Alibaba’s Plan to End Poverty in China
Alibaba is a Chinese multinational tech, e-commerce and artificial intelligence conglomerate that was founded in 1999 and has since become one of the ten largest companies in the world. Alibaba’s plan to end poverty in China stems from corporate social responsibility as an integral part of its business model.
In 2008, an earthquake in Sichuan province in China prompted huge individual donations to charities, which accounted for 54 percent of total giving. The earthquake was the second highest in absolute numbers in history, and led to a huge death toll and significant economic losses and brought many corporations closer to philanthropy.
Alibaba is one such firm. Over the course of time, Alibaba has introduced programs and models to end poverty across counties in China. With its “Internet + Poverty Reduction” model, the company plans to boost development in affected areas and move people out of poverty using the internet.
Poverty Relief Fund
In December 2017, Alibaba’s plan to end global poverty established a fund, the Alibaba Poverty Relief Fund, which commits $1.5 billion over five years. Alibaba Group chairman Jack Ma will remain the chairman of the fund. The tech giant will offer its expertise and technology to help the rural poor to use the internet to improve their lives. It will focus on programs in the fields of education, entrepreneurship, empowering women and environmental protection.
On January 18, 2018, Alibaba announced its blueprint to lift Chinese farmers out of poverty in southwest China’s Chongqing using internet technologies. The company will build ten model counties to find tech solutions to help poor farmers fight against poverty. Additionally, it will set up relief service stations to promote local produce.
CEO Daniel Zhang said, “The company will mobilize all resources to enable 800 poverty-stricken counties to gain prosperity through e-commerce.” The plan is a part of the numerous initiatives that Alibaba has launched as the country moves towards eradicating poverty by 2020. Poverty in China is defined as having an annual income below ¥3,000 ($450) and ending it by 2020 has become a signature campaign of President Xi Jinping.
In October 2014, Alibaba announced an investment of $14.8 million over the next three to five years to develop local e-commerce service systems for 1,000 counties across 100,000 villages and provide easy and affordable access to goods and services in poor areas.
The development in rural e-commerce provides a platform for young workers to return to their villages to run their own business. Alibaba’s initiatives have paved way for online shopping that has created two type of jobs — as farmer online shop owners and Rural Taobao partners. Taobao is a Chinese online shopping website operated by Alibaba Group that is similar to eBay and Amazon.
Known as Taobao Village, a community of rural online entrepreneurs are able to open shops on the Taobao marketplace and sell industrial or handmade products using the e-commerce platforms. By 2015, 780 Taobao villages in China had 200,000 active online shop owners and had a total employment of one million people.
The Rural Taobao Program allows Taobao partners to help farmers in buying and selling online, for which they earn a service fee. Additionally, Taobao helpers assist Taobao partners. By mid-2016, Rural Taobao registered 18,000 partners and 8,000 helpers across China.
Expansion of Financial Services
Alibaba’s affiliate Ant Financial offers online micro-lending to farmers, online shop owners and small enterprises. By mid-2016, with the average loan size at $6,533, the microcredit program covered 234 counties and 4,852 villages.
For farmers with no online presence or credit history, rural Taobao partners assist in determining their financial needs along with creditworthiness. Lending decisions are then made based on agricultural microcredit business model using online and offline data.
Ant Financial jointly launched the insurance program Poverty Reduction 100 to tap into poverty reduction funds and crowdfunding insurance. This will allow more coverage and help the poor to avoid falling into poverty due to illness, disability, natural disaster and education-related fees. By August 2017, a pilot scheme in Jiangsu Province had settled 284 claims and paid $111,350 in total insurance compensation.
Alibaba’s Global Initiatives
The struggle to end poverty in China remains a long one. According to estimates, nearly 800 million people in the world still live in extreme deprivation and 25 million of these live in China. But the good news is that charity laws are being relaxed to fight corruption and fraud as China’s first-ever Charity Law was put into place in 2016.
Alibaba’s contribution is not only benefiting China but Africa too. On his first visit in 2017, Alibaba founder and executive chairman Jack Ma announced the creation of a $10 million African Young Entrepreneurs Fund and a partnership with African universities to teach internet technology, artificial intelligence and e-commerce.
Such efforts by huge corporations can surely be a positive step in the right direction to end global poverty and end global corruption.