The roar of a Chinese whisper

Roopinder Singh

Indians have taken to ecommerce like teenagers take to computers, but wait; most of the users are teenagers! Who better to reach out to them other than youngsters, sometimes literally, otherwise relatively speaking? Chandigarh’s Bansals’ Flipkart takes the crown, as the international giant Amazon tries to wrestle it back, with Snapdeal snapping at the heels.

The elephant in the room is Alibaba. No prizes for guessing which company’s initial public offering was the biggest in history — Alibaba’s US $25 billion IPO filled its cave with more than Google, Facebook and Twitter together got in their IPOs. Now, we have an account by one of the earliest managers hired by the Chinese schoolteacher-turned-entrepreneur, Jack Ma.

Here is a ringside view of how the company transformed itself from an obscure Chinese start-up to a global ecommerce giant. Porter Erisman, who rose up to be Vice-President of Alibaba, is a public relations expert, and this is a largely sympathetic account of the trials and travails of the company, and gives some information about the man who leads it. Some of Alibaba’s initial problems are familiar — low capital, low bandwidth, rolling blackouts, lack of support from financial institutions — but then Ma and his team managed to thrive in an environment where others simply survived.

The focus on the home market and an understanding of the needs of the Chinese people coupled with a shrewd understanding of the local bureaucracy and political players all worked together to help Ma build his company, even as he went through many tumultuous moments, including the SAARS epidemic. Ma was not always the charismatic figure that he is now. In 2000, there were just three people who attended his speech in Berlin — in a hall that could seat 500. Six years later, among the attendees taking notes was Amazon founder Jeff Bezos.

Cost was always a consideration, a house became an office to save rent, farmhands stood in for educated salesmen, who were too expensive. What they lacked in formal education they made up in enthusiasm and drive. Constant innovation was the focus. ‘We want to be the world’s largest consumer site; EBay may be a shark in the ocean, but I am a crocodile in the Yangtze river,’ said the Alibaba founder, who used a secret project, which looked like a competitor online shopping platform Taobao, to successfully challenge the American giant.

Alibaba’s relationship with Yahoo! has been a long one. In 2005 Yahoo! invested $1 billion in Alibaba and bought 40 per cent stake. Alibaba got control of Yahoo! China. Who bought whom was initially not quite clear, but both have been winners on various occasions. However, Ma’s stewardship of Yahoo! China did not quite work out. Yes, you win some, and you do lose others.

Controlling an estimated 80 per cent of the ecommerce market in China, Alibaba is a huge crocodile, hungry for deals, be it joining others like Soft Bank to invest in Snapdeal or using its Ant Financial Services to buy 25 per cent in One97 Communications, the parent of mobile ecommerce firm Paytm.

As they try to understand Alibaba, many will turn to Porter Erishman’s account of its world. Those who do, will benefit from it.