Alibaba opens fortunes from Wall Street to Chinese backwaters

BAIGOU, China (AFP) - Thousands of miles from Wall Street, where Alibaba Group has filed for a multi-billion-dollar IPO, Chinese farmers are swapping tractors for luxury cars after making fortunes through the Internet giant.

"All of our business is now on the Internet," said Huang Jianqiao, who grew up in rural poverty but now roars to work in a black Jaguar and flies with his wife on holidays to Paris, thanks to an online bag store that he says takes in 30 million yuan (S$6 million) each year.

He is one of thousands of Chinese farmers who have transformed their lives using online retail platforms created by Alibaba.

The group, which dominates China's e-commerce market, combines aspects of eBay, Amazon, PayPal and other Western tech darlings, and according to analysts an investor frenzy could drive its value as high as US$200 billion (S$249.7 billion) when it goes public in the US later this year.

A world away from the plush boardrooms of New York, towers of cardboard boxes awaiting delivery to cities and villages across China are strewn across the cracked white tiles of Huang's warehouse in Baigou.

One of Alibaba's main assets, the sprawling e-commerce site Taobao - or "search for treasure" - enables him to offer his locally made bags to millions of potential Chinese customers.

"It's a start-up platform with nearly no entry barriers which suits many of us," Huang said.

Baigou, in the northern province of Hebei, is among the biggest of the estimated 20 "Taobao villages" in China - rural areas in which Taobao stores employ more than 10 percent of the local population and take in revenues of more than 10 million yuan a year.

"In the past my economic situation was poor, no house or a car. But now I have the ability, I've taken my wife to visit foreign countries," Huang said, adding: "This is the material life that Taobao has given me."

Huang's warehouse rustles with young workers stuffing leather backpacks and purses into plastic bags before throwing them into a pile on the floor where they are scooped up by delivery men.

Taobao villages often produce their goods - ranging from T-shirts to wicker baskets - in small-scale workshops, meaning farmers who would previously have flocked to Chinese cities in search of better incomes can instead stay put and connect with buyers online.

"This place is just 10 minutes away from my home," said Li Dan, a 22-year-old warehouse employee who takes orders and sticks addresses on packages - but says she has hopes of opening a store of her own, in a typical example of the entrepreneurialism that has driven China's decades-long economic boom and which Alibaba now facilitates.

"After a while you can do it yourself. Some people work here but have a side business, buying a laptop and taking care of an online shop in their spare time." The smell of leather hangs over the factory, where dozens of workers sew and stitch an array of unbranded pastel handbags, flower-print purses and Union Jack backpacks, with others adding zips and buckles.

"We take inspiration from Chanel," Huang says, grabbing a small red handbag. "We may not have great designers, but we learn from other companies."

Alibaba was founded in 1999 by former English teacher Jack Ma, who started with a platform for Chinese manufacturers to connect with foreign buyers but launched Taobao in 2003, just in time to tap into Chinese consumers connecting to the Internet and eager to spend their rising salaries.

China's e-commerce market is now vast - with revenues estimated at US$210 billion in 2012 according to consulting firm McKinsey - and is widely predicted to overtake the United States to become the world's biggest by the end of this year.

A short drive across town from Huang's premises, his friend Guo Shaohua has his own lucrative Alibaba bag business, with export destinations including Azerbaijan and Ukraine.

"I started using Alibaba in 2011," said Guo, a stocky man who drives a BMW. "It has changed the lives of many young people." The firm lets him ensure clients pay a deposit, he says, reducing the risks of fraud, and he expects to reach annual sales of 100 million yuan within three years.

"Now we can stay with our family when doing Internet business, and we earn more than working in other cities," Huang said.

"I think this is a big effect that Taobao brings. Apart from material life, I have more ideas and goals, and I dare to have a plan for my life."

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