Written by Peter Xu
On September 5, 2014, Alibaba Group said ‘Open Sesame’ to financial fame when its IPO raised a historical $21.8 billion, making Alibaba’s IPO the biggest in history. While seemingly excessive, that amount of funding might be necessary considering the extent of Alibaba’s future plans. With its method of connecting buyers and sellers, Alibaba acts as a national virtual marketplace where business suppliers and individual sellers find buyers for products and services; yet the expansion does not end there.
Alibaba’s creator and Executive Chairman, Jack Ma, wants American small businesses to use Alibaba to find a market for their products in China. Recently, in a joint presentation with American Express CEO, Ken Chenault, Ma indicated that he is interested in providing low-cost, possibly free, listing services for American small businesses. This free listing approach worked once before when upstart Alibaba overtook eBay in China.
Competitor eBay had already entered the Chinese market and held more than 90% of the market share when Alibaba started. Undaunted, Alibaba nurtured its business customers by offering six years of free listing services and delivering access to nationwide and even worldwide markets. The result turned the tables on eBay. Alibaba eventually grew to cover over 80% of all types of e-commerce (B2B, B2C, and C2C) in China, pushing out eBay’s China operation.
Much of Alibaba’s success rests on CEO Jack Ma and according to him, the skills he learned as a 15-dollar-a-month teacher. Beginning with his first job as an English teacher at Hangzhou Dianzi University, Ma promoted the growth of others. Then in 1995, Ma found something to teach to all of China. On a trip to the US, a friend of Ma’s introduced him to the Internet with the notion that one could search anything on the web. He took his discovery back home and convinced some friends to help him create an online ‘Yellow Pages’ for Chinese businesses. These 17 friends would go on to create Alibaba.com, becoming co-founders in the operation.
One of the largest hurdles Jack overcame was the CCP’s distrust of the Internet. In 1995, the government had initially rejected Jack’s vision of an online marketplace, seeing the Internet as an uncertain phenomenon. To help ease government fears, Alibaba.com took an approach where the company respects the government’s security needs, while extolling the benefits of the Internet as well.
As an e-commerce company and business facilitator, Alibaba avoids issues like censorship, all the while creating an estimated 14 million jobs and aiding the government’s goal in turning the Chinese towards an ever-adaptable consumption-based system. Today, Alibaba.com has the enthusiastic support of the government – which sees the company as a major job-maker for small and medium sized businesses and a foundation for a better economic model.
Throughout company growth, Ma has made customer needs his first priority. The increasingly tech-savvy Chinese consumers, both urban and rural dwellers, now access numerous products that they have never seen before. The same benefits can be applied to once isolated sellers who now have access to the largest national consumer base on the planet. As Jack stated: “Let the … investors curse us if they want. We still follow the principle of customers first, employees second and investors third.”
However, investors are not cursing the company. Stocks for Alibaba Group are on the upswing while Seeking Alpha calls it, “The Most Attractive Growth Stock in 2016.” Time will tell whether or not Jack Ma and Alibaba can attract America’s small businesses.