Jack Ma is arguably the most influential business leader in China today. The Chinese billionaires’ company ‘Alibaba’ have become a world leading e-commerce player. Ever since their record breaking IPO on the New York stock exchange there has been increasing interest in the strong character and leading Chinese entrepreneur that is ‘Jack Ma’. This is not surprising as he is the man behind the innovative, and highly successful, e-commerce revolution in the largest nation on the planet. Alibaba currently preside over 70% of the Chinese e-retail market.
In a recent interview at Davos, a global business conference, Alibaba’s founder spoke of the company’s goals and successes, Chinese business, as well as sharing some of his views on global politics.
Here are some excerpts from the interview with some analysis..
Alibaba vs Amazon, a different philosophy.
“Amazon is more like an Empire, everything they control themselves. Our philosophy is that we want to be an ecosystem. We empower others to sell, empower others to serve.. We think using internet technology we can make every company become Amazon”.
The key to Alibaba’s success is that they have created an eco-system for e-commerce. That is, a series of platforms that connect buyers and sellers. Unlike Amazon they have not built an empire which they control themselves, instead others are motivated to sell via their platforms. In this way they facilitate sales, they are the middle man and therefore can process transactions on a much wider scale than Amazon.
Amazon.CN have had a very difficult time in China and have always struggled to compete with Alibaba’s network and loyal consumer base. The platform, unlike Alibaba, have not been able to adapt to China and compete with domestic companies, as a result they hold a small market share of 5% verses Alibaba’s 70%.
Internet technology for Jack Ma should empower others, he is a passionate advocate for digital growth in China and beyond. It is digital innovation that will help China make the leap from a manufacturing based economy to a tertiary, service based one. The governments ambition is to make this leap over the next decade.
A shift from exporting to importing
“As a business person I want to share in prosperity together. I am excited as China is transforming from exporting to importing, if there’s a concrete number we can meet it. This is going to be a huge change for China and the world”.
Alibaba are uniquely placed to be a key player in the development of this trend. Whilst China is still the largest exporter of manufactured goods in the world, importing overseas products and brands is also huge, Chinese imports amounted to US$1.682 trillion in 2015. The Chinese strongly desire international goods and services which have become a byword for quality and authenticity in a market often associated with poor quality, Chinese produced counterfeits.
Their platform Tmall Global particularly provides an infrastructure for the sale / importing of western products, Alibaba have been instrumental in helping to facilitate this, responding to the rising middle class consumers demand for the genuine article. Tmall Global is just dedicated to international brands which host official stores on the website, they guarantee authenticity.
The increases in importing goods reflects a growing and changing consumer society. There are now over 350 million middle class Chinese consumers who are prepared to pay a premium for quality, overseas products.
Different ways of doing things in China
“There are many different models.. there is no one correct way. We need to have all types of models and business people need to believe in this, I believe in what I do.”
As Jack Ma points out there is no single correct way of doing anything, the e-commerce giant are a great example of this. They have developed in a unique Chinese specific climate with state regulation limiting the presence of competition from established western firms, they also have developed to cater for the Chinese market which is certainly a very different proposition.
Business practices in different markets will inevitably be different but he stressed that companies need to believe in their value, to have faith in what they do. Alibaba for Jack Ma is a positive step for China and one that improves the lives of its citizens by offering e-commerce shopping to more and more people.
It is only by embracing the different ways of doing things in China that western companies will succeed, Alibaba offer huge opportunities for growth on their cross border, e-retail platforms with such an active and growing consumer base across the country. The Chinese model needs to be utilized in order for western brands to be successful.
“We made same day delivery possible in 125 cities last year. Imagine 10 years ago delivering one thing from Hangzhou to Beijing took 8 days, Now you can deliver to inner Mongolia within 12 hours”.
Surely the company’s greatest achievement has been to build the most expansive delivery infrastructure in the world, for e-commerce to take off nationwide this was necessary but an unbelievable under-taking. They didn’t just focus on the established, more urbanized east coast of China but on the 2nd and 3rd tier cities in more rural area’s. This is very sensible as the majority of Chinese consumers are outside of the tier 1 cities (which are well catered in terms of brick and mortar stores), small city populations need to go online to shop without such services in their cities.
As he states, in a single year the company developed same day delivery in 125 cities across China, the largest growth in e-commerce in the world. It is not just a cases of a larger vehicle network, it has happened in-line with improved roads, a huge network of storage facilities and a better mobilized workforce.
Jack Ma and the US
“The US benefited from Globalisation.. The money was poorly invested.. It all went to Wall Street. It’s not a case that people are taking American jobs, if the money was invested in the mid states, that would create jobs”.
Jack Ma has strong opinions when it comes to Global Politics, with the rise of Trump he took aim at a changing America that he suggested had a poor strategy of investing money, rather it has been filtered away by Wall Street and not properly distributed.
It is evident that Jack Ma is passionate about investment spread out on a nationwide scale, particularly not just into the wealthiest marketplaces, Alibaba have practiced what they preach and pioneered the growth of e-commerce in smaller, more rural 2nd and 3rd tier cities outside of Shanghai, Beijing, Shenzhen and Guangzhou. The largest growth and uptake in e-commerce is now coming from smaller, 3rd tier cities in China.
The drive to ‘clean up’ counterfeits
Alibaba was recently added to the notorious American national e-commerce ‘blacklist’ for the selling of fake products. The firm have strongly argued against this citing their efforts to curb counterfeits on Taobao, the most problematic platform. This year alone 300 factories were closed and thousands of sellers banned from Taobao whilst Tmall is renowned for its quality and authenticity of goods with brands hosting official stores.
An agreement was reached with Trump, Alibaba have pledged to provide 10,000 jobs in the US, this is favourable for Alibaba as they look to expand their commerce empire beyond China’s borders. Alibaba have since been removed from the blacklist which they were previously removed from in 2012.
To conclude we can see that Jack Ma as global figure is of increasing importance not only to China but also to America and on the wider global stage. He is an incredibly perceptive and intelligent entrepreneur who has inspired a whole new generation of digital start-ups. Alibaba in recent years moved their headquarters to Hangzhou as part of huge ‘silicon valley’ style development with government grants and support for Chinese based tech businesses. Alibaba have contributed to this initiative to facilitate the growth of innovative, service based Chinese business in conjunction with the state.