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00:00BAIDU. IT ANNOUNCED A DEAL SO IT WOULD BE THE EXCLUSIVE ONLINE SHOWING PARTNER FOR THE JAMES BOND SERIES. THEY ARE VERY STRONG RIGHT NOW IN INTEGRATING WITH JD AND OTHER E-COMMERCE PLAYERS. ALIBABA IS NOT IN DESPERATE MODE, BUT CHALLENGED MODE. THAT'S WHY THEY ARE MAKING AN ACCUSATION -- QC -- ACQUISITION INTO YOUKU,. EMILY: CAN YOU GIVE US A SENSE OF HOW MANY PEOPLE IN CHINA WATCH YOUKU? IS IT REALLY LIKE THE YOUTUBE OF CHINA, OR SHOULD WE THINK ABOUT THIS MORE AS A NETFLIX OR SOMETHING ELSE? >> YOUTUBE AND NETFLIX MASHED TOGETHER AND A LOT BIGGER. IF YOU LOOK "BIG BANG THEORY" DOWNLOADED 240 MILLION TIMES IN CHINA LAST YEAR ON A RIVAL WEBSITE, YOUKU IS EVEN BIGGER. THE SCOPE IS HUNDREDS OF MILLIONS OF DOWNLOADS, NOT THE MILLIONS OR TENS OF MILLIONS. THE SECOND PART IS THE REAL SHIFT IN CHINA IS MORE TOWARDS SPENDING ON SERVICES AND ENTERTAINMENT AND AWAY FROM PHYSICAL ITEMS. IT'S A VERY SMART THING FOR ALIBABA TO BUY INTO YOUKU, BECAUSE THAT IS THE WAVE OF THE FUTURE. EMILY: I WONDER WHAT THIS POTENTIAL INVESTMENT IN BOXED MEANS. I KNOW YOU HAVE BEEN CHASING THIS STORY. I ORDERED ONE TIME FROM BOXED. I GOT TOILET PAPER AND DIAPERS. WHAT DOES THIS MEAN? BRAD: WE HAVE BEEN WATCHING AND WONDERING HOW ALIBABA WOULD COME TO AMAZON'S HOME TURF. THEY'VE MADE A LOT OF SMALL INVESTMENTS. SHOPRUNNER. IT'S ALL BEEN CHALLENGED, SMALL INVESTMENTS. WITH BOXED, IT IS A COMBINATION OF AMAZON PRIME AND COSCO, JUMBO ITEMS FROM YOUR SMART PHONE, NO MEMBERSHIP FEE. IT'S GETTING A LITTLE BIT OF TRACTION. THEY ARE BASED IN NEW YORK CITY. IT COULD BE $80 MILLION TO $100 MILLION. MAHA: ALL OF THESE COMPANIES, JET, BOXED,, ETC., IN MY VIEW, ARE MINI-AMAZONS. THEY ARE UNDERINVESTED-IN AMAZONS. THEY NEED ALL THE GREAT STUFF THAT MAKES AMAZON SO EFFICIENT. AND UNTIL THEY DO THAT, THEY ARE GOING TO BE MINI-AMAZONS. EMILY: WHAT IS ALIBABA? WHAT DO YOU MAKE OF THIS POTENTIAL INVESTMENT IN BOXED? IS ALIBABA TRYING TO BE LIKE THE AMAZON FOR THE WORLD? SOME PEOPLE SAY THAT IS NOT REALLY THE RIGHT WAY TO LOOK AT IT. SHAUN: I DON'T THINK ALIBABA HAS A CLEAR STRATEGY INTO THE UNITED STATES RIGHT NOW. I THINK THEY ARE UNDER SO MUCH PRESSURE IN CHINA THAT THEY ARE LOOKING TO BUY INTO LOGISTICS AND REALLY BRING PRODUCTS OF THE UNITED STATES INTO CHINA, BUT THAT GROWTH IS NOT REALLY SUSTAINABLE AS LONG AS THE CONSUMER ECONOMY CONTINUES TO WEAKEN IN CHINA. ALIBABA HAS TO MAKE INVESTMENTS OUT OF THE COUNTRY, GO INTO THE UNITED STATES, AND TRY TO SELL TO THE U.S. CONSUMER, WHICH IS DOING A LOT BETTER. I'M NOT CONVINCED, THOUGH, THIS IS THE RIGHT STRATEGY. OVER THE LAST THREE MONTHS TO SIX MONTHS, THEY'VE BEEN A LITTLE CONFUSED. THEY SEEM TO BE GRABBING AT EVERYTHING RATHER THAN HAVING A VERY FOCUSED STRATEGY LIKE THEY DID BEFORE THEIR IPO. EMILY: BRAD, HAVING WROTE THE BOOK ON AMAZON, HOW DO YOU THINK ABOUT IT IN THAT CONTEXT? ALIBABA'S FUTURE? BRAD: THAT ALIBABA WILL HAVE A VERY TOUGH ROAD IN THE UNITED STATES. WE'VE SEEN EBAY STRUGGLE. WE'VE SEEN ALL OF THESE LAYERS STRUGGLE. IT'S BECAUSE AMAZON DOES A GREAT JOB FOR ITS CUSTOMERS. REALLY, NO ONE CAN BEAT ITS SCALE, IT'S PRICE MANAGEMENT, IT'S LOYALTY. IT WILL BE DIFFICULT. BOXED HAS A DIFFERENT STRATEGY, SELLING IN BULK, SOMETHING AMAZON HAS NOT BEEN FOCUSED ON. MAYBE THERE IS A CHANCE HERE. BUT YOU WILL AWAKEN AMAZON AND THEY WILL COME TO COMPETE WITH YOU. EMILY: AMAZON IS WHERE ALL MY DIAPERS COME FROM. REDSTONE, THANKS FOR JOINING US. -- BRAD STONE, THANKS FOR JOINING US. MAHA IBRAHIM, SHAUN, THANK YOU.

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Why Alibaba Agreed to Buy Video Service Youku

Shaun Rein, China Market Research Group's managing director, Maha Ibrahim, Canaan Partners general partner, and Bloomberg's Brad Stone discuss Alibaba's agreement to buy video service Youku Tudou and its competition with Amazon. They speak with Bloomberg's Emily Chang on "Bloomberg West." (Source: Bloomberg)

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