<Alibaba.com, a Softbank Investment> Simply B2B for Jack the giant killer
Fairytale rise of Chinese high school teacher behind Alibaba
E-finance: special report
Phillip Inman
Wednesday June 7, 2000
Dedicated net freaks who want to undermine big business often consider their stance a moral duty, or even a crusade. But to Jack Ma the mission to steal away the lifeblood of multinationals and ultimately marginalise them is simply part of his business.
Mr Ma runs China's largest collection of business to business websites. His slight frame belies the sleeping giant who keeps US presidents awake at night.
Under the catchy umbrella Alibaba.com, Mr Ma has established an online marketplace that boasts thousands of buyers and sellers trading everything from teddy bears to computers, metals and minerals.
Buyers can sign on as members and source goods that previously they would have needed to attend a trade fair to see. Sellers can post messages when it would cost thousands of pounds to meet. "Only the big players can do this kind of thing at the moment," Mr Ma says.
He believes his site will be a treasure island for small businesses. For the first time they can afford to talk to each other rather than rely on trade from bigger firms further up the food chain. The website allows buyers and sellers to register free and there is an absence of add-on fees once they make contact or complete deals.
Mr Ma has chanelled his marketing effort at smaller firms - an untapped market, he says. He is now touring Europe to attract customers on the same basis and the OECD confirmed his view last week when it said only the US could be said to have an online business-to-business economy of any significance.
So far Mr Ma has steered clear of the US for that very reason. It is a mature market dominated by big players, he says, many of which have moved into China in a big way like IBM, Hewlett Packard and Coca Cola. It is companies like these that Alibaba is supposed to help small companies skirt round. Once they have built up business alliances through the site, the idea is that they can confront them on a more equal footing.
Mr Ma can also count on the backing of some heavyweights of his own. US investment bank Goldman Sachs and Japanese internet investor Softbank are his two biggest investors. Adding more weight, Softbank's chairman Masayoshi Son is on the Alibaba board along with Peter Sutherland, former director general of the World Trade Organisation.
Mr Ma began his business five years ago after a trip to the US convinced him the net was more exciting than teaching in high school. He witnessed the first internet connection to China when he got back and immediately began web hosting and designing. He says it was obvious that e-tailing would be slow to take off in China because of conservative consumers and the delicate sensitivities of the Chinese authorities. Business-to-business (B2B)ventures, which are actively encouraged by the government, were always likely to prove more profitable.
Five years later, however, and Alibaba.com has yet to make a bean. Mr Ma says he is careful with his investors' money, most of which goes on 100 staff to look after the site.
"The editors check all the postings," he says. "They don't polish the language, but they check everything fits the right category. For instance, companies don't qualify if they exaggerate their status. In the end we accept 1,500 out of the 2,000 postings we get every day."
That doesn't mean there is any kind of due diligence going on. Once buyers spot something they want, they contact the other party and from that point on its a standard business relationship.
The cash will begin to flow Mr Ma says, when he starts to offer add-on services like shipping and insurance to members involved in a deal. Next month he is launching a scheme that allows members to send samples via the site.
"We are targeting the $6.7 trillion market in imports and exports. At least 5% of that figure is service charges, which is where we come in."
guardianunlimited.co.uk |
