Alibaba / Jack Ma’s Empire of Success

In 2016 Chinese online shopping giant Alibaba (Alibaba.com, Alibaba Express, Tabao etc) overtook Walmart as the largest retailer in the world, based on gross volume. The publicly traded company recorded revenues of CN¥101.143 billion. It also reached the milestone of creating 15 million jobs since its founding. To describe Alibaba as a success would be an understatement. However, it wasn’t always an easy ride for founder and current Chairman Jack Ma.

 

An Entrepreneur In A Communist Society

Born in 1964, Jack Ma grew up poor in communist China. He never had any official English lessons, so instead he took it upon himself to learn the language. He did this by talking to tourists and offering them free trips around Hangzhou in exchange for informal classes. Even before he dreamed of starting an online shopping company, he was making deals and developing international relations on his own terms.

This atypical route of learning and success would stick with him as he grew of University age. Despite failing his entry exams twice and having no wealth or status in-roads, no was not an option. Eventually on the third attempt he was accepted. He studied to become what he never had himself, a proper English teacher, but his heart was in something much bigger. An online shopping empire!

While others were studying for business, he was using his English skills, charm and creative mind to think outside the box. Planning what would become online shopping‘s biggest success story. However this was not before he was turned down for jobs at such lucrative establishments as KFC.

Ma was not deterred in spite of his lack of technical abilities and formal training in entrepreneurship. He was one of the first people in China to champion the internet and foresee it’s ability to make money. To begin with he wanted to help others get online and market their businesses. It wasn’t until later that it dawned on him that the real money would come from making his own online business. To create something similar like those emerging in the west.

 

The Start of Something Big

In 1999, he along with 17 friends who were inspired by his enthusiasm, all pooled their money and talents. From a crowded flat in Hangzhou they launched their first online shopping marketplace “Alibaba Online.” The venture wouldn’t make revenue until 2002, but the decade that followed saw staggering growth. This was something that was never meant to happen.

Today we’re accustomed to online shopping and the giant internet corporations that dominate the web. When Jack Ma dreamed up Ali Baba it was a very different online world. Not only was eCommerce unheard of on any scale in China, but traditional retails outlets had barely even ventured outside of the big cities. The only real way to buy anything was face to face, with cash. Ma was not just entering a market, he was creating it. He had to overcome centuries of traditions to get buyers and sellers to connect over the web.

Of course in a communist leaning country where the government enjoys having overbearing control of the business sector, the uphill battle was steep. Much steeper than the technological shifts going on the west at the time, with the rise of eBay, Amazon shopping and other online shopping websites. Jack Ma had to formulate a secretive and complex corporate structure that put the power and assets in the hands of himself and a few insiders, in case the government decided to swoop in and take control. He is now worth $27.9 billion and was the first Chinese entrepreneur to appear on the cover of Forbes.

The simple idea proved extremely successful. For the first time it allowed manufacturers in China and businesses across the world, a direct line of contact, cutting out the middle men. Alibaba would profit from the listings and didn’t have to carry its own stock. They have since expanded in to auction and consumer to consumer marketplaces (Taobao, Tmall, Alibaba Express). Plus they supported the payment platform Alipay and an endless list of other online properties. Including everything from maps services to online streaming video.

Alibaba Not Just a Success – The Best

In 2002 with funding from Goldman Sachs and Japanese telecom company SoftBank, Alibaba China recorded revenue of $1. Just 5 years later it was listed on the Hong Kong Stock Exchange and was making thousands of millions in Yuan. Alibaba Express (AliExpress) which was launched in 2010 cut out even more middlemen, allowing manufacturers to reach consumers across the world directly. It is the most visited e-commerce website in Russia!

Today the group is the largest online shopping and mobile commerce business on the web. They receive over 100 million hits a day and 70% of sales made using a mobile device. You can now also purchase Alibaba stock on the NYSE. Their Alipay payment platform is worth $10 billion more than PayPal, with 450 million active users compared to the American company’s 188 million. Compared to Amazon, Alibaba sells almost triple the amount of items per year. It also has an equity of $25.46 billion compared to Amazon’s $13.384 billion. In March, 2016, it surpassed Walmart as the largest retailer in the world, based on gross volume. Not bad for a poor communist who struggled to enter college.

 

More Than A CEO

Some equate Alibaba’s success with Jack Ma’s larger than life personality. In fact the name Jack was given to him by one of his foreign friends as a youth. He was actually born Ma Yun, but to the world of Alibaba he’s Jack Ma, the man who staged a silly string party when the company first turned a profit and encouraged employees to do handstands during breaks to promote fun and productivity. At the 2013 annual celebration he dressed as a punk rocker and performed in front of 20,000 workers. He did this for no other reason than because it was funny.

But it’s not all about fun and games for the second richest man in China. Ma, believes China’s air pollution has caused his health to deteriorate. Due to this he is one of the few in the country leading the charge in corporate environmental responsibility. In 2007 he and his family stopped eating shark fin soup. By 2009 all shark fin products were pulled from all Alibaba platforms. Ma never allowed shark fin’s to appear on newer ventures like Alibaba Express either. Ma was instrumental in building a 27,000-acre nature reserve. He has also pledged 0.3% of annual revenue to water and air quality improvement projects since 2010.

 

The Future

Jack Ma has stepped down as CEO for Alibaba. Even without Ma, the sky is the limit for Alibaba and they continue to expand and diversify beyond shopping online. 2016 Alibaba news saw the group branch in to India with a 25% stake in the Paytm online wallet and eCommerce platform. Domestically growth is happening at a natural pace as more of China’s huge population get online and internet infrastructure becomes more high speed. Jack Ma also wants to give back to young entrepreneurs. He is doing so via loans to small businesses at an average of $5,000. “We want to make sure that small businesses can survive and young people make the world changing, that they change China, he explained in 2015. Perhaps the next Alibaba is just around the corner?

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