Globalization 1.0 was about big companies finding cheap labor and international growth markets. That has powered the stock market by increasing corporate profitability.
Globalization 1.0 also increased inequality in the West as the value of labor vs capital decreased.
Globalization 2.0 is when small business entrepreneurs get to benefit from globalization. As small business is the engine that drives economic growth, this is good news for all of us.
With our Globalization 1.0 hat on, Alibaba looks like the Rest (China, India, etc) selling to West. It looks like a one way street.
With our Globalization 2.0 hat on, we can see a two way street populated by micro multinationals, tiny companies that trade globally. They have been on the bleeding edge of innovation. This is about to become more mainstream.
The Rest is full of high growth markets with a demanding middle class that wants differentiated products and services. In other words, great markets for tech savvy small business entrepreneurs to go after.
The Alibaba IPO is the Netscape moment for Globalization 2.0 because the numbers will make people pay attention. The big number is gross sales enabled by the Alibaba platform – $170 billion in 2012, more than Amazon and eBay combined.
That’s right. Selling to the Rest is no longer an afterthought. The Alibaba IPO puts this on the A List priority.
You can source products through Alibaba sites to combine with other products to create your distinctive product or just to sell retail. You can also use Alibaba sites to sell your products in foreign markets. Looking at Alibaba just like another Amazon is missing the point. Alibaba is the global supply chain facilitator.
This will lead to a big increase in cross border transactions, which will need to be powered by something new. Global e-commerce is a razor-thin margin business. Buyers want a bargain but sellers today have to pay a lot to intermediaries for:
– Matching buyers and sellers.
– Payment, including currency exchange.
Bits don’t stop at borders, but money does. That is why Bitcoin is so disruptive. Bitcoin is the payment network that the Internet deserves. Paying by credit card is simple, but it is hard to compete in global e-commerce when you add up the normal credit card fees and the currency exchange costs.