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The founder of Alibaba, (NYSE:BABA) Jack Ma states they are no longer planning on expanding into the United States due to the tension in trade relations between the US and China. "The promise was made on the premise of friendly US-China partnership and rational trade relations... [t]hat premise no longer exists today, so our promise cannot be fulfilled," he said today.
Previously, Ma promised a large expansion in the US entirely contingent on trade relations remaining normalized. “If China and the United States maintain good economic and trade relations, there will be no problem at all in providing the United States with 1 million jobs or even 10 million jobs,” Ma said. "But if there is no trade between China, the 1 million jobs will be gone too."
Following off the heels of yet more tariffs announced from both China and the United States, this could be cause for concern. Ma referred to this continuing trade debacle in a call on Tuesday with investors as a "mess." With both the US and China going for broke on tariffs, Alibaba could very well be caught in the crossfire. Ma suggested on Tuesday that in the medium term, production and supply chain elements for Chinese business be shifted to other countries rather than the US. "You may win the battle, but you lose the war," he quipped, making clear that he believes that "middle term, a lot of Chinese business will move to other countries."
Last week, Ma announced he would be retiring from the executive chairman position of Alibaba within the next year, and has been planning on leaving for quite some time. This should come as no surprise, as he is now China's richest man. Ma has a reputation for speaking his mind, and while optimistic, analysts called into question his figure of one million jobs, thinking of this as a relatively lofty goal over five years.
As Alibaba grows into new markets, there will always be some sort of new burden they will have to accept. Ma made a call to postpone expansion into the United States, but itis hard to see Alibaba not expanding into the US market at some point in the future. With all this fuss about the trade relations between the US and China, this is bound to be just beginning. We will keep you updated as this story continues to unfold!
