Founder and Chairman, BDA China, a leading investment consulting firm.
Author of “Alibaba: The House That Jack Ma Built”
Founder, investor and leading advisor on China’s dynamic technology and consumer sectors.
Founder and Chairman, BDA China, a leading investment consulting firm.
Author of “Alibaba: The House That Jack Ma Built”
Founder, investor and leading advisor on China’s dynamic technology and consumer sectors.
Duncan Clark is a recognized expert on the Internet and entrepreneurship in China, where he has lived and worked for more than 20 years. Duncan is chairman of BDA China, which he founded in 1994 after working as an investment banker with Morgan Stanley in London and Hong Kong. BDA China is an advisory firm serving investors in China’s technology and consumer sectors, employing over 100 mainland Chinese professionals in Beijing.
An early advisor to leading China Internet entrepreneurs, Duncan is author of Alibaba: The House That Jack Ma Built, the definitive work on China’s e-commerce and technology giant, its founder Jack Ma, and the forces and people that propelled its rise. Alibaba: The House That Jack Ma Built, published in the spring of 2016 by HarperCollins/Ecco, has received glowing reviews from The New York Times (“breezy”, and an “engaging” biography), The Economist (“fascinating”), and The Wall Street Journal (“Duncan Clark tells the story with flair… A fine writer”).
A senior China policy advisor to institutional investors, corporations and governments, Duncan is also a cofounder or early stage investor of a number of technology ventures including AppAnnie, Student.com and Radish Fiction. He is an independent director of Bangkok Bank (China) and an advisory board member of WildAid – dedicated to ending the trade of illegal wildlife products in our lifetime – and the Digital Communication Fund of Pictet et Cie.
A UK citizen raised in the UK, US and France, Duncan is a graduate of the London School of Economics and a former Visiting Scholar at Stanford University. After serving as Chairman of the British Chamber of Commerce in China, Duncan was awarded an OBE in 2013 for services to UK-China trade and investment.
I write this morning with a book recommendation, and not the book you might think I’d be recommending.
In March I wrote a profile of Alibaba co-founder Jack Ma that focused on his leadership qualities. For that piece, I interviewed Duncan Clark, a China hand who has known Ma for years and in 2016 published a biography of the Chinese entrepreneur, Alibaba: The House That Jack Built. It is this book, which doubles as an account of Ma’s life and a corporate history of his important company, that I strongly encourage you to read. (I’m often a slow reader, and I just finished it; that’s why I’m talking about it now.)
Ma’s story is fascinating. Unlike much of the Chinese political leadership, he comes from neither a well-connected family nor from a top university. Instead, through his wily ways and attention to the changing world around him, he cobbled together an e-commerce monolith that is unlike anything in the West. Clark tells this story clearly and objectively, though he clearly admires Ma and the people around him.
As I wrote in my feature article, for all its fame and the success of its 2014 initial public offering on the New York Stock Exchange, Alibaba remains poorly understood outside China. Compared with its home market, its businesses are nascent everywhere else, but they won’t stay that way. Clark’s book is a one-stop shop for beginning to understand one of the most important companies in one of the world’s most important markets. Because Alibaba’s story involves one-time U.S. Internet giant Yahoo as well as Softbank, the still-relevant Japanese telecommunications, and investment firm, Clark also does a good of job reviewing some dot-com history that had become gauzy in my mind.
Clark’s admiration for Ma has its limits. He recounts, for instance, the 2011 spat between Alibaba and its investors, Yahoo and Softbank, over Alipay. In that largely forgotten episode, Ma transferred ownership of Alibaba’s critical payments arm, now known as Ant Financial, into a new entity he controlled, effectively taking it away from Yahoo and Softbank. Clark describes Ma’s defense, that the Chinese government wouldn’t grant a license to a payments firm with such high foreign ownership. What he doesn’t explain is why Ma didn’t bother telling Yahoo and Softbank, whose principals were furious.
Alibaba (BABA, +1.24%) is on a trajectory to be an important global company for years to come. Understanding its story—and that of its charismatic and quirky co-founder—is important for anyone who needs to know about the future of business.
As China’s second richest man, Jack Ma is the global face for the country’s innovative tech entrepreneurs. While he recently met with US President Donald Trump to discuss ways to create more than a million jobs in America, Ma’s mighty e-commerce empire Alibaba famously began in a modest Hangzhou apartment 18 years ago.
Ma’s journey from an English language teacher to global power player is chronicled in Duncan Clark’s Alibaba: The House that Jack Ma Built . An early advisor for the company, Clark credits its success to “the consistency of Ma’s vision.”
“In 1999, [Ma] said he would take on the giants of Silicon Valley and indeed he did. He was driven by an unwavering faith in the power of entrepreneurs and the Internet to transform China,” Clark explains. “Back then in the humble surroundings of his apartment, it all sounded quite impossible, but his self-effacing and humorous personality made me want to believe he could do it.”
While Alibaba began with a focus on business-to-business e-commerce and became profitable within two years, the company exploded with the 2003 founding of its business-to-consumer platform, Taobao. Its AliPay function was spun off into its own separate business a year later.
“Ultimately Jack’s biggest success in the early days was using his charisma to raise the capital he needed to start Taobao,” Clark says. “His reputation was secured by 2006 with Taobao’s humiliation of eBay in China.”
Now Ma uses his engaging personality to charm world leaders, such as his famed appearances at the World Economic Forum (WEF) in Davos, where he routinely undercuts his growing power by noting that he had been rejected 10 times by Harvard. Looking through his archive Ma’s speeches over the last two decades, Clark laughingly points out that the Alibaba founder “has been giving the same speech [over and over again]!”
“Not exactly, of course, but he often repeats some stock stories or jokes,” Clark explains. “But if you look at the faces of his audience, you will see that Jack has an incredible ability to make people laugh and keep their attention. Like a stand-up comedian, he knows how to tailor his performance to suit any particular crowd.”
With a purported 80 percent share of China’s e-commerce market, Alibaba is turning its eyes abroad. Its USD25 billion initial public offering (IPO) three years ago on the New York Stock Exchange was the world’s largest. It recently struck a deal with Steven Spielberg’s Amblin Entertainment, showing its bold intentions to infiltrate Hollywood.
“Alibaba has no choice but to diversify,” Clark says. “China’s e-commerce market is changing in line with the country’s consumers, who are demanding [not only better] quality of goods, but also services and cultural content – from financial services to sports and entertainment.”
“Big data is the driving force for Alibaba’s diversification. All the information flowing through its e-commerce, finance (especially AliPay) and logistics businesses give it a unique opportunity to anticipate, and perhaps even shape, consumer demand.”
An underexplored aspect of Alibaba’s expansion is its focus on emerging markets. While competitors like eBay and Amazon may rule the West, Alibaba Express has become an increasingly popular site for consumers “keen to buy ‘factory gate’ priced products, made in China that are not available through other channels.”
As a result, Alibaba: The House That Jack Ma Built has been greeted with keen global interest with editions available in 15 languages and counting. While Alibaba’s rise to global prominence is seemingly on a smooth course, Clark examines a growing challenge that Chinese entrepreneurs like Ma will face in his Shanghai Literary Festival talk, Pragmatism vs. Populism, that explores rising anti-trade sentiments abroad.
“It’s useful to speculate on how individuals like Jack, who famously met President Trump just before he took office, will be put to the test in the current global disorder,” Clark says. “They succeeded against the odds, but now they need to go global. Can they meet this challenge?”
Originally by: Andrew Chin, March 6, 2017 in THAT’S
BEIJING, Aug. 25 (Xinhua) — At first glance, little may set Duncan Clark apart from other foreign business executives in Beijing’s CBD, with his dapper appearance and Mandarin-peppered English. But in fact, he has worked as an adviser for Jack Ma, the maverick founder of Alibaba Group, when China’s largest e-commerce company was founded in a small apartment back in 1999.
Now Clark, who comes from Britain, has written a book about Ma and his monolithic company, “Alibaba: The House That Jack Ma Built.”
Clark, in a crisp blue business shirt, sat down with Xinhua recently for an exclusive interview in the office of his consulting firm next to the CCTV “big pants” building to talk about his book on the eve of the G20 summit to be held in the Chinese city of Hangzhou — incidentally, Ma’s hometown in Zhejiang Province. Ma, who chairs the B-20 SME Development Task Force, is expected to attend the summit.
So what is the book about? Clark put it in a nutshell. “The book is really about two things: the Internet coming to China, the rise of the private sector. The combination is like an explosion, and Ma Yun is the guy with the match,” Clark said.
Then of course there is “Jack” himself, as Clark mostly referred to Ma Yun, Alibaba’s larger-than-life founder and chairman. After all, what good would a book on Alibaba be without mentioning Jack?
“His sense of humor is the first thing you notice,” Clark said, adding that Jack would say “crazy things,” for example that his company would be bigger than Amazon’s or that he would rule the world — all big visions while sitting in a little room. “You had to laugh. But somehow you didn’t laugh at him, you were laughing with him … but somehow, there was something about him that just seemed different.”
Though he appeared to be a bit of an oddball, Clark said Jack proved himself to be “a team leader and a great communicator.” Also, Jack had a knack for telling stories and “making people feel relaxed … he makes you feel like he’s talking to you, even if you’re in a room of 3,000 people.” Yet behind his Forrest Gump-like facade, Jack is actually “very strategic,” a man who is always “looking, learning, building ideas.”
In fact, Jack is a pragmatist at heart. Born into a modest background in China’s Zhejiang Province, one could say that Jack was also born right into China’s merchant culture. Bad in math, he “turned to his sense of imagination and his ability to be a performer” while hawking plastic carpets to supplement his income from teaching and translating. “He understands what it is to be a small merchant,” Clark said. Also, he said, Jack understands his customers. “The success of Alibaba is really Taobao (Alibaba’s consumer-to-consumer portal). The key to understanding Taobao is understanding the customer.” A true-blooded business tycoon, “he’ll do anything to get the deal.”
And Jack is ambitious. “The strongest thing about him is ambition. The weakest thing about him is his ambition,” Clark said, citing Alibaba’s massive money market fund, Yu’e Bao, as an example, which shocked banks and had people turning against him. Still, thanks to Jack’s strong communication and motivation skills, others “follow him into battle.”
Clark mentioned Tencent as a foil to Alibaba. “Tencent is much more strategic, is much more cautious, and more focused. Alibaba is doing big things in finance, in media, in global… so ambition is the strong point and the weak point of the company.” A double-edged sword indeed. “Investors sometimes love too much ambition, sometimes they’re afraid, so it’s a balance.”
Clark said he was brought on board to advise Alibaba on its international expansion during the company’s infancy as a contractor and “foreign friend.” Clark also indicated that Alibaba was to a certain extent supportive in his writing the book, yet he emphasized he had worked independently on it.
“I did not have that sit-down with him,” Clark said. In other words, he didn’t conduct lengthy interviews with Jack, but he did have some time with Jack’s number two, Joe Tsai.
Clark said he talked to current and former Alibaba employees as well as competitors. It was hard to find critical voices because Jack has “a very different management style” than Steve Jobs, Clark said, referring to the founder of Apple who wasn’t known for his people skills. He wanted to steer clear of gossip about Alibaba’s founder while making sure he was not producing a “puff piece.”
Clark said his book is now being translated into 14 languages. “Brazil, Russia, Ukraine, Indonesia, Vietnam, Mongolia — a lot of people actually buy stuff on Alibaba’s websites, so they are interested in the company and also his story,” he said.
Yet his book is not only about technology. “People don’t love technology, they love people,” the author said, and as such, a story about Alibaba’s charismatic leader would attract more readers.
Clark aims to both entertain and inform. “I think Alibaba is a window into a deeper understanding of China,” he said, hoping his readers can learn more about what is going on in China, for example as regards the Internet, its entrepreneurs and Zhejiang Province. Clark said that Jack had helped make Hangzhou, China’s Silicon Valley, a major tech hub and further raised commerce in Zhejiang. “I hope one of the things of this book is it kind of opens people’s eyes to the power of Zhejiang. The G20 will do that even more.”
For Clark, finding some old Australian friends of Jack’s — the Morley family who had come to China in 1980 — was a highlight. To track down David Morley, who is now running a Yoga studio in Australia, Clark conducted some “investigative journalism.” “Nobody had told that story,” Clark said. Now, Jack’s friend David is also Clark’s.
“The most fun part was building a friendship with David Morley. Actually, we’ve never met, but we send messages all the time,” he said, adding that Jack has now started talking about the Morleys as well.
Another surprise that his book had in store for him after its publication was receiving a call from Wall Street Journal that a pirated copy of his book was available — on an Alibaba marketplace. “The funniest thing was when my book was copied on Taobao,” Clark said, amused. Alibaba later removed the links.
When asked how Jack benefited from the development of the Internet and China’s opening-up, Clark suggested that Jack was born in the right place at the right time, as Hangzhou opened early to tourism and has a long tradition of commerce. Moreover, Jack “has benefited from certain crises. Actually, if you look back, crisis has been his opportunity.”
Clark cited SARS as an example, when many people had to stay home and used their new broadband connection to shop online. That was exactly the time when Taobao was launched in 2003. The 2008 global financial crisis helped open up the Chinese market for him, as a lot of factories could not export to the United States.
Now, Clark said Jack can help facilitate China’s shift from a manufacturing to a consumer-driven society. “Jack is offering a solution to China … how to move from a made-in-China to a consumed-in-China or designed-in-China,” he said. “Ma Yun can sell Alibaba as a way to actually move up the development of the middle class, give them more choice … and create more innovative products. That’s a dream.”
Clark also addressed the subject of innovation and said that there has always been a history of copying among nations. He said while the private sector has to lead innovation, governments can create the conditions for it, such as education and intellectual property laws. “People in the West want to understand what is happening in China that might be original, or might be not just copycat,” he said. Actually, he said Alibaba’s Taobao and Tmall platforms are themselves innovative to a certain extent.
As for Alibaba’s foray into overseas markets, Clark said there would have to be a wait-and-see approach. Although its e-commerce website AliExpress has taken off in Russia without Alibaba’s even opening a single office, Clark is not so sure that success can be replicated in the United States with its highly sophisticated retail sector. He mentioned Amazon.
“Amazon is doing things differently from Alibaba. Amazon buys products and sells them, so they have inventory; Alibaba is just a market place, so they just connect buyers and sellers.” However, Clark said that Amazon is now building its own products, which might pose a threat to its biggest customers yet harbor opportunities for Alibaba to compete with Amazon.
Looking forward, Clark said Alibaba’s top future challenge is human resources, so it is trying to recruit its own foreign talent for its expansion through the Alibaba Global Leadership Academy. Young foreigners work for Alibaba in Hangzhou, become immersed in the company culture and are then dispatched overseas.
Ironically, Clark called Jack, the homegrown Hangzhou entrepreneur, “more of a global player” than Baidu’s U.S.-educated Li Yanhong and said Jack has been actively involved in the globalization debate. Alibaba’s founder has also been visiting Davos. “Jack was one of the earliest to start talking about corporate social responsibility, environmental responsibility because he tends to be ahead of where other people are,” Clark said. So far, this has been a smart move for Alibaba’s PR.
“For Alibaba going overseas, we will learn do they make the same mistakes that the West made coming here (to China),” Clark said. He suggested that a key to Alibaba’s past success lies in Jack’s flexibility, which may also serve him well in the future. “He tries to be all things to all people, and he’s doing pretty well.”
(Xinhua reporter Chen Xuelian contributed to the story.)
Duncan Clark has narrated a highly entertaining story about not only Alibaba and the man who created it, Jack Ma, but also about entrepreneurship in China and the creation of the Chinese Internet.
Clark is a consultant who lives in Beijing. He has worked in China for more than 20 years and has seen the birth and development of the Internet in China from up close. As an advisor to Alibaba in its early days and with access to company insiders over the years, Clark manages to provide a unique insight into both the company and its founder, Jack Ma.
There have been plenty of books written about tech legends, from Steve Jobs to Elon Musk to Jeff Bezos that give detailed accounts of their extraordinary talents and the great companies they have built. Alibaba: The House That Jack Ma Built chronicles, almost for the first time, the journey of a tech entrepreneur and a company that are not American and are “one hundred percent Made in China.”
Unlike, Jeff Bezos, who went to Princeton and worked on Wall Street, Jack Ma came from a very modest background, was not good at Math and barely made it into a local college. While at times adulatory, the author provides a lively account of Jack’s rags-to-riches story, which started in Hangzhou, a city 200 km Southwest of Shanghai. His mother was a factory worker while his dad was a photographer. He was not a good student in a conventional sense but he was passionate about learning English and he did that by showing tourists around his hometown as a tour guide. He established a special bond with an Australian family on one of their trips to Hangzhou. The family not only helped him hone his English skills but also helped him financially during his college years.
According to the Clark, this friendship was instrumental in unlocking opportunities for Jack that have made him what he is today. Jack Ma began his career as an English teacher but he was inspired to become an entrepreneur during Deng Xiaoping’s famous “southern tour” in 1992 where the Chinese leader made the famous statement that “to get rich is glorious.” Jack started a small translation company to help local Chinese companies that sought to do business with the West. One of his projects led him to visit the US where he was introduced to the Internet for the first time. Jack was very intrigued and the idea for an online yellow pages for Chinese companies was born.
For aspiring entrepreneurs in India, looking for inspiration and start-up gyaan, this book would be a very rewarding read. The book is peppered with quotes from Jack, which in themselves provide great entrepreneurial lessons. Jack’s famous quote “Today is brutal, tomorrow is more brutal but the day after tomorrow is beautiful. However, the majority of people will die tomorrow night”, teaches an important lesson of perseverance that tech entrepreneurs would do well to remember especially given the tough times they are currently facing.
The book also gives the reader a good sense of the challenges faced by Jack and other Chinese internet pioneers along with the reasons for their success. In a country where internet penetration was low when Jack started his first online venture and where the government was grappling with the dichotomy of encouraging the growth of the internet while still maintaining government control, the challenges were especially daunting. One of the big reasons for the success of some of the homegrown internet ventures in China was the failure of global internet companies to make any impact in the country.
For readers who are curious to learn about Alibaba, which in 2014 raised $25 billion in the world’s biggest IPO ever and who want to understand how the Internet evolved in China, the book is well worth a read.
Travis Kalanick, the co-founder and chief executive of the ride-hailing giant Uber, often defended his eagerness to risk billions on winning the Chinese market with a simple question: If you have a chance to become Amazon and Alibaba at the same time, why not try?
The implication was simple. Over the last couple of decades, Amazon, Facebook, Google and other American technology giants have each followed a similar script for world domination. Like an imperial armada rolling out from North America’s West Coast, these companies would try to establish beachheads on every other continent.
But when American giants tried to enter the waters of China, the world’s largest internet market, the armada invariably ran aground.
Plagued by opaque and ever-shifting regulations and a culturally abstruse way of doing business, American companies fell to a series of local giants. Instead of Google, Baidu. Instead of Facebook, WeChat, owned by the giant Tencent. And instead of Amazon, Alibaba.
That has left us with a divide: Today, there is the Chinese internet, and there is the internet of the rest of the world. A network seen in its early days as a tool to foster financial and political unity across a fragmented planet has irrevocably cleaved into two completely separate spheres.Mr. Kalanick, a famously competitive and aggressive entrepreneur, had apparently studied these risks and seemed determined to bridge that gulf. He would try to take on China not as an afterthought, but as a central mission of his fledgling company. He would risk billions and spend a great deal of time in China to figure out the secrets of winning there. The goal seemed lofty, but the opportunity, after all, was eye-popping: Amazon has a market value of $365 billion, and Alibaba is worth about $200 billion. The ride-hailing business might one day grow to be as valuable as e-commerce, if not larger — and wouldn’t it be fantastic if you could own it all, everywhere?
Well, you can’t. The announcement on Monday that Uber will sell its Chinese operations to its rival Didi Chuxing, effectively ceding China to the homegrown favorite, cements an emerging global state of play: A kind of Chinese-American Cold War over the internet.
Entrepreneurs across the globe can choose to win in China or the rest of the world. You can be Alibaba or you can be Amazon. You can be Uber or you can be Didi. But you can’t be both. Given the rising Chinese market and increasing tension over the role of American tech firms in the rest of the globe, the gulf between the two sides promises to become one of the most important factors in determining the shape of global tech innovation.
How exactly might the war play out? In some ways, being at the mercy of two poles of internet leadership could be good for citizens of planet Earth. In emerging markets like India, the Middle East and parts of Africa and South America, the giants of China and the United States are increasingly investing billions to compete for local customers in e-commerce, social networking, ride sharing and other markets.
For instance, Duncan Clark, an investment adviser in China who wrote “Alibaba: The House That Jack Ma Built,” pointed to the way Amazon and Alibaba act as foils for one another.
“Amazon is increasingly making its own branded products, taking on Procter & Gamble and others, and also getting into the logistics business, and shipping, and everything else,” Mr. Clark said. “But Alibaba is a marketplace that doesn’t hold inventory and describes themselves as helping local merchants — so maybe there’s some argument that Alibaba could serve as a counter globally to Amazon.”
But Uber’s deal with Didi — in which Uber will take an 18 percent stake in the combined company, which is certain to become the monopolistic player in the Chinese ride-hailing market — points to another potential outcome: A series of accommodationist deals in which giants cede large parts of the world to one another, pragmatically carving out their spheres of influence like players in The Great Game.
“In that way it could be like the Yalta Conference,” said Mr. Clark, referring to the 1945 meeting in which the victors of World War II determined the postwar geopolitical order.However the global order shakes out, each side’s home territory seems safe from invasion by the other. Uber’s retreat in China was preceded by a parade of failures by earlier American tech firms. Some fell short for obvious political reasons — companies that traffic in information, like Google, Facebook and Twitter, were essentially stymied from the start by the Chinese censorship regime. Others, like Amazon and eBay, failed to appreciate some of the differences in how business got done in China, especially the importance of personal connections.
Of all American tech firms, Apple has achieved the biggest success in China — about 25 percent of its sales occurred in China, Hong Kong and Taiwan in 2015. But in recent months, it, too, has been running into political hurdles in the region.
“The barrels that will be thrown at you when you’re trying to do business in China will just never stop,” said Mark Natkin, the managing director of Marbridge Consulting, an advisory firm based in Beijing. “You’ll constantly be above one barrel or recovering from jumping one, and as you’re dusting yourself off you look down the road and here comes the next one.”
Compared with previous failures, Uber seemed to do everything right in China. It set up a separate company, Uber China, which had a buy-in from local investors, including from a local giant, Baidu. It hired many local experts, and worked closely with the national government to foster friendly relations.
Insiders say Mr. Kalanick was also personally invested in the deal. He visited China eight times in the last year and a half, and became something of a tech star in the Chinese media.
Publicly Mr. Kalanick had insisted he was fighting for total victory in China. But he must have known that Uber would always struggle to achieve dominance, given the emerging centrality of ride-sharing to the future of infrastructure in China. Still, even if he failed to win everything in China, investing early in the country seemed too big to skip.
“The ride-sharing opportunity in China is basically as big as the rest of the world combined, if not bigger,” said Ben Thompson, an analyst based in Taiwan who writes the tech newsletter Stratechery. “For Uber, China was basically frosting on the cake.”
For now, it’s especially delicious frosting. The $2 billion Uber spent tackling China is now worth about $7 billion in the new merged entity; if Didi does become one of China’s largest tech companies, the value of Uber’s stake in China could rise geometrically, making the firm much more attractive in a potential initial public offering. Pulling out of China also frees up Uber to invest more in other markets — India and Indonesia are big targets — as well as expand its expertise in core technological initiatives like mapping data and self-driving cars.But if spending big to tackle China ultimately works out for Uber, it will be an anomaly, and certainly not a model for other American tech giants.“The ride-sharing market is one the few markets where the upside is big enough to justify going in,” Mr. Thompson said. “For most other companies, going into China is still going to be nothing but pain.”
The New York Times: Q. and A.: Duncan Clark on ‘Alibaba: The House Jack Ma Built’
by Jane Perlez
Duncan Clark is known in Beijing as a savvy commentator on China’s rapidly morphing tech world. A British citizen who first came to China in 1994, he learned the language and stayed for two decades. His background as an investment banker specializing in telecommunications at Morgan Stanley in London and Hong Kong helped him understand in the mid-1990s that the China market was about to take off.
Mr. Clark opened a consultancy firm, BDA, which helped raise money for the major telecom operators China Mobile, China Unicom and China Telecom. One of the most interesting characters he encountered, Mr. Clark said, was Jack Ma, in the early days of Alibaba, the e-commerce giant Mr. Ma founded. That insider view infuses Mr. Clark’s book “Alibaba: The House Jack Ma Built,’’ to be published in April. In an interview, Mr. Clark discussed Alibaba’s phenomenal growth, Mr. Ma’s emergence as a public figure and what sets Mr. Ma apart from the Facebook founder Mark Zuckerberg.
Q. You once described Jack Ma as someone who likes to cultivate the persona of an outsize personality. Isn’t there a risk in having too high a profile in China and being taken down?
A. Executives who say or do the wrong thing are always at risk. I titled the last chapter of my book ‘‘Icon or Icarus.’’
Sure, he has an outsize personality and a large public following, but he has been careful not to fall foul of the authorities. If anything, he has positioned Alibaba as a useful ally as the government attempts to put Chinese consumers in the driving seat. Spend more, save less is the new mantra. This won’t happen overnight. Shedding the old economic model centered on manufacturing, construction and exports will take time and require complex and painful reforms. Alibaba, and the power of the Internet, are shiny objects that the government can point to.
Q. Alibaba has been working in recent years to reorganize and become more efficient. All tech start-ups go through growing pains. How severe are those pains at Alibaba right now?
A. Alibaba was founded 17 years ago, employs over 38,000 people, and is a listed company on the NYSE. It has experienced lots of ups and downs, both as a private and a public company, and gone through many reorganizations. Alibaba is more of a commerce company than a tech company, although its future is increasingly one in which technology plays a leading role. Jack himself does not have a tech background and unlike, say, Robin Li at Baidu, he has had to defer to colleagues who do.
After a few years of piecemeal international expansion — including a failed attempt to launch its own consumer-facing site in the U.S. — Jack last year brought in former Goldman Sachs banker Michael Evans to oversee its global footprint, with new offices on the East Coast of the U.S. and across Europe.
Q. Ma started out as an outspoken, slightly goofy businessman. Now he is attending major political events like the China Development Forum — which is a major way for Beijing to promote China. Has he chosen to go into politics of his own free will, or has he allowed himself to be co-opted as a matter of survival?
A. Even before he founded Alibaba, Jack was a regular speaker at conferences at home and abroad. His public appearances have been critical for him to grow and maintain his profile. He is the ultimate performer, his folksy charm and seemingly impossible ambitions as effective in English as in Chinese.
Before he founded Alibaba, his third venture, Jack worked as a civil servant in Beijing, giving him valuable insights into the intersection of business and politics in China. This is crucial as he expands his empire beyond e-commerce into areas such as finance. The process isn’t smooth however: Jack has already encountered powerful vested interests such as opposition from state-owned banks alarmed by the rapid growth of his money market fund or plans for an online bank.
Q. Is Alibaba, whose business depends heavily on private vendors using it to sell their wares, really committed to getting rid of counterfeit products as demanded by the Chinese State Administration for Industry and Commerce (S.A.I.C.)?
A. Fakes and unscrupulous traders are part and parcel of commerce. In China, as in the U.S., there are people who actively seek out fakes, people who are unwilling or unable to pay for the real thing.
Simply moving trading online doesn’t eliminate the problem, but it has created tensions between S.A.I.C., the brand owners who suffer from piracy and operators of e-commerce platforms like Alibaba. The short-lived, but very public, spat with S.A.I.C. in January 2015 illustrated that Alibaba has no choice but to step up its efforts to root out fakes on its platforms: to help the government do its job.
Alibaba became famous for Taobao, the platform where small merchants or individuals sell a wide range of third-party products — including fake products, especially in the early days. Merchants who pass off fake products as real can expect to see their store ratings and business suffer. Alibaba can also shut down the Alipay accounts of repeat offenders, and use big data to analyze trading patterns.
But Alibaba’s success hangs increasingly on another platform, Tmall, where brand owners sell their own — real — products, or via large retailers, directly to consumers. Taobao was vital to Alibaba’s past success. Tmall is the key to its future, as Alibaba generates a commission on every sale. By contrast, on Taobao, Alibaba relies purely on advertising revenue.
Q. Alibaba seems to be buying into new areas that could be considered vanity projects, or projects that assist the Chinese government with soft power. Hollywood and The South China Morning Post, the Hong Kong English-language newspaper, are two examples. How much of Ma’s desire for promoting China is involved in these projects?
A. The relatively small — $200 million — purchase of The South China Morning Post will do little to move the needle for Alibaba’s business, raising the question of why the company felt inclined to buy it in the first place. In explaining the purchase, Alibaba vice chairman Joe Tsai vowed to protect the newspaper’s editorial independence. Yet he also voiced frustration at how China is portrayed in Western media. While Alibaba is unlikely to use the paper as a vehicle for promoting itself, it faces an uphill struggle to convince skeptics that it made the purchase for reasons other than helping the Chinese government project its influence in the territory.
Q. How would you describe the differences in entrepreneurial style between Mark Zuckerberg and Jack Ma? Do you think Facebook, which is now blocked, will enter the China market?
A. Jack is an entrepreneur’s entrepreneur: He’s not a tech guy, he didn’t go to Harvard, he even once supplemented his income as an English teacher by buying and selling plastic carpets on the streets. Mark Zuckerberg has a tech background, who leveraged that and good timing while at Harvard to build a massive and almost global social business.
But China will likely remain beyond Facebook’s grasp. China has hardly stood still without Facebook: Tencent’s WeChat is a dominant player in China already, superior in some important ways to Facebook especially in mobile. No doubt Jack and Zuckerberg have explored how they might work together, not least because Tencent is a formidable competitor to Alibaba in social and mobile.
But to enter China, Facebook would have to water down its local product, or de-link it from the rest of the world — which risks alienating customers and the U.S. government. It’s hard to see how Facebook can square the circle. But that doesn’t mean that Mark Zuckerberg won’t keep on trying.
China tech leaders (eg Alibaba, Baidu, Tencent, Xiaomi) – Chinese technopreneurs setting the pace on global landscape and implications for Western competitors
Entrepreneurship in China – Lessons for the West
“We appreciate the inspiring speech you delivered at the European Parliament and the vivid presentation next day. Your insightful interpretation on China’s e-commerce development based on your deliberated observation through Jack Ma’s early life contributed enormously to the success of our two events. The sparks generated between your vision and other speakers’ enabled people to regain attention on the brighter side of China-EU relationship, led to an open-up of hot discussion on possible bilateral cooperation on cross-boarder e-commerce. All the audience and speakers enjoyed your passionate presence, especially Claudia Vernotti and myself.”
President, ChinaEU – Brussels, Belgium
“Now that the dust has settled a bit I thought I would pop you a mail to try and express what a privilege it was to work with you and the SAGE worldwide team. I just wanted to say a big thank you for the excellent speaker address, tight deadlines and quick turnarounds.
The Discovery Leadership Summit is the definition of intellectual leadership, understanding this statement shows the magnitude of the task completed. I truly do believe that you were an asset to the speaker line up and that you speaker address personified intellectual leadership shared.”
Discovery Leadership Summit, Johannesburg, South Africa
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