Last Friday, September 19, Sesame opened on the New York Stock Exchange. One of the largest Chinese companies, and certainly the largest online trading site in the world, Alibaba, has put its shares on the market. Very noisy. The company's initial public offering is the largest in history, shares worth 25 billion dollars were sold, valuing the company at 230 billion dollars, only fifteen less than the American trade giant Walmart. By the way, Alibaba founder Jack Ma's plan and dream is to overtake Walmart in the next 15 years. As things stand, he could do it by the end of this week.
Where did that monster come from, a company that few had heard of until last week, and which has now become a symbol of worldwide business success? Alibaba.com was founded just 15 years ago in the city of Hangzhou, near Shanghai. Around the time we were getting g17-plus here, an English teacher there and a small internet entrepreneur (the aforementioned Jack Ma), with his 17 associates, started building a website that would connect small Chinese businesses. It was not his first job on the Internet, but he had some attempts that mostly ran afoul of the strict Chinese laws at the time. For example, he is considered the founder of the first Chinese internet company (1995) that published classified ads, which recommended him for some other jobs under the control of the Chinese government. Anyway, until 1999 he was an ordinary man, albeit an ambitious one. He likes to say that when he founded Alibaba, his salary was $20. Today he is a billion times richer and a little more than that.
A DREAMER IN SEATTLE: Fifty-year-old Ma is an interesting character. Small, chubby, but full of energy. His biography states that he struggled with math and most other subjects at school, but he simply adored English. He only passed the college entrance exam the third time, became an English teacher, and worked there until 1995, when he discovered the Internet during his stay in Seattle. He says "beer" was the first thing he searched online. He immediately felt the potential of the Internet, but he had few interlocutors on the subject in China. Most considered him a hopeless dreamer.
Ma likes to say that anyone who doesn't get rich by the age of 35 is simply not ambitious enough, so it's his own fault. He didn't miss it, but he couldn't complain about the circumstances either. Unlike his surroundings, even his immediate ones (personal friends whom he unsuccessfully tried to get interested in the business), he saw in the Internet an incredible opportunity to connect small businesses that sprung up in China at nuclear speed in the late XNUMXs. In the beginning, Alibaba was a place where they advertised their offer or found partners. It turned out that they lacked exactly that, and soon it was not known whether investors who wanted to invest in Mao's project or entrepreneurs who wanted to advertise with him were making a bigger fuss. Only two years of operation were needed for Alibaba to bring its first profit. The business continued to spread like wildfire.
Just like factories copying Western products so you can't tell the difference, Alibaba has copied Western online commerce. With the fact that Alibaba (now Alibaba Group) has gathered within itself the Chinese versions of eBay, Amazon, PayPal and several other trading sites. They currently hold 80 percent of China's online trade, and the Alipay payment service handles half of all online money transactions in that country (about $300 billion a year).
However, not everything in the case of Alibaba is exactly like a fairy tale. The company owes its success not only to the fact that it was the first in China, but also to the fact that someone enabled it to keep that privileged status even when it became clear what kind of golden cocoon it was turning into. The Chinese authorities, meanwhile, passed various regulations that made it difficult for many to do business, but Alibaba was more or less looked down upon. It is believed (justifiably) that this is because a large number of sons and grandsons of high-ranking party officials have invested heavily in Alibaba through their companies and this success on the stock market has made them enormously happy.
But when word got around some time ago that Jack Ma was thinking of moving from his hometown to Hong Kong, where life is a bit more comfortable, many people didn't like it. It sounded like a tripping over of the Chinese dream of the common man who rises to the top of the world but stays in his country and his town. Ma was quick to deny those stories, saying that Hong Kong is a fantastic place where he likes to go and where he has friends, while still being in China. And added that he stays where he was born, in Hangzhou.
photo: reutersHOW TO SUCCEED IN CHINA AND WORLDWIDE: Jack Ma
VIRTUAL WORLD MARKETPLACE: Chinese laws, made according to party directives, can be more favorable to rich people than Western laws, so Alibaba stated in its request for admission to the stock market that Jack Ma will not be able to manage without control, invest by mixing the firm and the personal (we would said, that he takes out of the cash register when he needs cash), and that he will have to invest most of the profit in charitable purposes. By the way, the New York Stock Exchange is not the first that the company approached, they first wanted to try the Hong Kong Stock Exchange, but they did not reach an agreement there.
Those familiar with the situation in China say, albeit from this distance, that a project like Alibaba simply had to succeed. When the country began to open up, people were eager for everything. And they missed shopping malls and the culture of shopping in them. That is why those who ordered a wide variety of goods through Alibaba and delivered them to their home address or at least to a nearby store flourished. Alibaba was an online megamarket where buyers and sellers shopped, because quantities of less than ten or twenty pieces were not offered. With a comfortable position in a market of one billion and two hundred million people, it was not necessary to be a brilliant mathematician to produce the result. Now the competition is starting to press in China as well, but in the meantime, Alibaba has become a globally relevant player.
Indeed, the portal looks like you are in a Chinese market, both in terms of offers and prices. The goods are from all over the world, it is believed that there is no serious small business that is not there (almost in every category something produced in Serbia is offered). If there is a Facebook for business, this is it. In its business history, Alibaba has had its share of setbacks. One of the more serious ones was a few years ago, when they introduced the Golden Supplier, a title that guaranteed honesty. For it to turn out that more than two thousand "golden" cheated their clients, that is, someone distributed the titles without much checking or for a nice compensation.
Some reasonable voices are trying to calm the euphoria by saying that the fact that Alibaba is making huge profits and is likely to continue to do so does not mean that everything is clean and legal in the business, even when it is listed on Wall Street. They would like the company to operate more transparently, but they are aware that it is difficult to get the Chinese government to accept, say, "European Union standards." If she doesn't like it.
Jack Ma likes to say that he draws inspiration from the movie Forrest Gump, where he sees himself as the main character, who no one expected to succeed. He likes to give that example to those around him, because if he and Forrest Gump could do it, then anyone can.
He called the company Alibaba, because wherever he checked in the world, everyone responded with "Sesame, open up" at the mention of that name. He concluded that he had found a universal name, liked by everyone, an anti-hero who got rich because he knew how to listen and hear what he needed at the right moment. That Alibaba dealt with 40 robbers and managed to defeat them thanks to the maid Morgiana to whom he richly repaid. Just like Jack Ma Kinney.
Za "Time" from Beijing
At the end of the 95s and the beginning of the 80s, China imposed itself on the global economy as the "workshop of the world", with incredible economic growth, among other things. In that "workshop" 70 percent of toys, XNUMX percent of shoes, XNUMX percent of textiles on the planet are produced... Products "Made in China" absolutely flooded the world, directing many to the production and procurement of goods in this Far Eastern economic miracle.
In the first years of the "Chinese economic explosion", for all potential buyers in China, the problem arose of how to find the right partner in such an abundance of companies that produce both for the richest countries (it should be remembered that China's largest trading partners are the European Union and the USA), as well and for the poorest countries on the African, South American and Asian continents. For our business people, like many others, the language barrier was huge. The distance between China and Europe is measured by thousands of kilometers, the traditionally low level of exchange between China and Serbia did not create long-term business ties... All this had to be bridged in a very short period of time, which is what we faced at the beginning of the work of our company Starlink Ent.ltd, which successfully has been operating in China since 2000, dealing with trade with this country. The main business of our company was related to the countries created by the breakup of Yugoslavia, and the majority of partners are still in Serbia today.
For many years, the main source of information on the export of consumer goods was the large export fair in the city of Guangzhou (formerly Canton), which is held twice a year. However, for many buyers, this fair was too demanding because the quantities that buyers had to buy from China's strongest exporters were too large. The Chinese central government, of course with the huge support of local authorities, factories and trading firms, created a whole chain of wholesale centers where it was possible to make purchases even for smaller customers.
As a company, in addition to our internal "sourcing", visits to a large number of trade fairs, various recommendations of local manufacturers, numerous trips and visits to Chinese factories, we have always used the Alibaba website as a very important source of information. Alibaba, somewhere with the growth of the influence of the Internet, was formed to be a guide through the huge offer of Chinese factories and various trading firms, and at the end of all the intricate tunnels there was profit in trade with China, which Alibaba brought even closer to the world. By well classifying the companies advertised on this site, Alibaba has enabled Internet users to get to know the Chinese offer better and complete their transactions. Alibaba has played an extremely important role in promoting Chinese companies in a new way and has significantly helped China grow into the second largest economy in the world.
What Alibaba has never done is contracting deals, mediation, financial services and, lastly, and extremely important, checking the quality of goods. We, as a company, have been and are still dealing with all these tasks, providing services to our partners in the continuation of the entire process of purchasing goods from China.
After the first flywheel, Alibaba also attracted many advertisers from other countries of the world and soon became a global platform for suppliers and buyers of the most diverse goods. Alibaba still bases its core business on the promotion of Chinese factories and trading companies in the world.
Zoran Bogdanović
Zoran Bogdanović and his wife Milena have been living in Beijing since 1997. They are co-owners of Starlink Ent.ltd.
