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Counting the Roadblocks to Alibaba’s US Aspirations

There’s no question that Alibaba is a formidable company. But it seems the only thing bigger than the retailer’s size is its aspirations.

For the past five years, Alibaba has been projecting that it would hit $1 trillion in sales by 2020, a claim it doubled down on earlier this month at its investor conference. In January, the company’s founder, Jack Ma, met with Donald Trump ahead of his inauguration where the two announced that Alibaba would create a million new jobs in the U.S.

While the company’s revenue continues to grow by leaps and bounds, increasing by 60 percent in the last quarter, some are calling its lofty goals into question—especially those related to cross-border sales. A recent article in Bloomberg lays out the ways in which the U.S. could prove to be an impediment to the e-commerce giant’s wish fulfillment.

Ma is hosting a two-day event in Detroit, starting today, to try to address concerns about selling into China. Gateway 17, as it’s dubbed, is designed to woo U.S. businesses, which The Wall Street Journal says are vital to its growth as the Chinese middle class swells.

Read more about Alibaba’s growth: Alibaba Revenue Soars on Online Sales

While it’s tempting to refer to Alibaba as the Amazon of China, the article points out crucial differences in the companies’ business structures—differences that could hamper Alibaba in the long run, especially as it tries to woe international sellers. The chief issue is that unlike Amazon, Alibaba hasn’t put the same emphasis on logistics. While Amazon has developed a lot of services to help sellers on its marketplace, Alibaba is not positioned to support sales in the same way. This is a particular sticking point for sellers trying to enter the Chinese market where red tape is common.

This leads to the next issue for the small U.S. businesses Alibaba’s trying to court: China has a history of creating roadblocks for foreign companies trying to gain entry into its market in the form of business licenses and currency controls.

The last issue the article highlights is counterfeiting, which Alibaba and its platforms have been accused of turning a blind eye to. Fake goods are also expected to be a main topic during Gateway 17.

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To reach a million jobs, two-thirds the size of Walmart’s workforce, the article estimates U.S. companies would have to export $245 billion in goods annually through Alibaba—$75 billion more than the total U.S. exports to China in 2016.

For now, the businesses that are most likely to sell on an Alibaba platform are those that already use Amazon, eBay or another marketplace, meaning they won’t contribute to job creation, according to the WSJ.