Alibaba (officially Alibaba Group Holding Limited) is a Chinese multinational technology company specializing in e-commerce, retail, technology. Internet and financial services. Founded in 1999 by its leader Jack Ma and 17 others and based in Hangzhou, two hours south of Shanghai,, it is China’s largest e-commerce company, business-to-business site (B2C), Internet retailer and online auctioneer. In addition to B2C Alibaba also provides consumer-to-consumer (C2C) and business-to-consumer (B2C) sales services via it web portals. The company also runs lucrative electronic payment services, shopping search engines and cloud computing services and owns and operates a diverse portfolio of companies around the world in numerous business sectors. [Source: Wikipedia]
Alibaba is worth more than Facebook and processes more goods than eBay and Amazon combined. Alibaba is traded on the New York Stock Exchange, the Stock Exchange of Hong Kong and the Frankfurt Stock Exchange and licensed in the Cayman Islands Its initial public offering (IPO) on the New York Stock Exchange in September 2014,raised US$25 billion, giving the company a market value of US$231 billion. It was the largest IPO ever at the time. Alibaba has been named one of the top 10 most valuable corporations and was listed as the 31st-largest public company in the world on the Forbes Global 2000 2020 list. In January 2018, Alibaba became the second Asian company to break the US$500 billion valuation mark, after its competitor Tencent. As of 2020, Alibaba has the sixth-highest global brand valuation. [Source: Wikipedia]
As of 2020 the Alibaba Group was the world’s the biggest ecommerce retailer and Jack Ma was one of the world’s richest people. At that time Alibaba controlled over 50 percent of China’s ecommerce market and the Alibaba Group owned multiple ecommerce sites. In 2020, Alibaba was also rated as the fifth-largest artificial intelligence company. and one of the biggest venture capital firms and biggest investment corporations in the world. Its B2B (Alibaba.com), C2C (Taobao), and B2C (Tmall) marketplaces are the largest of their kind in the world. In recent years, the company has expanded into the media industry. Most years its revenues rise by triple digit percentage points. In 2018, it set the record for the world's biggest online and offline shopping day., with that year's version of China's Singles' Day,
In 2022, Alibaba’s revenue were US$134.6 billion, with an operating income of US$11 billion and a net income of US$7.4 billion. As of 2022, the company had total of US$267.5 billion, and total equity of US$169.2 billion and had 254,941 employees. Its top executives are 1) Daniel Zhang (executive chairman and CEO), who joined the company in 2007; 2) Joseph Tsai (executive vice chairman), one of Alibaba's cofounders; and 3) J. Michael Evans (president),
Alibaba's Goals and Business Model
Alibaba has one of the simplest mission statements of any big company: “to make it easy to do business anywhere.” Among its goals are getting rid of trade barriers and boosting the fortunes of small businesses. Jack Ma coined the term the World e-Trade Platform, or eWTP, to describe the global integration of Alibaba’s e-commerce systems.
Adam Lashinsky wrote in Fortune: “The scope of Alibaba’s business activity is instructive...in comparison with Amazon’s. While Alibaba’s revenues of nearly $22 billion are tiny compared with Amazon’s $136 billion in sales, Alibaba is far more profitable. Ma’s company had operating profits of $6.7 billion in the 12 months ending Dec. 31, vs. Amazon’s $4.2 billion. Whereas Amazon owns warehouses and takes ownership of much of the inventory it sells, which explains its higher sales figure, Alibaba is an “asset-light” technology platform, making money mostly by charging for advertising and other sales-related fees.[Source: Adam Lashinsky, Fortune, April 1, 2017]
Adam Minter of Bloomberg wrote: “The Alibaba platform or model is unlikely to work outside China.“While e-commerce is thriving in Chinese cities — it accounts for 82.6 percent of all retail sales in Beijing, for instance — it’s really taken off because of rising prosperity in the Chinese countryside. There, bricks-and-mortar retail never fully developed because of poverty and terrible logistics. Supermarkets and retail outlets lacked much choice and were oftentimes stocked with poorly-made imitations of well-known brands ranging from Sharpie pens to Oreo cookies. When the Oreos were real, I found, they were usually expired. “In recent years, though, the growth rate of Chinese rural incomes has outpaced that of urban incomes. E-commerce has sprung up to serve those new shoppers. In 2015, online purchases in rural areas were up 96 percent, to $55 billion. [Source: Adam Minter, Bloomberg, October 17, 2016]
“As important as demand is supply. After 30 years of wild growth, China is now home to much of the global supply chain for making just about anything. Many skilled factory workers are looking for ways to move back to and make a living in the more affordable countryside. By connecting buyers and sellers, Alibaba’s Taobao Marketplace has enabled these workers to set up small-scale manufacturing or farming businesses that can reach customers across China and beyond.
“According to the Chinese government, 90 percent of China’s retail e-commerce shops are owned by individuals. Those shops, in turn, employ around 6 million people. In addition, as far back as 2009, Alibaba started noticing entire villages taking up production of goods for sale on Taobao. For example, the village of Junpu in China’s Guangdong province became a well-known online hub for clothing after factory workers — who had worked in nearby apparel plants — returned home and started setting up businesses. As of 2015, there were 780 so-called “Taobao Villages” where at least 10 percent of the population was engaged in e-commerce or had opened 100 Taobao shops, and annual transaction volume topped $1.5 million. The range of goods produced by these villages is as vast as a department store, ranging from produce to outdoor gear such as tents and backpacks.
Alibaba’s 18 Original Founders
Jack Ma is widely recognized as Alibaba’s founder, but a little-known fact that the company actually has 17 other co-founders. Ma launched his early Internet ventures in Beijing. Before returning to his hometown of Hangzhou, he visited the Great Wall with 12 former employees. Struck by how many messages had been scribbled on the stone Ma decided to replicate it on the internet. In February 1999, Ma invited 17 colleagues — a mix of Ma’s ex-students, ex-colleagues, mutual friends and like-minded entrepreneurs — to his apartment in Hangzhou introducing to them the thought of digital platform which he claimed would “revolutionise the Internet industry”. Later, Ma and his 17 colleagues created a bulletin-board service through which Chinese companies could introduce their products to clients calling it Alibaba.com. [Source: Angela Gratela, Yahoo News, October 19 2018]
That was how Alibaba started. Angela Gratela wrote in Yahoo News: “The 17 co-founders of Alibaba are one of the key driving factors that led to its success. Particularly the diversity of each founders which were from different industries journalism, investment banking, web development and education among many others made all the difference. Among the 17 are: [Source: Angela Gratela, Yahoo News, October 19 2018]
1) Jin Jianhang — President, Alibaba Group — was a top performing student from Fudan Journalism School and has worked at numerous Chinese Media such as Zhejiang Daily and Intl. Business Daily. Jin first encountered Ma during an interview with him back when he was with China Yellow Pages. In 1999, Jin left his journalism jobs and joined Ma at Alibaba.
2) Joseph Tsai — Executive Vice Chairman, Alibaba Group — Tsai has an undergraduate degree in Economics and East Asian studies and a law degree. Before meeting Ma, he was an investment banker earning about US$700,000 a year. Inspired by Jack’s charisma and his idea for Alibaba, he gave up his lucrative and joined Alibaba in 1999, where he initially only earned US$50 a month. Today Tsai is the second-largest individual shareholder of Alibaba Group after Jack Ma.
3 and 4) Lucy Peng — CEO, Lazada — began her career as a teacher at the Zhejiang University of Finance and Economics. She married Sun Tongyu and quit teaching in 1997. In 1999 she and her husband were part of the 18-member Alibaba founding team. She became the CEO of Lazada after Alibaba invested an additional US$2 billion into it.
5) Zhang Ying— Jack Ma’s wife
6) Eddie Wu — Chairman, AliHealth — graduated with a Computer Science degree from the Zhejiang University of Technology. In 1996 he joined China Yellow Pages in Beijing where he became acquainted with Jack Ma. Wu followed Ma to Hangzhou and served Alibaba as its first programmer.
7) James Sheng — Managing Director, Alibaba Singapore — studied traditional and commercial art and started his career as a designer. He came in contact with Jack Ma when James’ company was hired to design China Yellow Pages’ website. Sheng was at the meeting in Jack Ma’s apartment and became one of the 18 founding members of Alibaba in 1999. Sheng is the one who came up with Alibaba’s smile logo.
8) Simon Xie — Vice President, Alibaba China Investment Team — obtained his degree in Financial Management from the Shenyang University of Technology and later worked for the China National Air Separation Engineering, where he honed his skills in computing and information technology. In 1996, Xie met Ma while he was at China Yellow Pages and joined Alibaba in 1999.
9) Lou Wensheng was a classmate of Ma’s at the Hangzhou Teacher’s Institute. Lou join Chinese Yellow Pages after seeing a feature of the company in 1995 Oriental Horizon TV documentary. 10) Jin Yuanying was Ma’s student at the Hangzhou Dianzi University and later was encouraged by fellow founders 11) Jane Jiang and 12) Han Min to join Alibaba Group. 13) Zhou Yuehong was Ma’s student at the Hangzhou Dianzi University in 1988. An expert in Java Architect, Zhou developed the core code of MVC framework — WebX, which was used on Taobao during its early days. 14) Shi Yufeng was originally employed by the Central Weather Bureau. Eddie Wu, noted Shi’s works on the internet and introduced him to Ma and Shi was immediately attracted by Ma’s passion for Alibaba and decided to join the e-commerce company.
Alibaba in the 2000s
Alibaba has received large chunks of financing from Goldman Sachs and Softback of Japan. In August 2005, Yahoo paid $1 billion for a 40 percent stake in Alibaba.com, making Yahoo China’s largest Internet company. The deal was seen as good for Yahoo, providing a jump start for the company in China. Yahoo avoided a lot of hassles in China by letting its Chinese partner, Alibaba.com handle the Chinese market. The tie up with Alibaba.com allowed Yahoo to pass E-Bay to become the No.1 auction house in China. Alibaba's Jack Ma worked for a spell as a translator for Yahoo founder and CEO Jerry Yang, who became board member of Alibaba. Yahoo’s stake in Alibaba was worth $40 billion in 2017.
Alibaba had 15,000 employees in 2007. In October of that year it raised $1.5 billion initial public offering in Hong Kong. At the time it was the second-biggest IPO of an Internet company ever after Google Inc. A month later, shares surged 193 percent on their first day of trading in Hong Kong with the price rising from 13.5 Hong Kong dollars (US$1.74) to 39.60 Hong Kong dollars. The rise occurred after demand exceeded allocation by 150 fold.
Revenues grew 39 percent to $440 million. In 2007, Alibaba was valued at $3 billion. The Chinese -language business — business market place had 14 million regular users and its Taobao consumer auction had a 57.7 share of the market in China, compared to 31.5 percent for eBay In 2009, Alibaba claimed 8 million users.
Alibaba in the 2010s
As of December 2010 Alibaba.com claimed to have 57 million users, including some in nearly every country. Sometimes likened to eBay, but more like an online Yellow Pages, Alibaba.com was known mainly for linking Chinese manufacturers with buyers around the globe. In 2014, Alibaba’s two main websites, Taobao Marketplace and Tmall.com, accounted for 60 percent of the packages shipped through the Chinese postal system.
The Economist reported in 2010: Alibaba "faces several obstacles. First, the Chinese internet market is cut-throat and evolving fast. Baidu, the country’s leading search engine, has not yet attacked Alibaba head on, but one day it might. Second, talent is in short supply. Wages for the best engineers and managers are soaring. Third, in its rush to grow, Alibaba has neglected to make much profit. Its main services are free, with sellers paying only for extras such as being bumped to the top of a list of search results. Mr Ma says this is deliberate: size will eventually bring rewards. But investors will not wait for ever. Recognizing this, Alibaba.com, the listed part of the group (most of which is private), promised in December to pay a special dividend of $140 million in January. [Source: The Economist, December 29, 2010]
The Economist reported: Alibaba facilities in Hangzhou looks much like the offices of a zippy firm in Silicon Valley. The architecture is airy and feng shui-compliant. Employees enjoy ping-pong and free massages. Grey hairs are as rare as neckties. As is common at Chinese internet firms, a disproportionate number of senior managers are foreign-educated or have worked abroad. “A dozen big screens hang on the wall. Maps flash. Numbers stream by. The Alibaba Group’s “live data monitoring room” offers a snapshot of frantic activity: Chinese firms trading with foreign ones; Chinese individuals buying clothes from each other. Perhaps half a billion people use Alibaba’s various online services.” Jack Ma “smiles that business is “pretty good”. Yet he is far from satisfied. [Source: The Economist, December 29, 2010]
Alibaba’s staff boast of the businesses they have nurtured. One Chinese village had a stack of rabbit meat, having skinned the creatures for fur. The chief asked for suggestions. A villager sold the lot on Alibaba.com. More commonly, clients are small firms that want to link cheaply to the global market. Machine-makers in Turkey or Britain use Alibaba to find cheap suppliers in China without having to go there. Buyers can read reviews that others have written about each seller, which fosters trust, though it is far from foolproof.
Owen Matthews of SupChina wrote: Aliexpress was launched in 2010 as a way for Chinese businesses and individuals to sell their products to international online consumers. Today, it is the most visited ecommerce platform in Russia. In 2013, Alibaba partnered with six Chinese logistics companies to establish Cainiao, a package delivery and logistics company that allows Alibaba and any other company to manage their own deliveries and logistics. Alibaba acquired Lazada in 2016, which is headquartered in Singapore and is one of Southeast Asia’s largest ecommerce players. In September 2019, Alibaba acquired Kaola.com — an online marketplace that sells imported products to Chinese consumers — from NetEase for $2 billion. [Source: Owen Matthews SupChina, August 7, 2020]
In 2016, Alibaba had 46,819 employees and 443 million annual active buyers in China. Buyers from more than 200 countries used Alibaba. The company’s annual revenue was $21.7 billion, with annual profits of $5.8 billion. Its market value was $264 billion. [Source: Fortune]
Alibaba Products, Services and Subsidiaries
Alibaba's e-commerce businesses include Alibaba.com, a business-to-business platform which links foreign buyers with Chinese suppliers of goods from medical technology to furniture, and Tmall, with online shops for popular brands. Alipay became a freestanding financial company, Ant Financial, in 2014. Alibaba also set up its own film studio and invested in logistics and delivery services. [Source: Joe McDonald, Associated Press, September 10, 2019]
Alibab products include E-commerce, Cloud computing, Artificial intelligence, Entertainment, Mobile commerce, Retail, Mobile media and FilmsTV shows. Among its services are Alibaba.com, Alibaba Cloud. AliExpress, Ali OSA, liGenie, Taobao, Tmall, Lazada1688.com and Daraz. Owen Matthews of SupChina wrote: A key element of Alibaba’s dominance of the Chinese internet sector was its 2004 launch of Alipay. Initially a PayPal clone, the service has grown into one of China’s two major mobile payment systems — the other is WeChat Pay. Alipay is now part of Alibaba affiliate Ant Group (See Ant Group IPO Below). [Source: Wikipedia, Owen Matthews SupChina, August 7, 2020]
YouKu is a video streaming and hosting service. Operating as a subsidiary of Alibaba Group and described as hybrid of YouTube and Netflix, it had 580 million registered users in October 2018, according to DMR statistics, and 39.6 million average daily active users in September 2018. The average visit duration was 4 minutes 7 seconds in December 2018. At that time it had over 800 million views on its videos per day! Tony DeGennaro wrote in Dragon Social: Youku was previously the top video sharing app in China. For many years it was called the Chinese YouTube, which you can see from the name seems to be exactly what they were going for. However, beginning in the late 2010s, Youku started to fall behind its rivals. Unlike Youtube, where user-generated content is king, Youku contains more professional content than individual user-generated content. Users can even stream or download movies and TV shows directly on Youku. It’s similar to what Youtube tried to do with its paid offering, Youtube Red. [Source: Tony DeGennaro, Dragon Social, 2020]
The Economist reported in 2010: “China has millions of small entrepreneurs but a primitive financial system. To boost traffic through his websites, Mr Ma set up an online payments system, Alipay, in 2004. Its growth was greatly helped by the impedements that China placed, until recently, before its American rival, PayPal. Alipay says it now has 470 million users worldwide and that more than 500,000 Chinese merchants accept it. In some Chinese cities people can use it to pay their utility bills. [Source: The Economist, December 29, 2010]
Another venture, Taobao.com, sells to consumers. It has 300 million customers and shifted $29 billion-worth of goods in 2009. It is like a scrappy cross between Amazon and eBay: it operates an online mall where vetted sellers can hawk their wares, and a site where anyone with a Chinese identity number can sell anything legal to anyone. It generates money through advertising.
Mr Ma has also started a service called Ali-loan. He does not lend money, but works with banks, which typically have no idea if a small borrower is creditworthy. Mr Ma, in contrast, has a trove of data revealing whether small firms pay their bills on time. He can also bundle together firms that know each other, so that a seller can help guarantee a bank loan to a regular customer. According to Alibaba the proportion of Ali-loan’s lending that goes bad is a trifling 0.35 percent, which suggests that the service could be expanded fast.
Alibaba’s Rich Marketing Database
The Economist reported: “Alibaba has a huge and barely exploited asset: the data it has gathered on the spending habits of China’s emerging middle class. The firm is cagey about what, exactly, it will do with these data, and insists that it will not violate anyone’s privacy. Nonetheless, there are ways in which Alibaba could profit from what it knows. One idea might be to use customer data to identify trends and so help companies to anticipate what consumers want. Given the paucity of accurate data in China, this would be extremely valuable. [Source: The Economist, December 29, 2010]
Another promising area might be credit. Ali-loan does not charge for its credit-scoring service for business borrowers, and says it has no plans to. But it would make sense: a small fee on each loan would be almost pure profit. And there is no practical reason why the group should limit itself to helping businesses borrow money. Another glittering prize would be to help Chinese consumers obtain credit, too. Very few can do so at the moment. Many would doubtless like to.
This is a politically sensitive area, however. The government largely controls the allocation of credit in China. Through state-controlled banks, it funnels the nation’s savings to large, politically favored firms. Would an expansion of credit to the little people be seen as a threat to this cosy arrangement? Some in government probably think it a good idea to help small businesses and even consumers get loans, but others are cautious. The Communist Party is terrified of credit bubbles, the bursting of which might spark unrest. So Mr Ma must tread carefully.
Taobao, Tmall and Alibaba E-Commerce Sites
Alibaba group owns four of the top 10 e-commerce sites-apps in China: Taobao, Tmall, Alibaba, and Kaola. Tabao and Tmall together are far and away China’s leading e-commerce site. Owned by Alibaba, they dominate the online retail business to consumer (B2C market) with a a market share of nearly 65 percent and well over 700 million active users. They also have a large global presence. Together they are the world’s second biggest e-commerce website, after Amazon, with a 28 percent market share. An innovative part of the Tmall-Taobao system is Weitao, a social e-commerce function that has been embraced by as Key Opinion Leaders (KOLs) and has grown as social e-commerce has grown. [Source: Nicolas Chu, sinorbis, April 18, 2021]
The Alibaba site has traditionally focused mainly on business to business (b2b) linking quality manufacturers, suppliers, exporters, importers, buyers, wholesalers, products and traders via its award-winning international trade site. Alibaba-owned 1688.com received 35 million monthly visits as of 2021.
Owen Matthews of SupChina wrote: Taobao Marketplace and Tmall.com are Alibaba’s largest sites targeted at Chinese consumers. On Taobao, both individuals and companies can sell products (like eBay), while on Tmall.com, only recognized companies can sell their products (like Amazon). Brands like Nike often have their own flagship stores on Tmall.com that closely resemble their own websites. [Source: Owen Matthews SupChina, August 7, 2020]
Tmall sells everything from clothing to electronics, appliances and even cars and prioritizes offering authentic, high-quality goods. It has undertaken considerable efforts to combat counterfeit products, making the platform highly trusted by consumers. Tmall Global is the sub-platform via which foreign companies sell directly to Chinese consumers, although this comes at a price for brands because they must meet stringent criteria to register their account and pay relatively high fees in order to appear on the platform. [Source: Nicolas Chu, sinorbis, April 18, 2021]
According to sinorbis, Alibaba is a well-known brand of global inter-enterprise (b2b) e-commerce. It provides tens of millions of online merchants with massive information about business opportunities and a convenient and secure online trading market. It is also a community platform for businessmen to interact with each other through business and friends. . At present, 1688.com has covered 12 major industries including raw materials, industrial products, apparel, household goods, small commodities, etc., providing a series of supply products and services from raw materials-production-processing-spot products. Tabao and Tmall together are far and away China’s leading e-commerce site. Owned by Alibaba, they dominate the online retail business to consumer (B2C market) with a a market share of nearly 65 percent and well over 700 million active users. They also have a large global presence. Together they are the world’s second biggest e-commerce website, after Amazon, with a 28 percent market share. [Source: Nicolas Chu, sinorbis, April 18, 2021]
Early History of Taobao
Taobao — which began as China's answer to eBay — is the premier auction site in China. It has done so well that in 2006 eBay shut down its own site in China.” “Taobao” means “treasure hunt” in Chinese. The site had 80.9 billion yuan (£7.2 billion) in 2009 first-half sales. That is double the same the previous year and higher than Amazon.com's over the same period. Goldman Sachs estimated that revenue will hit £122 million dollars in 2009. this year. [Source: D'Arcy Doran, AFP, December 7, 2009]
Taobao is a division of Alibaba.com. It charges nothing to list items for sale and the site's revenue comes from advertising. Taobao was started in 2003 when eBay controlled 90 per cent of the Chinese online shopping market after buying Shanghai-based EachNet. Within two years, Taobao pushed eBay's market share down to 30 per cent and forced the US-based auction site to stop charging for listings in China. In 2006, eBay's Chinese site shut down.
In 2009, Taobao controlled 82.8 percent of China's online shopping market, according to iResearch, a Chinese consultancy. That year, for the first time, household goods became Taobao's top selling category. Jonathan Lu, said that convenience and a greater price consciousness amid the economic crisis had boosted consumer acceptance of Taobao...What is most interesting is the level of mainstream acceptance of using online retail channels to shop for everyday items, a trend both prominent global brands and small businesses have recognized.” Taobao's sells offers everything from turkeys to televisions and used by students starting new businesses and vendors in Yiwu, the home of the world's largest wholesale market, as well as giants like Dell, Uniqlo, Procter and Gamble, and Chinese firms seeking to step out of the shadows after years of manufacturing for US and European labels.
Taobao's Early Customers
At Yiwu Industrial and Commercial College more than a fifth of the school's 8,800 students run Taobao shops from campus, selling products sourced from the market. The students' shops generated 25 million yuan in revenue last year, according to college officials who have embraced Taobao as a business teaching tool. “When I graduate I will continue with my Taobao business,” a student who sells cosmetics, children's toys, underwear and fashion accessories through Taobao, said. “It's easy to find a job in Yiwu, but once my business is on the right track, I can double or triple my salary compared to people who go work for companies.”
Procter and Gamble started selling Rejoice shampoo, Olay skin cream and Gillette shaving products on Taobao earlier this year at discounts of 20 to 30 per cent to attract customers and build market share. Japanese clothing retailer Uniqlo launched a Taobao shop in April, attracting 430,000 visitors and 4.1 million yuan in sales in the first 11 days. Computer makers Dell and Lenovo also introduced Taobao sales channels. Companies like Qilong Trading Company, a previously anonymous company that in the past only manufactured for international brands, are also using the site to develop their own labels.
Yahoo Japan and Taobao have formed an alliance to market each other’s products in their home countries, with Yahoo Japan offering about 50 million products sold by Taobao and Taobao selling about 8 million products sold by Yahoo Japan. Taobao offers about 400 million products but many will not be offered in Japan because they do not meet Japan’s drug regulations or they are feared to be counterfeit. Rakutan, Japan’s largest online retailer, also is planning to enter the Chinese market.
Alibaba and Counterfeit Goods
In 2014 on the eve of Alibaba’s IPO, Kelvin Chan wrote in Associated Press: “At first glance, the Monster Tron T1 headphones sold on Chinese e-commerce giant Alibaba's Taobao site are a tempting offer for audiophiles looking for state-of-the-art hi-fi equipment. But sellers omit one key detail: Monster Inc. never produced this model. "There should be none in existence but our prototypes," said Dave Tognotti, general manager of the California company best known for its audio-visual cables. He said Monster went so far as to announce a launch date but the design proved too complex to build to the company's quality specifications, so it was abandoned. "You can understand our surprise when we started to see counterfeit versions of this product appearing on websites like Alibaba.com, Aliexpress.com, 1688.com, and Taobao.com," he said. All four sites are part of Alibaba Group. Tognotti said that 99.5 percent of purported Monster products sold on Alibaba sites are fakes, based on thousands of listings the company's investigators have examined over the years. [Source: Kelvin Chan, Associated Press, May 27, 2014]
“Phony headphones and other knockoffs are a persistent problem for Alibaba. Jack Ma has called theft of intellectual property a "cancer" on society and Alibaba has stepped up efforts to root out fakes that dent its credibility with consumers, but there are still complaints. Alibaba spends more than $16 million dollars a year on anti-counterfeiting efforts. Taobao has 200 staff working on copyright infringement, brand protection and quality control. According to the company's blog, it took down 114 million listings of fake or counterfeit products in the first 10 months of 2013, nearly a third more than for all of 2012.
“For such efforts, the U.S. Trade Representative removed Taobao in December 2012 from its Notorious Markets list of counterfeit goods. The report urged Taobao, which has about 800 million listings and requires just a Chinese ID card to start selling, to further streamline procedures to reduce the time needed to take down listings.… Counterfeits are not limited to Alibaba. EBay said in its latest annual report that it faces lawsuits or the threat of lawsuits from brand owners over alleged listings of counterfeit items.
In 2015, Alibaba was harshly condemned by the Chinese government for failing to do enough to stop fake goods being sold on its site. The Guardian reported: “The State Administration for Industry and Commerce (SAIC) said in a report published that many products sold through Alibaba’s Taobao and Tmall platforms infringed trademarks or were substandard, fake, illegal or dangerous. “The “Alibaba Group has long paid insufficient attention to the illegal business activities on Alibaba platforms,” the report said, adding that the company “let that abscess fester until it became a danger...This not only is the biggest crisis of integrity faced by the company since its founding, but also has hurt other internet companies that try to operate legally.” [Source: Chris Johnston, The Guardian, January 28, 2015]
“The unusually stern report also said Alibaba had allowed “illegal advertising” that misled consumers with false pricing claims, failed to deal effectively with fraud and that some employees took bribes. Alibaba retaliated by accusing the SAIC official in charge of internet monitoring, Liu Hongliang, of unspecified “procedural misconduct” and said it would file a formal complaint. “We welcome fair and just supervision, and oppose selective omissions and malicious actions,” Alibaba’s statement said. “Obtaining a biased conclusion using the wrong methodology has inflicted irreparable and serious damage to Taobao and Chinese online businesses.” Such public defiance is almost unprecedented in China, where companies usually respond to official criticism by promising to change their practices.
Alibaba Acquisitions and Expansions
In 2013 Alibaba bought an 18 percent stake in Weibo, China's largest Twitter-like service, as part of its effort to tap into the then fast-growing social media sector. Alibaba paid $586 million for the stake, valuing Weibo at over $3.2 billion. According to the BBC: “The deal is expected to help Alibaba drive traffic from Weibo, which has more than 500 million users, to its e-commerce sites such as Taobao. It will also help generate additional advertising revenue for Weibo. According to the two firms, the partnership will bring in $380 million more in advertising and social commerce services revenue for Weibo over the next three years. [Source: BBC, April 30, 2013]
In 2014, Alibaba Group acquired and and merged with UCWeb, China’s number one mobile browser company to form the UC Mobile Business Group. According to Forbes: The deal was the biggest acquisition in China since Baidu — China’s main search engine — acquired 91 Wireless for $1.9 billion in 2013. Baidu actually wanted to buy UCWeb before. Against the backdrop of an intense mobile battle with Baidu and Tencent, Alibaba is making this strategic move to bolster its defense and attack. The deal really is a merger and no staff will be culled. In fact, it is simply seen as a natural step since Alibaba made its first investment into UCWeb in 2009. [Source: Jason Lim, Forbes, June 11, 2014]
In 2015, Alibaba bought the South China Morning Post, well-respected, Hong-Kong-based English-language newspaper, about two years after Jeff Bezos bought the Washington Post. Adam Lashinsky wrote in Fortune: Like Bezos, Jack Ma “has taken a hands-off approach, meeting infrequently with its staff, having installed his longtime dealmaking confidant, Alibaba vice chairman Joe Tsai, as head of the organization. Whereas Bezos framed his purchase as aiding an institution integral to democracy, Ma explained his investment as ensuring that non-Chinese-speakers have access to high-quality information about China. [Source: Adam Lashinsky, Fortune, April 1, 2017]
In 2016, Alibaba paid $1 billion for a controlling stake in Lazada, a Southeast Asian online retailer. Alibaba and Ant Financial, which runs the dominant Chinese payments platform Alipay, have invested in Paytm, an Indian e-commerce player. And while Alibaba’s operational forays into the U.S. market have been furtive, it has invested aggressively in U.S. startups, including Magic Leap, Lyft, and Snap.
As part of the company’s mission “to make it easy to do business anywhere”, Alibaba has invested in and owns 47 percent of Cainiao-Alibaba, a network of logistics companies that vastly improved on the capabilities of the Chinese government’s postal delivery system. In the late 2010s Alipay branching out from payment processing to loans, which at times has raised eyebrows and the ire of China’s massive state-owned banks.
In January 2017, Ma met with Donald Trump about two weeks befor Trump became U.S. President and pitched Alibaba’s plan to bring one million small U.S. businesses onto its platform to sell to Chinese consumers over the next five years. After Trump became president the Alibaba Group hosted an event to inaugurate its effort to empower U.S. small businesses, entrepreneurs and farmers to sell to hundreds of millions of Chinese consumers at "Gateway 17," a small business summit held in Detroit, Michigan in July 2017 [Sources: Michael Zakkour , Forbes, April 25, 2017; Reuters, January 10, 2017]
Abrupt Halt of the Ant Group IPO
The Ant Group is Alibaba’s sister company, owner of Alipay, and a provider of financial services, including investing, credit, and a variety of insurance products. In November 2020, Regulators abruptly halted the much-anticipated initial public offering (IPO) of Ant Group. Reuters reported: “Investors were left reeling by the suspension of Ant Group’s $37 billion stock market listing, with many having spent weeks studying the deal and lobbying bankers for shares in what was set to be the world’s biggest initial public offering. Ant halted its planned Shanghai and Hong Kong listings less than 48 hours before it was due to go public following a meeting by its billionaire founder Jack Ma and Chinese financial regulators. [Source: Anshuman Daga, Reuters, November 4, 2020]
Ant apologised to investors in a stock market filing for “any inconvenience” and said it would follow up with them, but gave scant details on what the problem was aside from calling it a “major event.”“There has been so much excitement around this IPO and there is clearly deep disappointment from the markets about this unexpected curve ball,” said Victoria Scholar, market analyst at IG. Shares in Alibaba slumped as much as 10 percent in New York trade.
More than $3 trillion just from retail investors had been placed in bids for Ant, a factor some said was likely to have prompted a tougher line from Chinese supervisors. “It’s quite clear that the magnitude of the oversubscriptions and the influence of Alibaba have become a source of concern for the regulators,” said Justin Tang, head of Asian Research at United First Partners in Singapore.
For William de Gale, cofounder and lead portfolio manager at BlueBox Asset Management, who had opted not to take part in the deal from the get-go, the suspension was vindication for their stance on Chinese financial companies. “I think this demonstrates why we don’t particularly like these companies - there is always a risk of capricious behaviour by management or regulators, neither of whom are subject to reliable or predictable governance,” he said.
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Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.
Last updated May 2022