Monday, January 9, 2017

Alibaba Promises Trump 1 Million Jobs, But Don’t Believe It

Ma’s ambitious pledge of job creation doesn’t include actual jobs.


By Jennifer Booton
MarketWatch
January 9, 2017

Don’t be fooled by the latest billionaire meeting at Trump Tower claiming to have made “great” progress in American job creation: Alibaba won’t create 1 million jobs in the U.S. as promised, at least not directly.

On Monday, Alibaba BABA, +0.88% Chief Executive Jack Ma became the latest CEO to tout job creation after a 40-minute meeting with Trump in the newly-minted politician’s gold-plated tower. There’s no better music to President-elect Donald Trump’s ears than pledges from CEOs to keep jobs in the U.S. or to create new ones. Trump ran much of his campaign on ensuring U.S. jobs are kept away from foreigners and aren’t outsourced to other countries, and he’s gone through great, highly-publicized lengths to prove his election is the reason why jobs are coming to or staying in America.

However, Ma’s assertion that he’s going to create a million new jobs in the U.S. by helping small businesses sell products and services to China is a stretch. The Chinese e-commerce giant is merely upping its own investments to appeal to U.S. small businesses, providing them with incentives, such as user data and logistics capabilities, in hopes that more American brands will sell items on its e-commerce sites. The increased demand on those U.S. goods from the Chinese middle class will prompt, it hopes, increased hiring as U.S. brands expand to meet the heightened demand.

These aren’t promises of traditional labor-force “jobs” that many Americans dream of when they listen to Trump’s rhetoric on job creation. They’re merely part of a publicity stunt that plays on Alibaba’s previous announcements to expand its presence outside of China, particularly in the U.S.

That’s like saying Amazon.com Inc. AMZN, +0.12% , Etsy Inc. ETSY, -5.58% and eBay Inc.EBAY, -0.97% have all created millions, if not billions, of jobs through their respective marketplaces that connect third-party sellers to buyers. Sure, they’re all platforms connecting sellers to buyers, which are necessary tools in this modern-day economy that enable tiny merchants to potentially reach new customers across the globe. But their full-time, with-benefits workforces are much tinier. Alibaba has fewer than 36,500 global employees despite notching in as one of the most valuable Chinese companies with a market capitalization of $230 billion, according to FactSet. Amazon has 230,800 employees, eBay has 11,600 and Etsy has fewer than 1,000.

The U.S. has long been an area of heightened focus for Alibaba, particularly as its stock continues to trade 20% below an all-time high reached more than two years ago. In a Wall Street Journal opinion piece on June 15, 2015, a week before Trump announced his candidacy for the presidency, Ma said Alibaba was focusing on the U.S. market, and said helping U.S. brands connect to Chinese consumers would “create American jobs and increase U.S. exports.” Alibaba also specifically chose the U.S., rather than its home base of China, for its initial public offering.

On Monday, with cameras capturing both Ma and Trump in the lobby of Trump Tower following their meeting, which they both referred to as “great,” Ma said he’s going to work with the incoming administration to support “1 million small businesses to sell” products in Southeast Asia. Despite referring to that 1-million figure as “U.S. jobs” in an Alibaba blog post, neither Ma nor Trump elaborated on whether any of these would be full-time corporate jobs stationed in the U.S., or whether they’d simply be part of the third-party network of sellers on Alibaba’s e-commerce sites, many of whom likely also sell products on other e-commerce sites, such as Amazon and eBay.

An Alibaba spokesperson later confirmed to MarketWatch that these aren’t corporate jobs.

This, of course, isn’t the first time Trump has claimed responsibility for job creation without providing details on what those jobs are or being transparent about where they’re coming from.

In November, Trump took credit for United Technologies Corp.’s UTX, -0.93% decision to keep 1,000 Carrier factory jobs in the U.S. following CEO Greg Hayes’ meeting with Trump in the tower. That included a decade’s worth of corporate tax incentives to be funded by Indiana taxpayers.

In December, he took credit for Sprint Corp’s S, +0.12% decision to return 5,000 jobs back to the U.S. from other countries, even though Sprint said the jobs were part of a previously-announced commitment by Japan’s SoftBank Group 9984, +1.39% to invest $50 billion in the U.S. and create 50,000 new jobs.

SoftBank, which owns a controlling stake in Sprint, announced that multi-billion-dollar investment in the U.S. after a meeting with Trump earlier in December, however even that pledge was tied to an earlier announcement from October, when SoftBank struck a deal with Saudi Arabia to create a $100 billion tech fund with a focus on the U.S., according to the Wall Street Journal.


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