Just 15 kilometers from Pakistan’s border with India, Sialkot is a city of military outposts, cantonments, and factories. Local lore has it that the city was once conquered by Alexander the Great. Today, Sialkot has a reputation for entrepreneurship, thanks to more than a century as an export hub for leather goods, surgical equipment, and sports gear.
The business culture here is scrappy — rather than wait for the government to do so, in 2001, local businesses banded together to build their own private airport with its own airline, AirSial. The first flight landed in 2020. “We are masters of reverse engineering,” Qasim Malik, vice president of the Sialkot Chamber of Commerce and Industry, told Rest of World. “We look towards the world.”
Recently, the city’s potential has caught the attention of one of the world’s largest online retail companies, Alibaba. The Chinese e-commerce giant has been building its presence in Pakistan for the past five years. Today, the country is home to the highest concentration of paid sellers on the company’s business-to-business (B2B) platform, Alibaba.com — and almost 90% of those sellers are in Sialkot.
During the pandemic, more exporters signed onto Alibaba.com in Sialkot than anywhere else in Pakistan. Among them were makers of dental extraction tools, lederhosen, cricket kits, boxing gloves, eyelash extensions, and more. Some were multigenerational businesses that had been selling abroad for decades, others were new upstarts. The company had to take notice. “It was natural,” a former Alibaba Group employee told Rest of World, requesting anonymity because they are not allowed to talk to the press.
The city’s manufacturing industry has a lot going for it: in addition to the diversity in products, said the former employee, processing times at Sialkot’s smaller businesses are faster than anywhere else in Pakistan. Of the country’s $27.2 billion worth of goods exported from 2020 to 2021, 8% came from Sialkot.
So, Alibaba has turned to courting Sialkot sellers, following a playbook for global expansion that it has used from Turkey to Vietnam. The Chinese company started with the acquisition of a local e-commerce giant, Daraz, and then proceeded to woo local sellers to its own global B2B platform. Alibaba did not respond to questions about the company’s expansion strategy or the number of sellers in Pakistan. “Alibaba.com is committed to bringing our service offerings to more markets around the world,” a company spokesperson said in an emailed statement to Rest of World. “Pakistan is a manufacturing base with appeal to global buyers, and we will continue to facilitate Pakistani exporters’ transition to the digital era and enhance their visibility in the global market.”
In March, Alibaba announced plans to set up a local office in Pakistan. The company’s 2022 outlook report pledged it would make Pakistan into a global “digital trade hub.” Alibaba’s expansion has brought new hope for business prosperity in the region. “We need a revolution here, an economic revolution,” Malik at the Chamber of Commerce said. Alibaba’’s advances are just the beginning for his entrepreneurial city — someday, companies will come to Sialkot to build space suits and electric cars, he added.
On a hot July morning, Muhammad Bashir Bhatti, one of Alibaba’s newest Pakistani channel partners — companies that recruit local businesses to sell on the global site — walked onto a podium and took a seat beside four other businessmen. Bhatti had organized the gathering, a summit on exports at the Sialkot Business and Commerce Center, for nearly 200 business owners to meet with representatives from Alibaba. The online retail giant’s pitch to attendees blazed across a banner: “Grow your export business with Alibaba.com during economic crisis.”
Besides Bhatti’s firm, Computer Xperts, there are 11 other channel partner organizations in Sialkot alone. Companies like Web Excels and Alpharex International have also evangelized selling on Alibaba.com with similar summit events in export hubs like Faisalabad and Lahore. Their message is simple: whether you’re making soccer balls or Edwardian costume shoes, Alibaba.com is a gateway to a “virtual international trade show” with more than 20 million interested buyers. For makers of products with a low cost per unit — a watch strap, or a pair of gloves — the idea of selling bulk orders to businesses abroad is especially appealing.
Patras Jaan, 40, runs Anmol and Company, a footwear manufacturer that employs upwards of 20 people, working out of a three-story building in a residential district in Sialkot.
Outside Jaan’s building, the smell of dough frying at a street cart fuses with the stench of leather and glue. In the foyer, two men sit on the floor near a yellowed 1970s Sanyo television, surrounded by peeling paint. One man glues, the other stitches. The vintage-inspired shoes they put together will be bought on Alibaba.com by Edwardian costume enthusiasts, who wear them to local fairs in the United States. Roughly half the shoes Anmol puts together each month, upwards of 400 pairs, will be sold on Alibaba.com to clients in the U.K., Germany, Poland, and Singapore. One of Jaan’s customers video-calls him from Malta every six months to give their exact specifications.
When Jaan was 20, his father forced him to quit his job at the local bank and join the family’s footwear-making business. “I kept telling him we needed to digitize our inventory, that we needed to export our products ourselves, instead of relying on middlemen,” he told Rest of World. But his father resisted.
Now, two decades later, Jaan is betting Alibaba can help him deliver on the promise of exporting that his father was never quite convinced about. “I see containers in my dreams, and I want to fill one with my products,” he said. “Alibaba is going to make that happen.”
Malik, the vice president of the Sialkot Chamber of Commerce, says the younger generation has led the adoption of technology critical to facilitating exports from Sialkot. Before the pandemic, Malik, just 35 years old himself, signed visa letters sponsoring Sialkot business owners to visit trade fairs from Munich to Tokyo. Alibaba has promised Malik that it can deliver Sialkot’s exporters the same global reach online, without them having to leave home.
Exporting hubs like Sialkot play an important role in Alibaba’s global ambitions. In 2016, Alibaba founder Jack Ma told shareholders that the company aimed to serve roughly a quarter of the global population in the coming decades. In the company’s push for international expansion, Alibaba has targeted countries with large populations and rapidly growing access to mobile internet — and where Amazon doesn’t yet have a strong hold.
In line with its playbook for entering new markets, first, Alibaba acquired Pakistan’s biggest e-commerce platform, Daraz, in May 2018 for $194 million. Alibaba had made the same first move by acquiring, or investing in, popular local e-commerce platforms in other markets: in India, it was Snapdeal in 2015; in Southeast Asia, it was Lazada in 2016; and, two years later, it was Trendyol in Turkey.
Then, Alibaba courts sellers to join Alibaba.com. It relies on channel partners, like Bhatti’s Computer Xperts, to recruit these sellers in exchange for a commission fee. The channel partners lend Alibaba a facade of familiarity — speaking about e-commerce in the local language, spreading the word through meetups and sellersummits. Alibaba tracks the channel partners’ sales through a central management system, checking in almost daily, Bhatti told Rest of World.
Alibaba executives also make it a point to have in-country presence. Before 2021, said Bhatti, a team from Alibaba would visit Pakistan for just a week at a time. But, after the influx of new sellers during the pandemic, Alibaba’s country manager Song Song, and his team, spent six months in the country, according to Bhatti. “They went to Lahore, Islamabad, Faisalabad, Rawalpindi, Karachi,” said Bhatti. “But they were in Sialkot more than in any other city.”
Alibaba’s access to many of the world’s top consumer-facing e-commerce sites is also part of the pitch.
“Alibaba appears to be trying to turn its B2B platform into a worldwide catalog of manufacturers,” Juozas Kaziukenas, founder of New York-based e-commerce intelligence firm Marketplace Pulse, told Rest of World. According to Kaziukenas, the company has been the most successful at this in Pakistan, Vietnam, and previously, India. In 2020, Alibaba was one of the companies caught up in the Indian government’s ban on hundreds of Chinese apps and websites, following border tensions between the two countries.
While Alibaba was expanding its reach in Pakistan, the country also became part of China’s Belt and Road Initiative, which pledged more than $60 billion to it. Despite the investment, the two countries’ economic relationship has been marked by tension and strain. While Chinese companies have built the much-needed infrastructure in Pakistan, progress has been slow, and Pakistan now owes $1.5 billion in unpaid bills to Chinese companies operating their power plants. About 30% of Pakistan’s foreign debt is owed to China. These investments have had some positive impact, Uzair Younus, director of the Pakistan Initiative at the Atlantic Council think tank in Washington, D.C., told Rest of World, but “Pakistan’s own economic dynamic is so flawed that it leads to instability — which then impacts everyone, including the Chinese.”
Tensions have flared, particularly over the Gwadar Port, and multiple attacks on Chinese nationals have led to fatalities. In April, a suicide bombing, in protest over Chinese presence in the country, claimed the lives of three Chinese language teachers and their local colleague in Karachi. Since the bombing, security for Chinese citizens living in Pakistan has been tightened, and many have left the country.
Song Song, the country manager of Alibaba’s Pakistan operations, was previously a highly visible presence in Pakistan, meeting regularly with high-level officials and executives, and courting sellers in YouTube interviews. During a visit in August, Rest of World observed billboards displaying pictures of Song across Sialkot. But Song has not returned since the April suicide bombing in Karachi.
“You need to understand that between China and Pakistan, the agreements drafted between these two countries must respect our dignity and sovereignty,” said Malik at the Sialkot Chamber of Commerce. “We don’t want to become a colony, of any country, after fifty years. We have a very good friend [in China]. But poor planning always leads to disaster.”
In the past year, Pakistan’s rupee has lost more than 30% of its value against the dollar, making exports more lucrative. Top commerce officials in the Pakistan government are now supporting exporters by offering subsidies on power and gas, as a way of tackling the economic woes.
Alibaba is in a clear position to benefit from the incentives and interest in boosting exports, Ahmed Uzair, a partner at AUC Law in Lahore, told Rest of World.“The government wants to facilitate exporters, and Alibaba happens to be a player that has decided to build itself as a Pakistan-friendly organization that is enabling exports,” said Uzair, who spoke at an Alibaba.com seller summit in Lahore.
Former and current employees of Alibaba Group told Rest of World that sellers on Daraz were also recently being pushed toward considering exports on Alibaba.com. According to the former employee, who asked not to be identified as he is not allowed to talk to the press, there have been increased efforts to upsell. Employees have been asked to identify local sellers listed on Daraz who also operate an export business, and convince them to increase their export footprint on Alibaba.com. “The strategy [is] to use the database from Daraz, and then search exporters from that, and try to target them through different offline and online activities,” the person said.
This strategy for Daraz could be because of the post-pandemic slowdown in local e-commerce, Pakistani venture capitalist Shehryar Hydri told Rest of World. “[For] Alibaba, it makes perfect sense [to] use the Pakistan foundation to add more numbers to the global export engine,” Hydri said.
Around the world, more than 200,000 sellers have been drawn to the potential profit offered by a platform that boasts more than 20 million buyers. “At the end of the day, everyone — you, me, Alibaba, China, Pakistan — is looking to make money,” Zabbih Ullah Klair, who sells sporting goods on Alibaba from Sialkot, told Rest of World. “We need to be smart about the choices we are making to make sure we do well in the long run.”
Alibaba has now found a place in the Pakistani exporter zeitgeist, and in July, made Pakistani sellers eligible for another tier of membership, previously only available in key markets in Asia and Europe, including China, Malaysia, Italy, Thailand, and Turkey. This new tier costs up to $9,500 per year and allows sellers to open verified accounts on the platform, theoretically making them more trustworthy in the eyes of new buyers abroad, who stumble across their offerings online. “Hope is what keeps the world alive,” said Jaan. Though he’s only been on Alibaba for four months, he’s optimistic: “My Alibaba account already has three stars.”