E-commerce giant Alibaba Group recently launched financial programs with two lenders, ezbob and iwoca Ltd., to provide loans to small and medium-sized enterprises in the U.K. to buy products from suppliers on Alibaba.com, Alibaba’s China-based business-to-business e-commerce site.
“Our vision is always helping the SMEs,” Alibaba’s international marketing and business development director Wei Duan says. “We realized finance is one of the key issues for SMEs, and we are trying to provide financing to customers that buy products on Alibaba.com and sell products made by Chinese suppliers.”
Alibaba.com is the international B2B trading site of Alibaba Group, which also operates major retail e-marketplaces Taobao.com and Tmall.com in China. Alibaba attracted global attention in September when its initial public offering on the New York Stock Exchange raised a record $25 billion.
Through iwoca—which stands for “instant working capital”—U.K. small and midsized businesses can apply for a maximum of 50,000 British pounds (US$73,975) for up to six months; interest rates run from 1.5% to 2% per month, Wei says. Through ezbob, customers can borrow between £50,000 and £120,000 (US$177,539) for up to 15 months; interest rates range from 0.75% to 2% per month.
The financing program, the first of its kind in Europe for Alibaba, has been in the works for a year, Wei says. It follows a similar partnership for small and midsized borrowers located in the U.S. between Alibaba and Lending Club, an Internet-based service that connects borrowers with banks and other lenders. Lending Club allows American buyers to apply for financing for transactions valued up to $300,000 on Alibaba.com. Alibaba says the U.S. financing program is intended to promote buying from suppliers based in the U.S.-based as well as those based in China and other markets.
“The U.S. is our biggest market, followed by the U.K. in Europe,” Wei says. “We want to focus on the biggest markets for now, but this is a global project. We are talking to many partners in the pipeline.”
Wei says that more than 1 million buyers in the U.K. are signed up to purchase products on Alibaba.com, where they can access products from some 10 million suppliers. About 70% of those suppliers are based in China, but others from several other countries including the U.K., India and the United States. Alibaba says purchases by U.K. buyers on the B2B site are divided among 10 categories: Machinery, Minerals and Metallurgy, Construction and Real Estate, Apparel, Automobiles and Motorcycles, Beauty and Personal Care, Chemicals, Computers and Software, Home and Garden, Electrical.
In the next six months, Wei says, Alibaba plans to try to develop financing programs in two other European countries. The Chinese company is also looking for financing companies to work with in Canada and Australia, the latter of which is Alibaba’s third largest market.
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