Mr 'Made in China' - a dreamer with a mission

PUBLISHED : Monday, 10 September, 2007, 12:00am
UPDATED : Monday, 10 September, 2007, 12:00am founder aims to bring e-commerce to SMEs

In many ways the corporate world may see Jack Ma Yun as a 'Made in China' business success. However, Mr Ma, who founded, says he sees himself more as a dreamer with a mission to help the country's overlooked small and medium-sized enterprises.

Alibaba, which has grown to become the country's biggest e-commerce company and which uses the internet to match manufacturers in the mainland and elsewhere with potential buyers, is thriving because chairman and chief executive Mr Ma believes he and his team have 'stuck to their guns'.

'From day one, we believed in our dream. We believed that e-commerce and the internet could help numerous SMEs succeed,' he said. 'Others did what was hot at the moment ... but we persevered in our thinking.'

By official count, the mainland has more than 42 million SMEs, accounting for 99 per cent of all enterprises in the nation.

Most are in the manufacturing business with many yet to tap into e-commerce to boost operations.

On those grounds, Mr Ma, 43, has spent the past eight years building the Alibaba group centring on e-commerce and targeting SMEs.

The efforts resulted in five units - the business to business (B2B) (Alibaba), for consumer e-commerce, Alipay, an online payment system, Alisoft for software, and Yahoo China.

Even though government recognition of SMEs' contribution to the mainland's economic growth has since grown, their development was not without hitches.

For years, state-owned firms have always been preferred for loans from mainland state banks over SMEs and private enterprises, although that is gradually changing.

However, in a true display of entrepreneurship, this is where Alibaba sees an opportunity to add value.

According to the government-backed China National Network Information Centre, Chinese, businesses using the internet expanded from four million in 2004 to 30 million last year, mainly in Beijing, Shanghai, Guangzhou and Hangzhou, where Alibaba is based.

This boosted e-payment and e-banking, services provided by Alipay, established in 2004 to complement the group's other e-commerce units.

The centre projects that e-payments will exceed 100 billion yuan by next year, and 280 billion yuan in 2010.

Alipay recently introduced an international service that allows mainland consumers to buy directly online from global retailers.

It has 47 million users in the mainland, with average daily transaction volume at 150 million yuan. was established in 1999. In the first year, foreign players including Softbank and Goldman Sachs invested more than US$25 million. It has more than 24 million registered local and foreign enterprises.

The group declines to provide financial figures but says its cash position is likely to be the strongest among mainland internet companies, and it is 'very profitable'.

Yet, like other internet firms, Alibaba learned some hard lessons when the dotcom bubble burst earlier this decade. The chief lesson, says Mr Ma, was: 'Listen to your customers rather than your investors.'

In 2003, the group set up, its business-to-consumer site, riding on growing consumer spending online.

Recent figures show that such spending in the mainland reached 161.81 billion yuan in the first half of the year, and is expected to exceed 364.11 billon yuan for the year. That would represent a 32 per cent jump from last year.

Taobao's transaction volume last year totalled 16.9 billion yuan, up 110 per cent from 2005, the company said.

But it was the group's deal with Yahoo in 2005 that put the company in the international spotlight when it emerged that Yahoo would pay US$1 billion and hand over all of its mainland operations in return for a 40 per cent stake in Alibaba. The transaction valued the closely held company at more than US$4 billion and cemented Mr Ma's global credibility.

The group's corporate picture is also changing as prepares for a Hong Kong listing, which is expected to raise US$1 billion. Alibaba executives declined to comment.