Society /Life Dreams Maferialized
Ma Yuns
Internet World
By staff reporter ZHU HONG
A
S the founder and chair-
man of Alibaba Group, every
one of Ma Yuns business
decisions attracts attention.
From spending RMB 1.2 billion on
stakes in the Guangzhou Evergrande
Football Club to wholly acquiring
UCWeb, and to making the Initial
Public Offering (IPO) in the U.S., Ma
Yun continues to make headlines with
many fingers in many pies, despite
64 CHINA TODAY
having resigned as Alibabas CEO.
Alibaba, Chinas largest e-commerce
enterprise, boasts hundreds of millions
of users and provides business platforms
for millions of online shops, taking up
80 percent of Chinas online shopping
market share. The companys two web-
sites Taobao and Tmall registered a sales
volume of US $240 billion in 2013, three
times that of eBay and twice Amazon.
In 2013, Alipay, the companys smart-
phone-based payment platform, had a
turnover more than three times that of
U.S. rival PayPal.
Fifteen years ago, Alibabas 18 Chi-
nese founders were determined to es-
tablish a world-class Internet company.
Fifteen years later, our company is more
successful than we could ever imagine.
Alibaba is entering an age of new chal-
lenges, Ma Yun wrote in an email to Al-
ibabas employees, before the company
applied for its first U.S. IPO.
Father of the Chinese Internet
In a way, Ma Yuns entrepreneurship
parallels the history of Chinas Internet.
In 1995, as an interpreter for a Chi-
nese trade delegation to the U.S., Ma
Yun encountered the Internet for the
first time. This is Internet, you can
search anything by inputting key words,
said a local friend whose advice intro-
duced Ma to the new world. Mas first to create a business model.
search was for beer and returned huge Alibabas B2B (business-to-business)
amounts of information about German model is to provide services like infor-
and American beer. Then he searched As a pioneer of Chinas mation, finance, management, talent
for China, but the response was no and logistics to SMEs. Unlike other
data. Ma wondered why there was Internet, Ma Yun is models popular in the West that focus
nothing about China on the Internet. also an unconventional on large enterprises, Alibaba favors
Thinking fast, he persuaded a friend to small entrepreneurs, matching millions
make a website for an English-Chinese innovator in the industry. of buyers and sellers worldwide without
translation service. Within three hours geographic restrictions. Since the Inter-
he received six emails requesting infor- net was not yet prevalent in China, there
mation, giving Ma his first glimpse of
the Internet as a business opportunity.
After returning home, Ma set up Chi-
nas first business website China Yel-
low Pages, which made homepages for
other enterprises. Each homepage con-
tained about 2,000 characters in both
Chinese and English and a color picture,
and cost RMB 20,000.
Invited by the Ministry of Foreign
Trade and Economic Cooperation
(MOFTEC) in 1997, Ma Yuns team
joined the China International Elec-
tronic Commerce Center. Within a year
they successively developed a number
of websites for customers including
several government ministries and
commissions.
Ma left MOFTEC in early 1999 and
established Alibaba in his apartment
in Hangzhou. If the business world is
also divided into the poor and the rich,
the Internet is for the poor, said Ma. I
want to lead poor people to launch this
revolution. Born in Zhejiang, a province
known for well-developed private small
and medium-sized enterprises (SME),
Ma has struggled with the market, and
The Alibaba headquarters in Hangzhou City, Zhejiang Province.
knows how hard it is to start a small
business. For instance, suppose the
manufacturers price for a pen is US $15,
but Wal-Mart offers a price of US $8. bined, these small pebbles are mightier were no competitors.
Since an order could be worth US $10 than boulders, said Ma. Online busi- In May 2003, Alibaba launched its
million, the supplier has to accept the ness is like throwing a sprat to catch personal e-commerce website Taobao.
order. However, if Wal-Mart cancels the a herring, winning competition with In order to compete with eBay, a strong
order next year, the supplier is finished. speed. opponent, Taobao adopted a free pattern
Fortunately, small suppliers can now combined with functions and services
use the Internet to find other customers Original B2B Mode tailored to Chinese users. As a result,
worldwide, Ma explained. As a pioneer of Chinas Internet, Ma eBay was forced to withdraw from the
Alibabas business model is to gather Yun is also an unconventional innovator Chinese market. Data from analysis
import and export information for small in the industry. Though knowing little company Alexa shows that Taobao has
businesses across the world, helping about Internet technology, he boldly cre- become one of the top 20 most frequent-
them to find buyers who were otherwise ated a distinctive Internet business. Be- ly visited websites in the world.
only present at trade fairs. SMEs are fore him there were no success stories in As Taobao developed, the question of
like scattered pebbles on beach, which the global business-to-business market payment security became more problem-
the Internet can stick together. Com- and no Chinese Internet company able atic, hampering its further development.

October 2014 65
Society /Life Dreams Maferialized
In December 2004, Alipay, a third-party
payment platform which provides a fund
supervision service between buyers and
sellers, came into operation. Alipay has
become Chinas largest third-party pay-
ment platform, with 600 million users
and daily transactions of over RMB 2.6
billion.
Currently, Alibaba trades more than
eBay and Amazon combined, account-
ing for two percent of Chinas GDP. Ali-
baba commerce generates 70 percent of
Chinas express delivery shipments and
takes up 80 percent of the countrys on-
line transactions. Perhaps this is just a
beginning, as more than half of Chinas
sales are still offline. China now has
more than 600 million netizens, which
will soon help Chinas e-commerce
market surpass the U.S. and become
the largest in the world. According to
its IPO document, Alibabas net profits
in 2013 were US $3.592 billion, second
only to Google among global Internet
enterprises.
On November 11, 2013 the big screen at Alibaba headquarters displays the total volume of payments
through Alipay during the Singles Day shopping spree.
66 CHINA TODAY
Alipay has become Chinas
largest third-party payment
platform, with 600 million
users and daily transactions of
over RMB 2.6 billion.
Ma Yuns Commercial Empire
Just as the Internet is changing the
retail industry, we believe it will finally
change information-driven industries,
such as finance, education, and health
care. Once it happens and once we
achieve comprehensive interconnection,
I believe that equality and transparency,
the core Internet spirits, will help China
to leap towards a more powerful system
and social infrastructure, Ma Yun said.
Ma believes that the Internet is not just
about technologies and industries, but
conveys a spirit.
Alibabas commercial empire has
already expanded beyond e-commerce
to more traditional industries. Taking
advantage of the mobile Internet, Ali-
baba has invested in social networks
and social media, such as microblogs
and momo, and also developed a social
network software named Laiwang (lit-
erally: contact). To expand traditional
e-commerce and complete the distribu-
tion of O2O (Online To Offline), Alibaba
invested in Cainiao Network, purchased
amap.com, and became a part owner of
Haier and Intime Retail. To buttress its
superiority in Internet finance, Alibaba
purchased Hundsun Technologies and
Tianhong Asset Management. Optimis-
tic about the prospect of Chinas cultural
industry, Alibaba has also heavily in-
vested in TTPOD, Xiami Music, Wasu
Media, cul.china.com.cn, Youku Tudou
and Evergrande Football Club.
Currently, Alibabas industry distri-
bution is comparatively transparent. For
Wall Street, the charm of Alibaba lies
in its integrity, which not only implies
strong single product or service, but
more importantly its impressive syn-
ergistic effect in various service chains.
In this way, Alibaba can create an enor-
mous overlay effect, which explains
its strengths over other enterprises,
said Song Shaokui, senior analyst of
ChinaVenture Investment Consulting
Group.
During Alibabas 10th anniversary
celebration party in 2009, Ma Yun
elaborated his dream about the com-
pany: Alibaba is expected to become
a social enterprise, which comes from
society and serves society. Ma Yun
hopes that over the next decade Alibaba
will provide a development platform for
10,000 companies, cultivate 10 million
online communities, create 100 million
job opportunities, and offer a consumer
platform for one billion people. Ma
hopes that via the Internet and Alibabas
service, small companies can compete
equally with large enterprises. As re-
gards retired senior citizens who have to
wait in long queues in a bank just to pay
their electricity bill, With our services,
they can enjoy the same rights as the
banks chairman, Ma said. C
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