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TRADE WARS
Alibaba: China's giant online shopping 'crocodile'
by Staff Writers
Shanghai (AFP) Sept 19, 2014


Alibaba's Ma rides 'Forrest Gump' story to riches
New York (AFP) Sept 19, 2014 - In his long road to riches, Alibaba founder Jack Ma says his inspiration has been the film character "Forrest Gump."

"I like that guy. I've been watching that movie about 10 times," Ma said in an interview with CNBC as his Chinese online firm made its historic Wall Street trading debut on Friday.

"Every time I get frustrated, I watch the movie."

Ma said the lesson he learned from the blockbuster featuring Tom Hanks was "that no matter whatever changed, you are you. I'm still the guy I was 15 years ago (when I earned) $20 a month."

Ma became excited about the Internet during a visit to the United States in 1995 and wanted to find a way to bring the online world to China. In 1999, he convinced friends to give him $60,000 to start an e-commerce firm called Alibaba.

Fifteen years later, the company is an Internet giant and Ma -- a former English teacher -- is among the topmost ranks of China's super-rich, with wealth estimated at $11 billion by Forbes magazine.

Alibaba Group includes Tmall.com for business-to-consumer transactions and Taobao, China's most popular online consumer marketplace with hundreds of millions of products and services listed.

Ma, now 50, gave up his university teaching job after discovering the Internet.

Seeing an opportunity for small businesses to buy and sell their goods online, he started Alibaba, initially running the company out of his apartment in the eastern city of Hangzhou.

"The first time I used the Internet, I touched the keyboard and I find 'well, this is something I believe, it is something that is going to change the world and change China,'" Ma said in a CNN interview.

- Compared to Steve Jobs -

Ma has inspired strong devotion among his employees and users, drawing comparisons with late Apple co-founder Steve Jobs -- although he practices a more open management style.

A devotee of t'ai chi, he has made references to Chinese martial arts in both business strategy and corporate culture.

Porter Erisman, a former Alibaba employee who made a documentary about the firm, "Crocodile in the Yangtze," said: "What Silicon Valley is known for, he embodies a lot of that with Chinese characteristics -- that spirit of openness, risk-taking, innovation."

Ma graduated from the Hangzhou Teachers' Institute with a major in English-language education, and went on to teach at another university in the city, where Alibaba is still headquartered.

Chinese state media have burnished his rags-to-riches story, saying his parents were poorly educated and his father depended on a monthly retirement allowance of just $40 to support the family.

Ma's success was evident after Alibaba's Taobao bested eBay in China, forcing the US auction site to largely withdraw from the country in 2006.

In characteristic language, he threw down a challenge to the world's global Internet giants in a memo sent to the company's more than 20,000 employees as it filed for the IPO.

"Fifteen years ago, Alibaba's 18 founders were determined to set up a global Internet company originated by Chinese people, with hopes it would become one of the world's top 10 Internet companies, a company which will exist for 102 years," he said.

On Friday, he told CNBC that he hopes Alibaba will one day be "bigger than Wal-Mart" and have a huge impact on the world.

"We have a dream," he said. "We hope people say in 15 years this is a company like Microsoft, like IBM."

Alibaba has become by far the dominant e-commerce company in China, a country with the world's greatest number of Internet users, in only 15 years.

The Hangzhou-based company is largely unknown outside Greater China, but a historic listing on the New York Stock Exchange Friday and its recently-launched US shopping website, 11 Main, are expanding its global stature.

By raising $25.02 billion, Chinese online giant Alibaba has broken the record for the largest initial public offering in history.

With ambitions beyond online retailing, the company is guided by Jack Ma, a diminutive yet charismatic onetime English teacher who is now a billionaire entrepreneur.

"Fifteen years ago, Alibaba's 18 founders were determined to set up a global Internet company originated by Chinese people, with hopes it would become one of the world's top 10 Internet companies, a company which will exist for 102 years," Ma said in May, meaning the company would span three different centuries.

"We have a dream," said Ma, who was on the floor of the New York Stock Exchange on Friday before trading opened.

"We hope in the next 15 years the world will change. We want to be bigger than Wal-Mart."

Alibaba had originally planned to list in Hong Kong, thereby staying on Chinese soil, but talks between the company and the exchange broke down last year because listing rules prevented Ma and top management from retaining control over the board of directors.

The controversial structure has proved to be an issue even with a US listing, prompting Alibaba to disclose the identities of more than 20 partners who have the power to appoint a majority of the corporate board.

"Unlike dual-class ownership structures that employ a high-vote class of shares to concentrate control in a few founders, our approach is designed to embody the vision of a large group of management partners," it argued in a filing with US regulators.

Ma chose the name Alibaba from "1,001 Nights" because it is easily pronounced in both Chinese and English, and the literary work's "open sesame" catchphrase signifies the company can "open a doorway to fortune for small businesses".

- 'Taobao Girls' -

Alibaba is often described as the Chinese version of eBay. Like the US company, it has its own payments system, though it puts less emphasis on online auctions in favour of instant transactions.

Alibaba bested eBay in China over a decade ago, essentially forcing it to retreat.

"eBay may be a shark in the ocean, but I'm a crocodile in the Yangtze River. If we fight in the ocean, we lose, but if we fight in the river, we win," Ma is famously quoted as saying.

Unlike another US online retailing giant, Amazon, Alibaba has no product stocks itself, instead connecting buyers and sellers.

Its consumer-to-consumer platform, Taobao, is estimated to hold more than 90 percent of the Chinese market with over 800 million product listings and around 500 million registered users.

Taobao's presence is so pervasive in a country with more than half a billion Internet users that it has entered the lexicon: "Taobao Villages" are settlements of sellers while "Taobao Girls" are young women who model clothes on the site.

Another Alibaba platform, Tmall.com, is estimated to hold over half the market in China for business-to-consumer transactions.

Domestic competitors include JD.com, which listed on the US Nasdaq market in May, and a newly created upstart backed by property conglomerate Wanda Group -- the company of Wang Jianlin, who is worth $16 billion, according to publisher Forbes.

The surge in Alibaba's share price following its debut Friday lifted Ma's personal net worth to about $17 billion, making him the new richest man in China, Forbes said.

Ahead of the flotation, Alibaba has embarked on an acquisition frenzy aimed at expanding beyond its traditional online commerce business, though critics say it is already spending the money it will raise.

Recent deals include buying a 50 percent stake in China's top football club Guangzhou Evergrande, purchasing domestic mobile browser developer UCWeb and paying $1.22 billion for a stake in top Chinese online video platform Youku Tudou.

Alibaba said it recorded profits of nearly $2 billion on revenue of $2.5 billion for the quarter ending June 30.

Alibaba, China's Internet behemoth
Beijing (AFP) Sept 19, 2014 - Chinese Internet retail giant Alibaba made its historic Wall Street trading debut Friday, breaking the record for the largest-ever initial public offering by raising $25 billion.

The following is a fact-file about the e-commerce titan, founded by Chinese entrepreneur Jack Ma, who was in New York for the stock launch.

FOUNDING: Alibaba Group was founded in 1999 by 18 people led by Ma.

WHY ALIBABA?: Ma chose the name because it is "easily pronounced in practically all languages" and because the "open sesame" catchphrase from 1,001 Nights signifies that the company's platforms "open a doorway to fortune for small businesses", the company's website says.

SIZE: A total of 20,000 people are employed by Alibaba, which has its headquarters in Hangzhou, Ma's hometown in China's eastern province of Zhejiang. The company has 73 offices in mainland China and 16 overseas.

COMPONENTS: Taobao.com, China's most popular online consumer marketplace, and TMall.com, a website for business-to-consumer transactions, are among several online platforms which operate within the Alibaba structure. Raising its profile internationally is US shopping website 11 Main, launched in June. It also has a payment unit, Alipay, which is not included within the IPO vehicle.

CUSTOMERS: Taobao has more than 800 million product listings and over 500 million registered users. It is estimated to have more than 90 percent of China's online consumer-to-consumer market.

THE MARKET: China's online shoppers spent nearly 1.26 trillion yuan ($200 billion) in 2012, up 66.5 percent from the previous year, the semi-official China Internet Network Information Centre said in an April 2013 report. 11 Main potentially opens the door to a wider global audience.

ACQUISITIONS: Alibaba went on a deal-making frenzy ahead of its share offer in the United States.

Its purchase of Chinese mobile browser developer UCWeb for an undisclosed sum in June came after it paid $192 million for a 50 percent stake in top Chinese football club Evergrande earlier that month.

In May, it paid $249 million for a stake in Singapore postal service Singapore Post to boost its logistics and delivery operations.

It has also made forays into entertainment, paying $1.22 billion for a stake in top Chinese online video platform Youku Tudou in April and acquiring Hong Kong-listed ChinaVision Media Group in March.

POTENTIAL: China has the world's biggest online population and its annual online sales are forecast to reach between $420 billion and $650 billion by 2020. By then it will be the world's largest online retail market, consulting firm McKinsey estimates.

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