Chinese companies are going global, and online retailers are no exception. But what does this trend mean for China as a whole? As China’s e-commerce sector has grown rapidly (pdf), the success of Taobao, China’s eBay, may say as much about changes in China’s culture and society as it does about the company and its founder, Jack Ma.
Taobao is one of many successful ventures belonging to Alibaba Group Holding, Ltd., a Hangzhou-based company founded in 1999 by Jack Ma, a graduate of Hangzhou Normal University. The company has been positioning itself as a model of creativity and innovation for young Chinese entrepreneurs. Ma, the 48-year-old businessman, is also a source of inspiration for many Chinese who have not found success in the conventional way: by passing the national college entrance examination known as the gaokao, attending a good university, and starting with a decent entry-level job. Ma failed the gaokao twice before passing, and later abandoned a secure job to found his own company.
In the late 1990s, Ma saw an opportunity in catering to small- and medium-sized enterprises instead of focusing on larger ones, which accounted for a smaller percentage of Chinese companies, through Alibaba, which aimed at creating a marketplace for buyers and suppliers via the Internet. Ma’s company, which owns a number of online retailers, is now taking further steps toward a US$70 billion IPO, or initial public offering, by engaging in talks with the Hong Kong Stock Exchange.
The Ma story comes as the unemployment level in China is rising, especially for college graduates, indicating that the education system needs change. The year 2013 also saw a record graduation rate with approximately 7 million young graduates. Amid these challenges, many younger Chinese are striving to cultivate the creativity and willingness to take risks that have made Ma’s ventures successful.
“As long as one harbors dreams, it’s never too late,” wrote Sina Weibo user @爱国者冯军, in a post comparing Ma to other successful businessmen such as Henry Ford.
Others applauded Ma as a role model due to his firm convictions. “Ma is truly a leading figure,” said Sina Weibo user @程敬知. “A big heart leads to a successful company. When he was poor, he didn’t forget his ideals and beliefs. Even when successful, he didn’t forget his ideals and beliefs. The world will eventually cheer for him. I again recommend the documentary ‘Crocodile in the Yangtze: A Westerner Inside China’s Alibaba.com.马云真心是一个领袖级人物。心有多大，舞台就有多大。在最贫困的时候，不忘理想和信念。在富有成功的时候，也不忘理想和信念。世界终将为你喝彩！再次推荐这部纪录片《扬子江中的大鳄alibaba》。””
If controversies linked to fake Apple and Ikea stores push some to reassess China’s ability to innovate, companies like Alibaba prove that Chinese companies are capable of thinking outside the box. The Chinese government has shown support for local companies while restricting foreign competition, further fueling the growth of companies like Alibaba.
Two of the most popular websites under the Alibaba Group – Taobao and Tmall – have also helped broaden Alibaba’s target market by attracting younger people. The consumer-to-consumer business Taobao has drawn young Chinese adults thanks to the opportunity to set up their own stores and work for themselves. Tmall, which is a business-to-business marketplace, has been more popular among brand-name companies like Adidas and Nike.
Ma’s companies also differentiate themselves by their focus on customer service. Sellers on Taobao can be contacted via WangWang, a chat service that connects customers and sellers. Buyers have the option to rate and reviews sellers, giving details and information about their previous purchases.
“Sellers have pretty good customer service because it is really competitive on Taobao,” said Jason Wang, an international student at the University of North Carolina at Chapel Hill and president of the Chinese Undergraduate Student Association there. Wang added that he also preferred Taobao’s user-friendly website over eBay’s, although the latter might be more useful for purchases made in the United States.
Competition and long work hours have caused the deaths of some Taobao sellers. In one instance, a 24-year-old Taobao seller Ai Jun is reported to have died from overwork related to running her Taobao store. Store owners are generally responsible for responding to customers’ complaints and questions via WangWang, at any time. They are also responsible for ensuring delivery, and sometimes even making the goods they are selling.
“Whether you are on your way to the post office to take delivery or sitting on the toilet, you have to be on WangWang,” said Su Yuli, a Taobao seller.
Preparing for a future IPO, which is slated to take place sometime this year, puts Alibaba under just as much pressure as the average Taobao seller. The company is currently trying to battle counterfeit goods – a necessary measure to achieve credibility in the eyes of consumers and businesses. On August 15, 2013, the group signed an agreement with the International AntiCounterfeiting Coalition, a Washington, DC-based nonprofit organization, which proposes solutions and rules to fight the proliferation of counterfeits. The IACC and its partners will help Taobao detect counterfeits and work with law enforcement authorities for future investigations.
Time will tell how this large IPO involving foreign investors, not to mention the attention of foreign customers, will change Taobao.
“You go out and charge around… if it doesn’t work, you can always bow out. But if you think over thousands of things at night and in the morning keep on walking the same old path, you never get anywhere,” said Ma, as quoted by Liu Shiying and Martha Avery in their book alibaba. “You don’t grow. You might as well try.”