Myfictions Blog

Alibaba's World

Alibaba's World



It was the year 1998 when the number of internet users in China was just two million. Out of the two million,only one percent people preferred being online and out of that one percent also very few people preferred doing the online shopping. Consumers' purchasing power was also very low, and there was confusion regarding the Chinese Government's decision whether it would accept the world of internet or not. At the time, the Western companies and industries had a very big influence upon the Chinese society. In such a condition, a company like Alibaba, which was just like a crawling child, how did it establish itself as one of the top online companies in the world? We are going to reveal something about that today.

 The founder of Alibaba is Jack Ma ,who was born in 1964 ,September 10 in China. When China was open to the outer world after its cultural revolution, his intimacy increased with an Australian family,who had come to visit China as tourist. Consequently ,Jack Ma was able to understand and read English language properly. After his graduation from Hongzhou Normal University, he worked at the local University as an English teacher for which he was paid $12 a month. Five years after that in 1994 ,he established the company called Hongzhou Hope Translation Agency with which he helped a lot in the development of local tourism. Because of having a good command over the English language, he could have a very good conversation with the tourists. Once he had been to the USA in course of the work of the company,where he got to know about the world of internet for the first time. When he returned back from the USA, he had some kind of determination to do something of his own. With this determination,he shared the concept of Alibaba in his room in 1999 and thus,began the journey of Alibaba. He wanted to make Alibaba such a platform where the manufacturers, the trading companies,and the wholesalers could be connected in the same place. In October 1999, it was taken among the public and it was launched in a Press Conference. In the initial phase, $5 million was invested and later on in January 2000, additional $20 million dollar was invested,which was backed by Japan's Soft Bank.

Now, Alibaba was in search of an international platform for its promotion. Therefore, Jack Ma went to address a large mass of people in Messe Berlin convention Centre,which was organized in Germany in 2000 AD .It was supposed to take place among a large mass of people. For this purpose, a hall was reserved which was spacious enough for supporting 500 people. Nevertheless, when Jack Ma went there ,there was the presence of only three people. However, he did not lose hope even in such a condition and delivered the speech in the hope that it would be certainly houseful someday. Alibaba got another chance of promotion when the world's leading magazine, Forbes, printed Jack Ma's story in the front page. Alibaba was slowly going its presence among the people,but it wasn't able to make any progress economically. However, the positive aspect was that its market place was being extended as thousands of manufacturers and sellers from China as well as other countries like Pakistan, Kazakhstan and so on were increasing. Due to the lack of leadership, Alibaba was on the verge of being shut down as the employees were not assigned of the responsibilities and the official time was not specified as well. In spite of making several attempts, Alibaba wasn't able to make any kind of economic progress. Hence,Jack Ma decided to operate Alibaba from Silicon Valley, USA, the holy place for entrepreneurs. For that purpose, John Wu was appointed as the Chief Technology Officer who had been hired from the Yahoo !office in the USA. Under his leadership thirty employees were recruited. Nevertheless, this decision proved to be wrong one and the main reason for this was the difference in time zone between the USA and China. When people in China would wake up, the people in the USA would have their sleeping time and when the people in the US would wake up, the people in China would have their sleeping time. Hence, the whole operation of the USA had to be stopped and many employees were fired as well because its economic growth was still a problem. In order to manage the works of Alibaba, Savio Kwan was appointed as the Chief Operation Officer in January 2001. After Kwan's appointment, he brought many reformations in Alibaba. The first reformation he brought was that he cut off the unwanted number of employees and decreased their working hours as well. Thereafter, he established Alibaba's mission and vision. The mission was to facilitate in doing business and the vision was to co-operate with all the traders and businessmen as a partner. He made a system for hiring and firing staff and managed compulsory training for employees of all levels. This included entry level employees, sales staff as well as Managers. Along with time, there was increase in the number of different manufacturers and suppliers. To manage that in a transparent way, sponsorship service was started in which those manufacturers and sellers could display their product 24x7 by paying just $2000 which was much lesser than the fee of advertising in any commercial magazine. Nevertheless, people were still doubtful regarding the authenticity of the manufacturers and wholesalers enlisted in the site. Hence, to assure people about it, the Trust Pass Service was started in which the manufacturers and the sellers were allowed to display their products only after being verified. In 2002, Canton fair was organized in Guangzhou in which Alibaba's booth was kept for publicity. However, the year 2002 proved to be a very challenging year for Alibaba as the epidemic SARS, i.e. Sever Acute Respiratory Syndrome, broke out. Because of this, five hundred employees of Alibaba were quarantined in their own homes. Even in such a difficult situation, their efficiency and unity did not decrease at all as each employee set up a virtual network at their own home, from where Alibaba's operation was continued.

          When Alibaba was in the phase of development in China, eBay, world's number one online selling point, had a very heavy influence upon the Chinese market. But one negative point of eBay was that there was no direct contact between the buyers and the sellers. Also it would take a heavy commission with its customers depending upon the number of days the product was to be displayed. Jack Ma pointed out this weakness and Taobao was developed, which is an online platform for direct contact between the buyers and the sellers. The meaning of Taobao is "Hunt for treasure." In order to make the payment system more scientific, Alipay was developed which is an escrow payment method. It acts as a mediator between the customer and the seller. For example, when a buyer buys any product, the payment is sent to a bank account,which is connected to Alipay. When the customer is fully satisfied verifying that he has got the right product, the payment kept in Alipay is transferred to the sellers account.

Jack Ma managed free advertising service in Taobao due to which it was able to surpass the number of listings than that of eBay very easily. In the initial phase of 2004, the Gross Merchandise Volume of Taobao was only 9%,which increased to 41% by the end of 2004.Jack Ma was focused on producing and distributing the products based on the demand of the Chinese market due to which eBay had started falling back. eBay had developed the features of its sites based on the market of America and Germany rather than the Chinese market due to which eBay’s customers were also getting attracted towards Taobao. eBay was going to celebrate its 10th anniversary in China in which its customers were also invited. In that program, Alibaba was also going to be given a chance to keep its booth, but in the last hour eBay didn’t let Alibaba do that. Alibaba's team developed another strategy to show its presence in that program. They stayed a few distance away from the venue of eBay and distributed thousands of orange bags marked with Alibaba’s logo due to which the whole event of eBay looked like Alibaba’s event. In order to defame Alibaba, eBay blamed Alibaba for selling low quality products,but later on it was found that it was done by eBay due to which eBay’s fame decreased.

                 eBay got another shock when Alibaba decided to buy Yahoo! China. Yahoo! China would invest $1 billion in Alibaba for which it was offered a partnership of 40% .Yahoo! China knew that if they wanted to long last in the Chinese market, they would have to make a joint venture with a company based on the Chinese market strategy. Hence, Alibaba was the best option for them as all of its works were based on local Chinese market. On the other hand,Alibaba had the fear that rumors might be spread about taking over of Alibaba company by Yahoo!China. Hence, it was announced that Yahoo!China and Alibaba had made a joint venture with each other. In 2005,August 11,a long term agreement on partnership was signed between Yahoo! China and Alibaba in which the former U.S President, Bill Clinton, was also invited. This partnership was welcomed by China’s local government as well which was another great achievement for Alibaba. Yahoo! is a complete package of information, news and entertainment. With this platform, Alibaba could get the golden opportunity of promoting itself due to which it Alibaba had made joint venture with it.

Alibaba kept on increasing its revenue continuously which was 50% more than that of eBay. For another three years, the advertising in Taobao was made free enabling the customers to earn more without any investment on advertisement. This was continuously making the presence of eBay weak in China. Why was eBay losing its grip over the customers in China? The reason was that instead of supplying the goods according to the demand of the customers, it was imposing its product upon them. Also, it was focused upon unhealthy competition due to which its market value was decreasing. Towards the end of 2005,eBay’s market share fell back to 34% while that of Alibaba climbed up continuously up to 57%.In 2006,January 19,eBay announced free product listing on its site as that of Taobao, but by that time it had lost its grip over the Chinese market. In order to turn the situation in its favor, eBay made a joint venture with Tom Online, which is a company run by a billionaire of Hongkong. When this strategy also didn’t work, eBay shut down all its operations in China ,which was the greatest success for Alibaba. In Hongkong’s share market, Alibaba's share value continued soaring .This made Alibaba the largest IPO company in China while it fell under top five internet business portal of the world. In 2014,Alibaba’s market value was $220 billion which was much more than the combined value of Amazon and eBay.

                                    Today Alibaba is not only an online company but has emerged as a multi dimensional company. It’s because it has started other different services like media and entertainment, economic transaction logistics and so on. What’s the secret behind Alibaba’s success? This company was not made by Jack Ma overnight by saying ‘Open Sesame’ as shown in the movie ‘Alibaba and the Forty Thieves.’ To arrive in this situation, it took him fifteen years. To help and grow Alibaba, Jack Ma neither had the wealth obtained from a wealthy father nor he had the support of powerful uncle. He had a dream and the determination to fulfill it which was accompanied by the help as well as the support of laborious, diligent and enthusiastic team members.

Sandeep Kattel

Blog Writer

Sandeep Kattel is a Lecturer of English at various collleges in Nepal .He has been writing stories for a long time, but he started publishing them only recently.He is also working on his two books - Family Cafe, which is a novel and another book Defying Odds Optimizing Caliber ,which is a motivational book.He is interested in writing short stories related to contemporary issues.

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