeast Asia. That effort and a greater focus on lower-price consumer products have pressured Lenovo’s margins.
Lenovo said in November its net profit for its fiscal second quarter ended Sept. 30 rose 44% to US$76.6 million from US$53.1 million a year earlier, helped by strong growth in PC shipments.
Chief Operating Officer Rory Read said Monday Lenovo will continue to look at acquisitions that would give it a strategic advantage in mobile Internet.
The mobile Internet segment will help enhance Lenovo’s margins over three to five years, though the effect may not be significant, Mr. Read said in a phone interview.
“From a standpoint of business opportunity, the next 12 or 18 months are interesting, but the real game at hand is in, you know, 24, 36, 48 months” for devices like those the new unit will make, Mr. Read said.
Lenovo is likely to offer LePad outside China in late summer, after a new version of Android comes out and Lenovo has time to test it, Mr. Read said, adding the tablet may not be called LePad outside China.
Read in April last year said Lenovo believed 10% to 20% of its revenue would come from mobile Internet services within five years, up from low single digits at the time.(Wall Street Journal)
Apple Ranked last by China Environment Group for Transparency
Apple Inc. ranked last out of 29 global technology companies in terms of responsiveness and transparency to health and environmental concerns in China, according to a Beijing-based nonprofit group.
BT Group Plc and Hewlett-Packard Co. were among the highest ranked companies, Ma Jun, director of the Institute of Environmental and Public Affairs said in a phone interview. Apple refused to confirm suspected polluters were among its suppliers and avoided taking responsibility for environmental problems related to its products, he said.
“Apple has had an extensive supplier auditing program since 2006 and we have lots of information available through our website,” said Jill Tan, a Hong Kong-based spokeswoman for Apple. Tan said she read the IPE report.
Among the examples cited in the report is Wintek Corp. which in 2009 is alleged to have used poisonous chemicals in the production of screens for Apple that resulted in workers being hospitalized for nerve damage. In a regulatory filing in May, Wintek said it stopped using the chemical, N-Hexane, and all workers were getting adequate treatment. Apple has not acknowledged Wintek as a supplier, Ma said.
All of the workers involved in that case have recovered fully, said Jay Huang, a spokesman for Taichung, Taiwan-based Wintek. He declined to say whether Apple is a current or past customer. Apple’s Tan declined to say if Wintek is a supplier, or comment on specific cases.
BT and HP ranked highly in IPE’s list of technology companies because they have responded to environmental problems and worked with suppliers to ensure better compliance, Ma said.
“We originally thought that Apple, as a corporate citizen, would take a leadership role, but now we feel they ended up as the most obstructive,” Ma said. IPE today released “The Other Side of Apple” a report that outlines findings from a group of 36 non-governmental organizations into environmental and health practices among technology companies. (Bloomberg)
Facebook Should Mimic Apple App Security Restrictions
Experts at security company Sophos say a rise in unmonitored Facebook applications endangers the site’s 650 million users.
Instead, they suggest that it should mimic Apple’s App Store, which vets all programs available for download.
But Facebook said its data shows the opposite of Sophos and that it already has extensive protection for users.
“We have a dedicated team that does robust review of all third party applications, using a risk based approach,” the firm said.
“That means that we first look at velocity, number of users, types of data shared, and prioritize. This ensures that the team is focused on addressing the biggest risks, rather than just doing a cursory review at the time that an app is first launched.”
This is partially because of the site’s size and popularity, but also because Facebook allows anyone to build applications, games, surveys and other programs. The most popular ones have been downloaded tens of millions of times.
While this open system might be good news for Facebook’s business, says the report, it leaves inexperienced users vulnerable to attacks from malicious hackers who are increasingly building fake applications that trick people into handing over their private information.
“Facebook, by far the largest social networking system and the most targeted by cyber-criminals, has a major problem in the form of its app system,” it says.
To combat this, the report suggests Facebook could learn a lesson from mobile phone makers such as Apple, which operates strict controls over what applications are available for users of its iPhone and iPad platforms to download.
“A walled garden approach may be more suitable,” the report says. “This is the way the Apple App Store operates, with applications requiring official approval before they can be uploaded to the site and shared with other users.”
Although such an approach would potentially screen users from fraudulent applications, it would not be without its problems, however. Apple’s own process has come in for criticism in the past for its seemingly arbitrary rules that resulted in the banning of some applications, such as dictionaries, while other similar ones were allowed through.
Alternatively, Sophos says, the world’s biggest social network could offer more detailed controls over security, allowing them to decide more easily which applications can run on their profile.
“We have built extensive controls into the product, so that now when you add an application it only gets access to very limited data and the user must approve each additional type of data,” the company said in a statement.
“We make sure that we act swiftly to remove or sanction potentially bad applications before they gain access to data, and involve law enforcement and file civil actions if there is a problem.” (BBC)