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Technology<br />
Alibaba to Expand Supply<br />
Network in China<br />
Chinese Internet giant Alibaba Group said it is investing<br />
as much as US$4.6 billion to build a network of warehouses<br />
across China, as<br />
it looks to feed<br />
the countr y’s<br />
boom in online<br />
shopping.<br />
The move<br />
will directly<br />
benefit Taobao,<br />
an Alibaba unit<br />
that is China’s<br />
biggest shopping<br />
website by<br />
transaction volume, and comes at a time when Alibaba says<br />
China’s logistics industry has insufficient capacity to meet the<br />
needs of the country’s expanding electronic-commerce sector.<br />
Alibaba will commit an initial RMB 10 billion (US$1.52<br />
billion) to the warehouse project and, joined by financing<br />
partners, more than RMB 30 billion over three to five years,<br />
said Zeng Ming, Alibaba’s chief strategy officer.<br />
The company is making the investment to help speed<br />
delivery of products to consumers. “In 10 years, we hope that<br />
anywhere in China you can buy a product online, and, at<br />
the slowest, it will get to your home in eight hours,” Alibaba<br />
Chairman Jack Ma said.<br />
Chinese couriers ship many of the goods bought online<br />
in China, and can often deliver items the day after an order for<br />
a fairly low price — the equivalent of a few dollars or less. But<br />
e-commerce executives complain that the existing infrastructure<br />
is often fragmented and inefficient.<br />
The regions Alibaba has chosen for initial warehouse<br />
construction include the areas around the northern cities of<br />
Beijing and Tianjin, the Yangtze River Delta in east China<br />
and the Pearl River Delta in southern China since each is a<br />
major population center, the company said.<br />
Alibaba, which is 40% owned by Yahoo Inc., currently<br />
plans warehouse facilities in those three regions with total<br />
floor space around three million square meters, or the size of<br />
560 football fields, Alibaba said. Logistics partners, Taobao<br />
sellers and other business-to-consumer websites will all be able<br />
to use Alibaba’s warehouses, it said.<br />
The company said Alibaba.com Ltd., its business-tobusiness<br />
commerce platform, will also offer warehousing services<br />
to small Chinese exporters.<br />
Online retail transactions in China reached RMB 134.17<br />
billion (US$20.4 billion) in the third quarter, double year-ago<br />
levels, and Taobao accounted for 75% of the market.<br />
Taobao operates a consumer auction website similar to<br />
eBay.com Inc., but its Taobao Mall retail portal, where merchants<br />
can set up online storefronts, is more similar to Amazon.com<br />
Inc.<br />
Transactions on Taobao reached almost RMB 400 billion<br />
in 2010, Mr. Zeng said, up from RMB 208.3 billion in<br />
2009. Alibaba Group said in 2008 that Taobao broke even,<br />
but the closely held company doesn’t disclose its financials.<br />
While several Chinese Internet firms, including smaller<br />
e-commerce rival E-Commerce China Dangdang Inc., made<br />
strong trading debuts in New York in 2010, Taobao Chief<br />
Financial Officer Daniel Zhang said Taobao has no current<br />
plans to seek an initial public offering. (Wall Street Journal)<br />
Lenovo to Focus on<br />
Tablets, Phones for Growth<br />
Lenovo Group Ltd. will form a new business unit focused<br />
on mobile Internet and “digital home” devices, it said<br />
on January 19, as it continues pushing to expand beyond its<br />
core personal-computer business.<br />
Lenovo’s Mobile Internet and Digital Home Business<br />
Group will make tablets, smart phones and devices for other<br />
categories like smart TV and cloud computing, China’s biggest<br />
PC maker by shipments said.<br />
The world’s fourth-biggest computer maker by shipments<br />
behind Hewlett-Packard Co., Acer Inc. and Dell<br />
Inc. has already joined other PC makers in launching mobile<br />
devices to diversify into new areas and boost margins.<br />
In May last year, the company launched LePhone, its first<br />
touch screen smart phone based on Google Inc.’s Android<br />
operating system with a detachable Qwerty keyboard. Lenovo<br />
earlier this month also unveiled a hybrid notebook and<br />
tablet that combines a high-definition Android-based tablet,<br />
called LePad, with a keyboard base that enables the product<br />
to operate Windows 7.<br />
Lenovo bought International Business Machines<br />
Corp.’s (IBM) PC business in 2005 to boost its business in<br />
developed markets, but in 2009 it announced restructuring<br />
measures to refocus on China and other emerging markets.<br />
The company’s focus on mobile Internet comes as it is still<br />
also investing heavily to build its market share in emerging<br />
markets like Latin America, India and Southeast Asia. That<br />
effort and a greater focus on lower-price consumer products<br />
have pressured Lenovo’s margins.<br />
Lenovo said in November its net profit for its fiscal<br />
second quarter ended Sept. 30 rose 44% to US$76.6 million<br />
from US$53.1 million a year earlier, helped by strong<br />
growth in PC shipments.<br />
Chief Operating Officer Rory Read said Monday Lenovo<br />
will continue to look at acquisitions that would give it<br />
a strategic advantage in mobile Internet.<br />
The mobile Internet segment will help enhance Lenovo’s<br />
margins over three to five years, though the effect may<br />
not be significant, Mr. Read said in a phone interview.<br />
“From a standpoint of business opportunity, the next<br />
12 or 18 months are interesting, but the real game at hand is<br />
in, you know, 24, 36, 48 months” for devices like those the<br />
new unit will make, Mr. Read said.<br />
Lenovo is likely to offer LePad outside China in late<br />
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