Friday, December 13, 2013

Person of the year: Jack Ma - Financial Times

Person of the year: Jack Ma

http://www.ft.com/intl/cms/s/2/308e46a8-6189-11e3-916e-00144feabdc0.html?segid=0100320#axzz2nMjVbZJl

December 12, 2013 7:31 pm

Person of the year: Jack Ma

By Jamil Anderlini

The founder of Alibaba is stepping back from his corporate role to tackle China’s myriad woes

The sound of 16,000 people chanting “Ali, Alibaba” fills the Yellow Dragon Stadium in Hangzhou, a city on China’s eastern coast. As the theme to The Lion King begins to blare over the sound system, a diminutive figure rises through the stage floor.

Dressed in leather and sporting a giant spiked Mohawk, black lipstick and a nose ring, Jack Ma begins to belt out an off-key rendition of Elton John’s “Can you Feel the Love Tonight” to his adoring employees.

It had been 10 years since Mr Ma founded Alibaba, the internet company that made him a billionaire, and it was time to celebrate. Soon, it will be time to celebrate again: Alibaba, the world’s most successful ecommerce company, is preparing to sell shares in a global initial public offering that is expected to be valued at well over $100bn.

Mr Ma has been a cult figure in China for years. But he captured the attention of the world this year as excitement built around the impending IPO, which will let investors own a slice of the fastest-growing internet market on the planet.

Alibaba’s sales now exceed those of eBay and Amazoncombined and make up about 2 per cent of China’s gross domestic product. Seventy per cent of all Chinese package deliveries come from Alibaba sales. Roughly 80 per cent of Chinese ecommerce transactions are conducted through Alibaba’s sites. And this is probably just the beginning, considering more than half of China is still offline. With 600m people using the internet and counting, China will soon overtake the US as the world’s biggest ecommerce market.

Mr Ma, godfather of China’s scrappy entrepreneurial spirit, is the FT’s 2013 Person of the Year because he personifies the Chinese internet – with all its potential and its contradictions.

In a nation whose success has been built largely on business ideas developed elsewhere, Mr Ma is a true innovator. His contemporaries have mostly copied established business models to create “China’s Google”, “China’s Amazon” or “China’s Twitter”. But when Mr Ma started Alibaba in his apartment in 1999, this type of business-to-business ecommerce website did not exist.

Mr Ma is now setting his eyes on a new goal: shaking up Chinese finance. This has sent shockwaves through the staid, state-dominated financial sector and shows that his ambitions extend well beyond online retail.

But there is another reason for choosing Mr Ma this year: his decision in May to step down as Alibaba’s chief executive at the age of 48 to devote himself to tackling some of China’s biggest problems – in particular its looming environmental disaster.

He remains executive chairman of the company but his decision to focus less on the blind pursuit of riches and more on improving the state of the world reflects a profound shift in Chinese society – one that is being facilitated by the rise of the internet. After three decades of double-digit economic growth, the country’s growing and increasingly vocal middle class is no longer content with a myopic focus on GDP growth rates.

“In China, because of problems in water, air and food safety, in 10 or 20 years we will face a lot of health problems, like increased cancer. So that is one area where I will invest my money and time,” Mr Ma said in a telephone interview last week. “My second focus is people’s culture and education – if we don’t do this then young Chinese people will grow up with deep pockets but shallow minds.”

In his own words

‘eBay is a shark in the ocean, we are a crocodile in the Yangtze River. If we fight in the ocean we will lose but if we fight in the river we will win’

‘The internet is like a glass of beer: it tastes best when there are bubbles in it’

‘When you want to judge whether a person or a company is excellent or not don’t look at whether they went to Harvard or Stanford, don’t look at how many of their employees graduated from famous universities, look at whether they work like crazy and whether or not they go home from work every day with a big smile’

‘I know nothing about technology’

‘I don’t care about revenues’

. . . and what others say

‘In China, Jack is idolised as much as Steve Jobs was in the United States’
Hao Wu, former Alibaba executive, in a recent article

‘Inside Alibaba there is a huge personality cult built around Jack Ma and this is intentionally fostered by the company management’
Anonymous former employee

‘Share of ecommerce in China is likely to be the defining measure of success on the net’
Meg Whitman, former CEO of eBay and current CEO of Hewlett-Packard, 2005

Mr Ma’s energy and optimism inspire many. But that does not mean he is a saint. Some former colleagues and confidants say his incredible success and the adulation it has brought has made him overconfident in his ability to change the world.

In almost the same breath, he will say the internet is going to make China more open and transparent, while also vowing to hand over to the authorities information on any netizen who dares criticise the authoritarian Communist party.

His own authoritarian tendencies, and his sometimes dizzying reversals in business strategy, have bred resentment among a minority at Alibaba. But his cult-like following ensures even disgruntled former employees do not dare criticise him openly.

“Anybody who wants to do anything in the Chinese tech industry in future has to be careful what they say about Jack Ma because he is just so powerful,” says a former employee who asks not to be named.

“But even people like me who don’t buy into his cult of personality recognise that he epitomises the entrepreneurial new China, where a person from a very poor background can become huge through pure perseverance and by rallying people around him.”

Born in the southeastern Chinese city of Hangzhou in 1964, Ma Yun (his Chinese name) inherited a gift for showmanship from his parents, who earned their living as performers of “ping tan”, a traditional musical storytelling technique.

Mr Ma’s early life cannot have been easy: traditional ping tan was banned during the Cultural Revolution, the catastrophic decade-long political campaign launched by Mao Zedong in 1966 in which millions were persecuted, killed or banished to remote parts of the country.

As a child, Mr Ma was bad at maths but fascinated by English. As China emerged from the trauma of Maoism and began opening up to the world, he decided he would devote himself to learning the language.

For nine years he got up early every morning and rode his bike to the Hangzhou Hotel, where he befriended foreign tourists and worked for free as a tour guide in order to practise English.

After twice failing China’s national university entrance exam he was eventually admitted to Hangzhou Teacher’s Institute, where he graduated in 1988.

He worked as an English teacher at a local university making $12 a month but in 1994 he started a translation business that took him to the US, where he was introduced to the internet. At the time, China’s state media were not allowed even to mention its existence.

After a failed attempt to start an online Chinese version of the Yellow Pages, Mr Ma went to work for the Ministry of Foreign Trade and Economic Cooperation, where one day he was assigned to take an American visitor on a tour of the Great Wall.

The visitor was Jerry Yang, co-founder of Yahoo. The meeting would turn out to be transformative for both men.

Early in 1999, Mr Ma gathered 17 friends and founded Alibaba in his apartment in Hangzhou, giving rousing lectures that revealed his ambition, his vision and his fighting spirit.

“Chinese brains are just as good as theirs and this is the reason we dare to compete with Americans,” Mr Ma told his comrades in a speech that was caught on camera. “If we’re a good team and we know what we want to do then one of us can defeat 10 of them.”

From the FT video archives: Jack Ma – CEO interview

2007: Jack Ma, Alibaba.com CEO, discusses being a Chinese internet entrepreneur in this FT video

Alibaba’s model was simple: allow small and medium-sized Chinese companies to find global buyers they would otherwise only be able to meet at trade shows. It worked brilliantly.

In 2003, Alibaba made its first tiny profit and launched Taobao (“search for treasure”) to compete with US ecommerce group eBay, which then dominated in China with market share of about 80 per cent.

In a series of interviews with global media, Mr Ma announced he was “going to war” with eBay. At the time, it seemed like a comical mismatch.

By 2007, eBay’s market share in China had dropped to less than 8 per cent and it had in effect quit the market. Taobao’s share had soared to 84 per cent, making Mr Ma the unrivalled king of Chinese ecommerce.

He struck a landmark deal with his old friend Mr Yang in 2005, with Yahoo paying $1bn for a 40 per cent stake in Alibaba and handing its China operations over to Mr Ma to run.

In taking over Yahoo China, Alibaba inherited a scandal that would cast a shadow over Mr Ma’s reputation in the west but cement his image as a safe pair of hands in the eyes of the Chinese government.

Yahoo’s earlier decision to hand over private email information to the Chinese authorities had led to at least two Chinese journalists and democracy advocates being thrown in prison for subversion.

When asked how he would handle such a situation now that he was in charge of Yahoo’s China operations, Mr Ma’s reply was unambiguous.

“We create value for the shareholders and the shareholders don’t want us to oppose the government and go bankrupt,” he told reporters at the time. “Whatever [government officials] say, we’ll do it.”

When asked last week in the interview about the challenges of dealing with the Chinese government, Mr Ma pointed out that there had never been an organisation in China or perhaps anywhere that is as large as Alibaba. It boasts more than 600m registered accounts and welcomes about 100m shoppers a day.

“At the beginning I thought the government would worry,” Mr Ma said. “[But] we focus on business and the creation of jobs. The government seems to feel more comfortable now.”

To his employees he has often said that Alibaba should “be in love with the government but never marry it”. Over the years he has repeatedly turned down offers to establish joint ventures with the state.

Apart from the Chinese government, Mr Ma seems willing to pick a public fight with almost anyone.

That includes Alibaba investors such as Yahoo and, most recently, the Hong Kong Stock Exchange, which this year refused to change its listing rules to accommodate the corporate structure Alibaba would like to use for its forthcoming IPO.

Within Alibaba, this fighting spirit is celebrated constantly and employees – or “Alipeople” as they are called – assume nicknames taken from characters in the kung fu novels that Mr Ma loved to read as a young man.

This is more than a gimmick for Mr Ma, whose own nickname – “Feng Qingyang” – comes from a reclusive swordsman character who was unpredictable and aggressive.

“People don’t realise how much martial arts and kung fu novels influence Jack and his strategy for business,” says a former confidant. “They also helped shape his idealism because they are all about upholding the righteous way.”

Outside the ruling Communist party it is hard to find anyone today in China who has had a bigger impact on the lives of ordinary people than Mr Ma.

His decision to address some of the biggest problems facing China shows that his ambition extends far beyond changing the way people do their shopping. In an essay published this year, he laid out the scope of his vision.

“Just as the internet is revolutionising retail,” Mr Ma wrote, “we at Alibaba believe it will eventually do the same to fundamentally information-driven industries such as finance, education and healthcare. Once this change happens – once we are all connected – I believe the spirit of equality and transparency at the heart of the internet will make it possible for Chinese society to leapfrog in its development of a stronger institutional and social infrastructure.”

But he also included a warning: “Our water has become undrinkable, our food inedible, our milk poisonous and worst of all the air in our cities is so polluted that we often cannot see the sun,” he wrote. “Twenty years ago, people in China were focusing on economic survival. Now, people have better living conditions and big dreams for the future. But these dreams will be hollow if we cannot see the sun.”

JKHC FORUM

Friday, December 13, 2013