The recent partnership between Alibaba and Salesforce bucks the trend of US entities facing headwinds in the complex Chinese market – eBay and Google are two examples of this. With the current US-China trade imbroglio, things could be tough for Salesforce.
Salesforce has tried to enter the Chinese market for long. It released Salesforce China Edition a couple of years back targeting small and medium-sized businesses. Even with this strategy, Salesforce’s revenue contribution from outside of the United States continues to be minuscule. Just 10% of its revenue comes from the Asia Pacific region.
This partnership for Salesforce’s with a rapidly diversifying Alibaba to penetrate the competitive China market comes across as a smart move. Alibaba allows businesses and consumers from across the globe to buy a wide range of products from their online platform. Over the years, Alibaba has ventured into new areas like Alibaba cloud computing and Alipay for payments.
China has put in place a stringent cybersecurity law to address issues around privacy and security. This law mandates storing data aggregated in China within China itself. As a result, guidelines are still evolving, creating uncertainty for organizations operating in China.
In light of this, Salesforce’s cloud collaboration with Alibaba is a great model of SaaS providers building partnerships to address increasing privacy concerns. How this will pan out still needs to exploring, with the exact nature of the team-up expected to unfold with time.
Even more, this partnership will also be a blessing for Salesforce’s multinational clients that have users in China. It lets them address privacy concerns efficiently.
Leveraging Alibaba’s offering in cloud and insights in the Chinese market, Salesforce can reach out to the small and medium-sized business in China with its Sales, Service, and Commerce Cloud.
Alibaba and Baidu are pitted head-on in the China market, and this partnership could leapfrog Alibaba as a leader in the cloud domain. Amazon dominates globally in the cloud infrastructure market. Besides, with Alibaba investing in the market extensively, the former’s growth should be further accelerated.
The largest CRM provider in the world and China’s leading e-commerce player coming together opens itself to a broader discussion. Further, the collaboration between these two behemoths may also accelerate competition. This especially true with Alibaba already having an innovative solution like Dingtalk in the market.
So can Alibaba help Salesforce open the door to the Chinese market? The answer to this question in the short run will be yes, but the long-term impact of this partnership for Salesforce is still to be accessed.
Chinese corporations have long been successful in entering the US market. Contrarily, because of patent infringement issues and complex partnership laws, the reverse has seldom been as easy. This partnership between Alibaba and Salesforce will be a new chapter for partnership between Sino-US corporations.