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The billionaire head of China's biggest e-commerce retailer met with President-elect Donald Trump on Monday to promote his site by dangling the possibility of a million new U.S. jobs.

Jack Ma met Trump in New York and the two talked U.S.-China trade and specifically small business. Ma promoted Alibaba as a platform through which U.S. small businesses could sell products to consumers in China and Southeast Asia.

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By doing that, up to a million new jobs could be created at a million small businesses, Alibaba said. Alibaba didn't commit to hiring new staff in the U.S. itself.

"We mainly talked about small business, and young people and selling American agricultural products to China," said Ma.

He said he envisaged most of the jobs being created in the U.S. Midwest agricultural sector, and also mentioned garments, fruits, and wines as possible goods that could be successfully sold to Chinese consumers.

"Jack and I are going to do some great things," Trump said to reporters after the meeting without commenting further.

Alibaba operates a hugely successful e-commerce site in China and has been expanding overseas to compete directly with Amazon through AliExpress. But it hasn't all been smooth sailing for the company.

At the end of 2016, its Taobao marketplace, a consumer-to-consumer site much like eBay, was placed on the U.S. Trade Representative's list of "notorious markets." These are online and offline market places that enable "substantial copyright piracy and trademark counterfeiting."

Taobao had been on the list previously but was taken off four years ago. Its return prompted the company to question whether the decision was based on the election of Trump and what was viewed as his anti-China trade stance.

In recent weeks, Alibaba has announced a crackdown on counterfeit goods on its online marketplaces, including filing lawsuits against Taobao sellers.

Author : Martyn Williams

Source : http://www.infoworld.com/article/3156009/government/alibaba-could-generate-1-million-new-us-jobs-ma-tells-trump.html

Categorized in News & Politics

The engrossing book, ‘Alibaba: The House that Jack Ma Built’ is an insider’s account of how an English teacher in China built one of the world’s most valuable companies, rivaling Walmart and Amazon. The rise of Alibaba from startup to giant in less than 15 years culminated in a $25 billion IPO in 2014, the largest global IPO ever.

The author Duncan Clark founded BDA Consulting in Beijing in 1994, and first met Jack in 1999 in the small apartment where Alibaba was founded. He served as an advisor to the firm, and draws on a wide range of sources for this informative book. Duncan was formerly with Morgan Stanley, and has lived in China for over 20 years.

Here are my Top Seven takeaways and tips for entrepreneurs from this 287-page book, in terms of the context of e-commerce in China, Alibaba’s strategy and culture, competitive positioning, and future growth. See also my review of the related book, China’s Disruptors: How Alibaba, Xiaomi, Tencent, and Other Companies are Changing the Rules of Business by Edward Tse.

1 Build an innovation ecosystem

“Over 400 million people, more than the population of the US, make purchases on Alibaba’s websites each year,” according to Duncan; this accounts for two-thirds of all parcel deliveries in China each day.

The company’s strengths are built on the ‘iron triangle’ of e-commerce, logistics and finance. Its marketplace websites include TMall (branded products), Alibaba (international B2B trade), TaoBao (local e-commerce), and Juhuasuan (Groupon-like site).

It has invested in premier logistics firms such as Shentong, Yuantong, Zhongtong and Yunda; most of their business comes from TMall and Taobao. Payment provider AliPay is expected to generate almost $5 billion in revenues by 2018; it has also created an online mutual fund, Yu’e Bao (becoming the fourth largest money manager in the world within 10 months). The new business Sesame Credit Management provides credit ratings to third parties.

2 Build an innovation culture

Alibaba has built a culture of camaraderie and commitment. Employees are called ‘AliRen’ (‘the Ali People’), and the anniversary (May 10) is celebrated as ‘AliDay,’ which celebrates teamwork and achievements. Lessons from hardships such as the SARS crisis are shared, and mentorship is strongly promoted. Employees are encouraged to learn from setbacks, but without ‘shame and blame.’

The culture is informal, and employees are encouraged to adopt a nickname. Employees can avail of interest-free loans for housing. The company’s culture is codified in the Six Vein Spirit Sword: customers, teams, change, integrity, passion and commitment. Employees are frequently rotated between regions and roles to broaden their experience. Former Alibabaemployees have been associated with 317 startups (as compared to 294 from Tencent and 223 from Baidu).

3 Be a master storyteller

Jack Ma is regarded as a masterful speaker, and networks with the giants of the business world. He has been described as a ‘Rockefeller’ of his age and even ‘Don Quixote,’ and a mix of ‘Bill Gates, Steve Jobs, Larry Page and Mark Zuckerberg, all rolled into one.’ He has also been nicknamed ‘Crazy Jack,’ and his charisma is called ‘Jack Magic.’

Unlike many Chinese entrepreneurs who returned from US education and work stints, Jack describes himself as ‘one hundred percent Made in China.’ He has a strong ability to ‘charm and cajole,’ and is ‘attention-grabbing in both English and Chinese.’

Quotable quotes (‘a soundbite machine’) and humour are hallmarks in this maverick’s talks, and Duncan jokes that Jack Ma could be a ‘stand-up comedian’ as well. As storytelling and culture-building techniques, Jack uses references, imagery and metaphors from Chinese martial arts characters. (See also my review of the related book, The Storyteller’s Secret by Carmine Gallo.)

4 Understand the local context

In Jack Ma’s early years, formative developments were the reforms of the Deng Xiaoping era. He grew up in Zhejiang, China’s ‘crucible of entrepreneurship’ in the Yangtze River delta, with Shanghai as its centre. The Yiwu wholesale market was an early template for Alibaba, and Wenzhou was home to the country’s first private railroad and air carrier. The General Association of Zhejiang Entrepreneurs may be ‘the largest business association in the world.’

The collapse of the Soviet Union followed by the rise of the Internet shaped the Chinese government’s cautious approach to dealing with the online world – promoting digital infrastructure while controlling media expression. “China wanted a Silicon Valley, but one that it could control, built on its terms,” Duncan observes; this would manifest in the ‘Great Firewall of China’ as content filters.

Early Internet players in China, some with US exposure, include AsiaInfo, UTStarcom and the portal players Sina, Sohu and NetEase. The dotcom crash of 2000 and the financial crisis of 2008 would rearrange the pecking order of the different waves of China’s digital startups.

Today, Jack Ma stands “at the intersection of China’s newfound cults of consumerism and entrepreneurship,” Duncan observes. Due to pressure on urban land, inventory and rental costs are high - and retail offline penetration is lower than in large countries like the US. Thus, e-commerce is a necessary channel for many categories and has become a lifestyle. “More than 40 per cent of Chinese consumers buy their groceries online as compared to just 10 per cent in the US,” says Duncan. Young mothers are also a key customer base for Alibaba.

5 Accept the cycles of boom and bust

Jack was born on September 10, 1964, the Year of the Dragon. His parents shared a passion for folk art performances. As a boy, he developed a love for the English language and literature, which would help him develop an international outlook and network with visiting tourists. He developed a friendship and professional association with one such Australian tourist, David Morley, who became an angel investor in the company.

A visit to the US exposed him to the Internet, and he launched his first online venture China Pages, moving out of his teaching days (his other venture was Hope Translation services). He later moved to Beijing to work for the trade ministry; a formative meeting was with Jerry Yang, founder of Yahoo, during his China visit. Jack’s next venture would be Alibaba, for which he roped in Taiwan-born investor Joe Tsai as co-founder.

Early competitors would be the websites of the trade magazine Global Sources, and MeetChina. The NASDAQ IPO of China.com in 1999 opened the international floodgates of the consumer Internet investment boom in China. Jack Ma’s ambitions rose to position Alibaba as a global player, attracting early investment from Goldman Sachs and Softbank(Masayoshi Son would be regarded as a ‘kindred spirit’ for Jack Ma).

6 Be prepared to take on the giants

The growth of the international market attracted larger players like Yahoo and eBay. eBay bought a stake in Chinese player EachNet, and Alibaba responded by launching Taobao and AliPay with new investment from SoftbankeBay fumbled with wrong cultural approaches to its China strategy and design, and eventually withdrew.

Yahoo entered the China market with a Chinese PC manufacturer as partner, and later bought a firm called 3721 Network Software; Jack Ma negotiated a deal to sell 40 per cent of Alibaba’s stakes to Yahoo for a valuation of about $4 billion. Other entrants such as Google exited the China market due to security and censorship concerns.

7 The road ahead – plan for the bigger picture

The ‘BAT kingdoms’ (Baidu, AlibabaTencent) are major Internet players in China today. There are notable local competitors to Alibaba, such as JD.com (with an ‘asset heavy’ strategy like Amazon), and chat-based commerce from WeChat (the app launched by Tencent).

Alibaba is investing heavily in startups in China in mobile, media and crowdfunding spaces (the book does not cover its investments in other countries like India). It also has a research wing, AliResearch, and has launched rural initiatives such as e-commerce kiosks as well as a global consumer operation called AliExpress. (See also my review of the related book China Fast Forward: The Technologies, Green Industries and Innovations Driving the Mainland’s Future by Bill Dodson.)

Concerns have arisen, however, over the investment and holding patterns in the web of companies controlled by Jack Ma. His activities as entrepreneur and philanthropist have expanded to grappling with China’s greatest challenges, in reforming healthcare, education and environment.

It would be fitting to end this review with one of Jack Ma’s popular quotes: “Today is brutal, tomorrow is more brutal, but the day after tomorrow is beautiful.”

Author: MADANMOHAN RAO
Source: https://yourstory.com/2016/12/tips-entrepreneurs-alibaba-story

Categorized in Business Research

The USTR dropped its annual blacklist calling out marketplaces that are rife with counterfeit and pirated goods this week.

Many of the shopping centers and sites listed in this “Special 301” report were absolutely predictable, like Beijing’s Silk Market, St. Petersburg-based social network VK.com, or The Pirate Bay, which was formed by an anti-copyright group in the first place.

One entrant proved controversial, however, Taobao Marketplace, the e-commerce behemoth owned by Alibaba Group.

Today, Alibaba Group CEO Daniel Zhang hit back at the US government office, chalking up the USTR’s decision to list Taobao as a “notorious marketplace” to rising American protectionism.

President elect Donald Trump ran a protectionist campaign. He frequently rails against free trade agreements, outsourcing, and other facets of global trade that he claims have killed jobs in the US.

Alibaba Group CEO Zhang cautioned in an email sent to all employees and published online:

“…Protectionism is ever present around the world and influences that are not free market-oriented come into play. As we accelerate our pace of globalization, certain countries will deploy all sorts of ways to fence themselves off…

We are committed to protecting intellectual property, but will not be bullied by those who exploit the issue for unfair advantage.”

The USTR publishes the Special 301 report each year, in part, to caution consumers who don’t want to buy knockoffs, or pirated apps and content which all too frequently carry malware.

But the report is also used to pressure companies, and governments, to enforce the internationally recognized intellectual property rules that help American businesses compete fairly in global markets.

Alibaba and Taobao had been absent from the list for four years until this week, even though they’d been clashing with French, American and other luxury goods brands earlier this year.

In the spring of 2016, the company was denied a special membership to the International Anti-Counterfeiting Coalition, after protests from fashion industry insiders and IP firms.

shutterstock alibaba

According to Alibaba’s own statements to investors, Taobao’s  mobile app alone boasts150 million daily users, and the marketplace see 20 million product reviews posted daily. Across all of its businesses, Alibaba sold $500 billion worth of goods in 2015, from 10 million merchants who use their platforms.

In his public statement on Thursday, Zhang recounted efforts the company has taken to thwart pirates and counterfeiters. For example, it has used big data analytics to identify and block problematic sellers, and worked closely with law enforcement to shut down factories and send counterfeiters to prison.

Alibaba Group claims it removed 16 times more links than the number that brands, or their IP attorneys, have reported as infringing on their intellectual property rights this year. That could be because Alibaba’s sites don’t make it easy for brands to file complaints about IP infringements, however.

The USTR, in its report, specifically recommended that Alibaba Group could improve its standing by:

“Simplifying processes for right holders to register and request enforcement action; making good faith takedown procedures generally available; and reducing Taobao’s timelines for takedowns and issuing penalties for counterfeit sellers.”

Besides Taobao, twenty-one different digital platforms and twelve different physical malls were labeled “notorious marketplaces” by the USTR, selling everything from pirated music, videos, games, and software to counterfeit hardware and luxury goods.

The report also identified an emerging trend around intellectual property theft called “stream ripping,” that’s plaguing the music industry. This is when a site lets users convert a licensed streaming music or other file into an unauthorized copy for download and distribution.

The first site to make the list for this offense was Youtube-mp3.org, which is based in Germany but popular among users in Turkey and Mexico. Youtube-mp3.org saw 4.8 billion visits in 2016, the report says.

Author : Lora Kolodny

Source : https://techcrunch.com/2016/12/22/alibaba-is-back-on-u-s-blacklist-of-notorious-marketplaces/

Categorized in News & Politics

People have often referred to Google, Facebook and Twitter as cases where foreign tech companies are blocked in China. In reality, while Facebook and Twitter were indeed blocked, Google chose to withdraw because they didn’t want to comply with Chinese censorship regulations.

It’s important to note that most foreign tech companies were not blocked, and companies like eBay, Amazon, Viadeo and, of course, Apple and Samsung all entered and competed in China.

EBay was beaten by Alibaba more than a decade ago. Amazon entered China through the acquisition of a local company, Joyo, in 2004, but was never able to build a commanding position in China the way they did in the U.S. Viadeo withdrew in 2015 due to a lack of market traction mostly because of the entry of LinkedIn.

On the other hand, Apple and Samsung have done well in China, despite increasing competition from the Chinese who are chipping off pieces of their pies. More recently, Uber China and Didi Chuxing reached a mutually beneficial deal, though some see it as Uber essentially surrendering the China market to Didi Chuxing.

This all seems to beg the question: Can foreign tech companies win in China?

Clearly, China’s regulatory regime regarding the internet, in particular social media, is far more restrictive than that of the U.S. and many other western countries in general. The “Great Firewall” has proven itself repeatedly to be a thorn in the side of foreign companies, and not all have been able to overcome this hurdle. Most have tried, but with varying degrees of success.

It all comes down to the company’s mindset and willingness to adapt. Some firms decided they didn’t want to play in such a context, like Google, and withdrew their operations. Some want to play but got blocked, like Facebook, yet continue to lobby the government for access. Some were allowed to play but couldn’t quite get their act together (for whatever reason), like Amazon, Viadeo and perhaps even Airbnb. There was also Yihaodian, which was Walmart’s online business, but eventually Walmart sold it to JD.com in exchange for some of JD’s shares.

China is not easy. It’s tough for everyone, no matter if one is foreign or not.

But there are some who seem to “get it,” like LinkedIn (at least for now). They entered the China market in 2014 with a dedicated Chinese site, Lingying, and within two years grew their user base to 20 million subscribers and counting. How did they manage such a feat where several others failed? They adapted to the China context. Not only did they localize by conforming to restrictions on content, they partnered with local firms Sequoia China and China Broadband Capital to further understand the China market.

LinkedIn also created local leadership by hiring a president for LinkedIn China, giving the team more autonomy to integrate and cater to local needs. Examples include collaborating with Tencent’s WeChat so users could link profiles, launching a Chinese business social networking app “Chitu” and planning to release a Chinese version of its Pulse news reader app.

Another such example is Evernote. They, too, found success through a focus on meaningful localization. Not only did they hire locally, they employed localized marketing strategies by leveraging local social media like Weibo and WeChat, and had localized customer service, which supports real-time customer support on the mentioned platforms. They did thorough market research before entering in 2012, and looked to solve the “pain points” of the Chinese consumer, mainly security and privacy. Lastly, they had an easy-to-recall Chinese name (Yinxiang Biji) with a memorable pun. This strategy paid off; within the first year after launch they had 4 million users in China, and by 2015 their user base reached 17 million.

The notion that lower-quality clones sprung up because of foreign tech companies being blocked is only partially right. One could argue that the major Chinese social websites of Baidu, Ren Ren, Sina Weibo and Youku Toudu are clones of Google, Facebook, Twitter and YouTube, respectively. While the likes of Ren Ren weren’t able to replicate Facebook-like success in China, others have evolved beyond being clones to having their own unique, innovative ecosystems.

One such example is WeChat. Though it was originally inspired by Kik, and had similar features to WhatsApp, it evolved from mere messaging to becoming an integral part of the Chinese connected lifestyle. WeChat users can now link their bank cards to WeChat Pay, make in-store payments, transfer money to peers, buy movie tickets, hail taxis, pay for utility bills and so on. In fact, the list is practically endless, and shows how WeChat’s business model has become so powerful, and has grown from being a simple messaging app like WhatsApp (which, incidentally is also not blocked in China, but cannot hope to compete on WeChat’s scale).

Foreign tech players tend not to be as extensive in ecosystem building.

Importantly, Chinese innovators are developing new intellectual capital. They are crafting innovative business models and reaching new frontiers of business strategy and organization. Prime examples include Alibaba and LeEco. Jack Ma has built Alibaba into a sprawling internet business through “multiple jumping” from one business area to another, while building its capabilities along the way through a combination of self-built and collaborative partnerships. This disrupted the conventional “core competence” approach that has ruled modern business for the past 30-odd years.

LeEco is, broadly speaking, a “lifestyle” company, with a diverse ecosystem of infotainment content, smart devices and internet-connected mobility. Many commentators by now have pointed out that Chinese innovators are fast, agile and adaptive. However, these are merely phenomenological observations. At heart, the best and brightest of these innovators are deeply reflective on what the new frontiers of business are, focusing on “how can we get it right and do it well?”

Of course, China’s market for tech companies has evolved significantly for over a decade and a half. When Alibaba was competing with eBay more than a decade ago, China’s tech market was pretty primitive. Alibaba merely used guerrilla warfare tactics based on its grit to defeat a major foreign player. Today, both the market and the players are much more sophisticated and their business approaches are much more refined. The leading Chinese innovators are digital ecosystem players building scale and creating customer stickiness through their entire ecosystem. Foreign tech players tend not to be as extensive in ecosystem building.

To “win,” foreign tech companies need to adapt to the China context and deeply understand the key factors of success. Local leadership is critical and appropriate empowerment by the global headquarters to the local leadership to do the right things is essential. While for some, the market is not open or they are not welcome, for many, the opportunities are right there. China is not easy, but why should it be? It’s tough for everyone, no matter if one is foreign or not. And no one can be sustainably successful if they don’t observe, learn and adapt.

LinkedIn China’s Chitu, for instance, is struggling to get market traction. Evernote, while achieving early success in China, seems to be facing some challenges for sustainable growth, mainly due to lack of premium paid users and growing competition from Chinese startups. In fact, drawing a line on “who’s Chinese and who’s not” is also somewhat artificial, given that Alibaba’s and Tencent’s largest respective shareholders are not Chinese, and some of LinkedIn China’s and Uber China’s key shareholders are Chinese. (Sequoia China, whose parent is a Silicon Valley-headquartered VC fund, has its operations led by Chinese venture capitalist Neil Shen, who has a deep understanding of the China context.)

As China’s digital business grows, it’s going to provide more opportunities for many players. Who “gets it” and who doesn’t will certainly not only be a function of “being blocked or not,” but equally (or even more importantly) those who have the right mindset and approach to the China context (and for that matter, China for the world). To this end, it’s a real test of the leadership and capabilities of the companies, as well as the capital behind them.

Source : https://techcrunch.com/2016/08/28/can-foreign-tech-companies-win-in-china/

Categorized in Others

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