The Corporate A new era of Silk Road (e-)infrastructure in Europe? Alibaba lands at Liege Airport www.corpwatchers.eu/en/investigations/the-corporate-silk-road/ www.gresea.be Published by the European Network of Corporate Observatories (ENCO), on behalf of Gresea. Cover image source: Wikipedia Cédric Leterme, GRESEA-CETRI December 2018, the Chinese online giant Alibaba officially confirmed Liege Airport as its main European logistic hub. This decision is in line with a globalization strategy chosen by the group - and more broadly China – with possible (geo)political and economic dimensions which call for a closer look. Setting up of Cainiao Smart Logistics Network Ltd in Liège Airport in Liège Ltd Network Cainiao Smart Logistics up of Setting The Corporate Silk Road: A new era of (e-)infrastructure in Europe? in Europe? (e-)infrastructure of era new A Silk Road: The Corporate 3 The Alibaba Group was established in 1999 in Hangzhou in the Chinese coastal province of Zhejiang. Its founder Jack Ma decided to set up a company after a visit to the States where he discovered the potential of the Internet1. Back home, he launched the country’s first online yellow pages and then created Alibaba with the help of seventeen other people. The very first website of the group dates back to 1999. Alibaba.com was specialized in B2B (“business-to-business”). Quickly other dedicated portals were added to support, first, C2C (“customer- to-customer”) and then B2C (“business-to-customer”). Today, Alibaba controls the platforms counting the largest numbers of users within these three segments, mainly thanks to its overwhelming dominance of the Chinese market2. Simultaneously, the company slowly diversified by developing a comprehensive ecosystem of complementary services (electronic payment, online messaging service, search engines, logistics, etc.) as well as investing in or taking over companies in a wide array of sectors (audiovisual, health, etc.)3. Therefore, Setting up of Cainiao Smart Logistics Network Ltd in Liège Airport in Liège Ltd Network Cainiao Smart Logistics up of Setting while e-commerce (especially in China) still represents the core of its activities (both in terms of volume and profits), Alibaba is now much more than an e-commerce undertaking4. 1 For more details on the company, see Clark, D. (2016). Alibaba: The house that Jack Ma built. New York, NY: Harper Collins. 2 See online data and timeline in: Alibaba Group (2020), « Fiscal Year 2020 Annual Report » : https://doc.irasia.com/listco/hk/alibabagroup/annual/2020/ar2020.pdf The Corporate Silk Road: A new era of (e-)infrastructure in Europe? in Europe? (e-)infrastructure of era new A Silk Road: The Corporate 3 Ibidem. 4 On this point, read: Leterme, C. (2019), « Alibaba, c’est tout l’inverse d’Amazon »… Vraiment ? », GRESEA : https://gresea.be/Alibaba-c-est-tout-l-inverse-d-Amazon-Vraiment. 4 1 Globalization Halfway through the 2010s, with China’s economic downturn and the growing competition between the actors of the Chinese digital economy, Alibaba moved to expand into the world market, ambitioning to become a true global player5. Two elements of this strategy are of particular interest to us. First, the firm’s ambition to deliver parcels anywhere in the world within 72 hours (and anywhere in China in less than 24h)6. To succeed, Alibaba developed an international logistics network articulated around 5 regional hubs: Hangzhou (China), Kuala Lumpur (Malaysia), Dubai (UAE), Moscow (Russia) and Liege (Belgium)7. These hubs are the very first links of the supply chain of goods exchanged via the group’s platforms in and out of China. Each hub is built on or near an international airport area. They each hold a geostrategic position and are readily accessible via other transport infrastructure (roads, rail, waterways). The reasoning is that they can thus (ideally) provide cover for the entire planet. The creation of these hubs generally comes with the development Airport in Liège Ltd Network Cainiao Smart Logistics up of Setting of a network of second line warehouses8 as well as a network of operators and freight providers, currently subcontractors and coordinated by Alibaba through its logistics branch Cainiao. The group has just announced a fourfold increase of its fleet of aircraft within the next nine months and the doubling of its warehousing surface outside China9. This prospect is even more relevant given the pressure of the pandemic on the way the world economy operates and on Alibaba’s pure marketplace model10. 5 « Globalization is now Alibaba›s top priority », Business Insider France, 14 May 2015 : https://www.businessinsider.fr/us/r-alibaba-to-invest-more-abroad-as-globalization-top-priority-ceo-zhang-2015-5 6 « Jack Ma: Alibaba Bets Big on Logistics », Alizila, 31 May 2018 : https://www.alizila.com/jack-ma-alibaba-bets-big-on-logistics/ 7 « Cainiao reveals plans for five global logistics hubs », Air Cargo News, 1 June 2018 : https://www.aircargonews.net/cargo-airport/cainiao-reveals-plans-for-five-global-logistics-hubs/ 8 For example: « Cainiao Adds New Cargo Route Between Hong Kong and Spain », Alizila, 16 July 2020 : https://www.alizila.com/cainiao-adds-new-cargo-route-between-hong-kong-spain/ or : « Alibaba, le géant chinois du e-commerce, tisse sa toile en France », Le Journal du Dimanche, 25 May 2020 : https://www.lejdd.fr/Economie/alibaba-le-geant-chinois-du-e-commerce-tisse-sa-toile-en-france-3970380 9 «Cainiao’s Global Logistics Push Ratchets Up», Alizila, 24 June 2020 : The Corporate Silk Road: A new era of (e-)infrastructure in Europe? in Europe? (e-)infrastructure of era new A Silk Road: The Corporate https://www.alizila.com/cainiaos-global-logistics-push-ratchets-up/ 10 «Il n’y aura plus de produits bon marché en provenance de Chine», Gondola, 16 June 2020 : https://www.gondola.be/fr/news/il-ny-aura-plus-de-produits-bon-marche-en-provenance-de-chine 5 At the same time, these international developments require a stable, reliable and harmonized legal and technical framework, which is adapted to the e-commerce realities. As it does not yet exist, Jack Ma launched another initiative in 2016: The Electronic World Trade Platform (eWTP)11. The eWTP is “a private sector-led and multi-stakeholder initiative, for public-private co-operation to incubate eTrade rules and foster a more effective and efficient policy and business environment for cross border electronic trade development”. On the one hand, it provides a forum where different stakeholders can engage, exchange and work together. On the other, it also offers an action framework aiming to develop “Digital Free Trade Zones (DFTZ)” which could be interconnected so as to gradually build a ‘globalization 2.0’. The first zone is located around the Kuala Lumpur logistics hub and offers custom facilities, access to logistics services, one-stop desks for customs declarations and other formalities, regulatory and monetary procedures all hosted and coordinated through Alibaba’s IT tools12. Alibaba’s objective is to multiply these zones throughout the world and, more broadly, increase the number of partnerships and ensuing improved regulations by positioning Setting up of Cainiao Smart Logistics Network Ltd in Liège Airport in Liège Ltd Network Cainiao Smart Logistics up of Setting themselves as the key infrastructure for world eTrade13. At the last count, six partnerships had already been formed using this framework: two in China (Hangzhou and Yiwu) and four abroad (Malaysia, Rwanda, Ethiopia … and Belgium). This initiative received the support of the WEF, G20 and WTO14. 11 https://www.ewtp.org/ 12 http://www.matrade.gov.my/en/digital-free-trade-zone-dftz The Corporate Silk Road: A new era of (e-)infrastructure in Europe? in Europe? (e-)infrastructure of era new A Silk Road: The Corporate 13 On this matter, read: Facundo Vila Seoane, M. (2019), «Alibaba’s discourse for the digital Silk Road: the electronic World Trade Platform and ‘inclusive globalization’», Chinese Journal of Communication. 14 www.ewtp.org 6 2 Setting up in Liège Airport In December 2018, Cainiao and Liege Airport officially announced having reached an agreement to set up the group’s main European hub in Liege 15. The agreement covers a 220,000 m2 area (although the group’s executive refer to a final 380,000 m2) belonging to the airport and abutting the main runway. There would be a €75 million initial investment and a final envelope to the tune of €300 million16. This should contribute to the creation of 900 jobs and around 2,100 more indirect jobs17. Various criteria factor in the choice for Liege. First, its central position at the heart of Western Europe, with its various transportation networks. This is no coincidence, Liege has been pursuing a European ‘quadrimodal’ development for the past decades, mainly thanks to EU fundings18. Besides an international airport and direct connectivity to the European road networks, there is an international TGV railway station and an inland port (the third largest in Europe) in Liege, which also provides a direct connection with Antwerp and Rotterdam ports. Cainiao intends Airport in Liège Ltd Network Cainiao Smart Logistics up of Setting to take advantage of this intermodality, as shown by the launch of three direct block train connecting Liege to China (Zhengzhou, Yiwu and Chengdu) right after they settled in Liege Airport. Liege (and Belgium) should therefore progressively become a pivotal hub for e-trade with China, as can be deduced from other investments or agreements involving Chinese logistic