Jack of diamonds

PUBLISHED : Sunday, 25 June, 2006, 12:00am
UPDATED : Sunday, 25 June, 2006, 12:00am

Jack Ma loves to talk big. In some ways, that's understandable: how many former English teachers have borrowed US$2,000 from family and friends to set up an internet company and been rewarded, six years later, with

US$1 billion for selling 40 per cent of that same firm? Even so, the braggadocio from the skeletally thin internet entrepreneur and chief executive, whose online auction site,, has outstripped global giant and arch-rival eBay on the mainland, has raised eyebrows.

'We win [against] eBay, buy Yahoo and stop Google,' Ma boasted to reporters on the sidelines of a Pacific Rim leadership conference in South Korea in November. In May, he told analysts at the US offices of Yahoo, in Sunnyvale, California, that 'the game is over', with Taobao cocking a snook at its powerful American rival, buyer of the 40 per cent stake in Alibaba.

Ma has said that, despite a US$100 million injection last year, eBay is finished on the mainland. Depending on who is counting, Taobao has either 70 per cent share of the market (Ma) or 57 per cent (internet analysis firm iResearch). Either way, Taobao leads the pack, with eBay second and, owned by instant-messenger giant Tencent Holdings, trailing in third. The prize is glittering: valued at 900 million yuan in 2001, the mainland online auction market reached 5.2 billion yuan last year and is still trending sharply upwards.

So, expecting more bombast, it comes as a surprise when Ma takes a different tack during a recent interview in the ninth-floor headquarters of Yahoo China, just off Guanghua Road, in Beijing's central business district.

EBay, I point out, has not exactly rolled over and died.

'Yeah, let them [live],' says Ma, casually dressed in a light-grey polo shirt, dark-grey trousers and black leather shoes. As he speaks, he fidgets in his black office chair, one moment swinging his feet up onto another chair, the next bringing them down with a crash as he leans forward to make a point. From time to time he reclines, hands behind his head, lean frame almost disappearing under the table. 'It's impossible to completely vanish eBay. They are rich, they are powerful. They are rich enough that they can be here in 10 years, 20 years, they can be here all the time. [We can't] do something impossible.'

Sounding positively magnanimous, Ma adds: 'It's always good to leave a competitor in the market. If you destroy all competitors, you will die ... We will grow, the market is growing, we gotta leave some space for other people.'

Is this a recast, humbler Ma? He makes little secret of the fact recent acquisition Yahoo China (as part of the US$1 billion deal, Alibaba took over Yahoo's mainland operations) is proving hard to turn around. Ma is hoping to challenge market leaders Baidu and Google in the search-engine business.

'Big mess,' Ma sighs. 'I had a very good life before the Yahoo deal. I planned everything my way, everything: the management, cash and business.' Ma chooses a homely metaphor to describe Yahoo as a pain in the neck. Before, 'I prepared three tables of food and I got two tables of people. I knew pretty much what was going on. But since I got Yahoo, I have had three tables of food and, like, five tables of people.'

There is speculation in the mainland media that Ma's new tone may be part of a repositioning before some kind of merger with eBay, emulating a recent surprise partnership between Yahoo and eBay in the US. Some wonder if his position as chief executive will be threatened if the same happens in China.

Ma is also facing a revolt by Taobao customers angry the site has started charging. Critics have long sniped that Taobao's stellar performance has been largely based on the fact it promised to remain free for three years. Set up in May 2003, that promise was extended last year for another three years. EBay dropped many charges in December, in response.

Then in May, Taobao started levying fees for some services. Customers responded with an online petition and a one-day boycott, on June 1. 'Most people chose Taobao because it was free,' says protest organiser Cheng Yan. 'Of course, it's normal for an online site to charge fees. But if they promise they won't and then they do, they have broken their promise. We want them to listen to our opinions.'

As he does often, the likeable, ebullient Ma reaches into Chinese history and culture for an explanation. He compares Taobao to Mao Zedong and eBay to Chiang Kai-shek, the defeated Kuomintang leader who fled to Taiwan in 1949. 'The main task for Taobao today is not to compete but to develop the whole system, just like chairman Mao and Chiang Kai-shek. When Chiang Kai-shek was in Taiwan, do you think Mao should [have killed] Taiwan? Or should he [have built] up his own country?' he asks rhetorically.

China's internet darling was born and raised in Hangzhou, capital of Zhejiang province. He's articulate, intelligent and engaging, and never at a loss for words. The son of a theatre worker,

Ma taught himself English by hanging out at Hangzhou's West Lake Hotel every day for an impressive nine years, chatting to foreign tourists. It was the mid-1970s and China was just beginning to open up to the world after years of Maoist isolation.

Driven by burning curiosity about the outside world, the teenage Ma would pluck up the courage to say hello. 'The first time I was a bit nervous.' Another tactic was to hang out on the shores of the lake itself, where foreigners liked to jog. 'I read English loudly with terrible pronunciation [as foreigners jogged past] and because nobody in China at that time knew English, they stopped, they talked to me,' he says.

The experience opened Ma's eyes, teaching him an early lesson in the importance of communication. 'I made so many friends at the West Lake, foreign friends. I opened my mind and

I knew the world was not as I was told, there was another world outside ... the very important thing for people to do is communicate. People are not as bad as you think. Just talk to them.'

Ma studied the language further, and in a more orthodox manner, at Hangzhou Teacher's Institute, graduating with a BA in 1988, before teaching English and international trade for six years at Hangzhou Electronic Engineering Institute.

Over a decade and more than US$1 billion later, Ma, always bookish, still finds the time to read voraciously. He has said he always carries a novel by all-time favourite kung fu writer Kam Yung (a pseudonym of Hong Kong media magnate Louis Cha) in his briefcase and his favourite kung fu hero is Shi Potian, from Ode to Gallantry. 'He's like a Forrest Gump, my favourite figure from an American movie. He's very persistent, never gives up, simple, kind. People say of him that he's stupid. But things that other people find very complicated, he finds very simple.'

But today, Ma is carrying two other - revealing - books in his bag. One is about the home-grown banking system that flourished in Pingyao, in Shanxi province, in the late Qing dynasty; the other is about the Cultural Revolution. Asked in the past whether he would consider setting up a private bank, Ma has said he's not interested. But he is very interested in what the Cultural Revolution - the ten years from 1966, when chaos ruled and traditions were smashed - did to China.

Americans, says Ma, may not know much about China, 'but they are kind, they are very friendly and they love to help'. In contrast, he says, Chinese people can be suspicious and reluctant to offer assistance. Being duplicitous in business is regarded as a virtue and bribing others, de rigueur. 'I think it's getting even worse.'

Ma says he has never paid a bribe. 'Five, four years ago, people said, 'You want to do business, you gotta bribe people, you gotta bribe customers.' No! I would rather shut down the company tomorrow. So we do not do any bribery, we do not do any corruption, we do not do any dirty things.'

He blames the Cultural Revolution for many of China's problems. 'It destroyed the value system, it destroyed people's trust [as well as] friendliness and helping people, respect for the old, care for the young.' But Ma believes those values will return. 'Chinese tradition is still alive. It's still there. It's in your blood. Culture is everywhere, we just need to get to it, find it out ... all these traditional things, when you see China today, they are there, but they are just scattered everywhere. We need to redefine that.'

He says his approach to managing Alibaba is infused with those principles, but that he had to create them from scratch because they didn't exist in the culture around him. Showing trust and friendliness to employees is crucial, and so is gauging their mood. Ma calls it 'smelling the carpet'.

'We are a creative industry and if your guys are unhappy, how can you expect them to be creative? You can't.' To illustrate his point, he breathes in deeply. 'Is something wrong? When you go to a group of people you can smell it. [Then you think] oh, there's something wrong with this team, are they too nervous? [If] it's too much work, you can smell it, and then you can talk to them, listen and solve the problem. You can smell the whole company. That's most of my job.'

Like his kung fu heroes, Ma worships simplicity. 'I think that these days, everyone is stressing being fancy, complicated. And that's when one should be as simple as possible. The advantage of [simplicity] is that, one, it permits you to remain calm. And two, it lets you be yourself. Something isn't right just because other people say it is. And things aren't wrong just because people say they are. You have to use your own brain, your own thoughts, your own analysis to look at this world. And you need to be calm. I was never able to chase after the things that everyone said, 'wah, this is hot!' or 'wah, this is bad!' about.'

But isn't Ma's business, IT, very hot? 'Yes,' he replies, 'but at Alibaba, we don't think of ourselves as an IT company. IT is very hot. The purpose of IT is to serve the customers. I say, if something better than the internet happens tomorrow, I'll give up the internet and that thing can serve our customers.'

If kung fu has taught him a lot, so did Sars. Ma says he learned about leadership in the health crisis of 2003, which struck during Taobao's launch. One employee contracted the virus and the other staff members went into self-imposed quarantine, working from their homes.

'In personal terms, I think when everybody thinks the disaster that will kill [humanity] is coming, the difference between a leader and normal people is [the leader must] stand up and assemble your line and fight and face it. I was not scared. I was just thinking about how we could face it, united. It's funny; I felt proud when I had [got through that].'

The man many Chinese regard as a national hero for founding online firms that can do battle with the world's best - and win - has tough words for Google, a company he admires nonetheless. 'Oh my God they are arrogant! I know them very well and they are good people, but they don't know the world. They know the US very well but they don't know China.' The goals of Google and eBay, he maintains, are different to his.

'We want to build up an e-market that can last a hundred years and create value for Chinese businesses. They want to buy the China market because it is a fast-growing market and [they] can make more money in the future.'

A few months ago, Ma was having to spend half his time in Beijing. Now he's in the city only one week in four, but he still finds it a bore. He would much rather be at home in Hangzhou with his wife and 14-year-old son, or drinking the region's excellent tea with friends, than labouring in the arid capital to grow the troubled Yahoo China.

Ma points to a tank stocked with black and orange fish. 'My fung shui fish,' he says with his trademark broad grin. 'I am a water dragon, so Jin Yong (another of Cha's pen names) said I need water. I feel comfortable with water. Beijing is not my kind of place. Beijing is dry and fire [like]. So that's why I fly back to Hangzhou; to get some water.'

Water, I suggest, can put out fire.

'But when the fire is too strong ...' Ma tails off, laughing a knowing laugh. He may love the braggadocio but Ma is a subtle man, too.