Author explains rise of alibaba, world’s top ipo

The US-China Institute hosted a talk by author Duncan Clark about his new book Alibaba: The House that Jack Ma Built at the Annenberg Auditorium on Thursday afternoon.

The book covers the rise of e-commerce website Alibaba and its founder, Jack Ma, from Ma’s humble origins as an English teacher to the website’s meteoric rise into an e-commerce behemoth that boasted of largest IPO in 2014 at $25 billion.

Clark, who met Ma in 1999, provides an insider’s perspective into the last decade and a half of Alibaba. He pulls from personal experience as an advisor at Alibaba as well as his insider access to Ma for a number of exclusive interviews to discuss the impact of Alibaba and the rise of the internet in China over the last two decades.

During the talk, Clark explored the history of the company and how it rose from humble beginnings in a small apartment in the Wenzhou province to one of the world’s most powerful businesses.

At a young age, Ma ran a business showing tourists around his home province for free in return for lessons in English. Soon enough, Ma began building a following of similarly minded entrepreneurs, in part due to the fact that Wenzhou Province was one of the leading areas for entrepreneurs in the early 1990s. The group eventually co-founded Alibaba with Ma.

“I think he’s the team. It’s not just Jack,” Clark said.  “It’s always been about the people around him as well.”

Clark shared anecdotes about Ma’s personality and personal ambition, but emphasized his humble outlook on life and self-deprecating humor as important qualities of the man who built the empire of e-commerce in China. It’s estimated that Alibaba controls about 80 percent of China’s e-commerce through apps including popular payment method Alipay and website and app TaoBao.

Natalie Zhao, a freshman studying business administration, explained the popularity and appeal of popular Alibaba platform TaoBao.

“Apps like TaoBao are so commonly used by people around the world, and especially in China — all my relatives have bought things on there. The delivery and quality of the products are what make Alibaba very convenient and efficient for the users,” Zhao said.

Clark attributed the success of Alibaba in reaching the notoriously fickle Chinese markets — in which many e-commerce companies such as Ebay and Chinese-native 848 had previously failed — to its ability to reach customers and create a sense of trust with them. For the first time ever, he explained, an e-commerce business combined with a financial and logistics business to provide a one-stop shop for consumers.

Furthermore, Alibaba built in measures that gave customers what they wanted, such as seven-day free returns and the ability to rate merchants directly on the platform, according to Clark. The biggest feature to inspire trust in the Chinese market, however, was the innovation of keeping payments in escrow until the product was actually received by the customer, easing the most pressing fear of the Chinese market and opening it up to e-commerce.

Clark also talked about Alibaba’s expansion beyond China and its strategy in the coming years. Despite already being a powerful e-commerce force in rapidly expanding economies such as Russia and Brazil, Alibaba hasn’t quite resonated with the middle class of Western Europe and the United States, where it faces big competition from old stalwarts like Amazon and Ebay, as well as PayPal in the financial sector.

Alibaba’s focus right now, however, isn’t necessarily on expanding to the United States and Europe, but rather on bringing high-quality and brand products from the United States and Europe to Chinese customers who can now afford them after China’s economic boom, due in part to Alibaba itself.

“It is interesting that Jack has become a transcendent figure in these places,” Clark said of Alibaba’s now-worldwide business. “He is effectively the American Dream set in China.”