International

Pressure Packs Too Much On Alibaba’s Jack Ma

As a company that went public just a few months ago, Alibaba continued to show its strength when it shattered sales records on Nov. 11 with Singles’ Day sales of $9.34 billion. But that’s not enough to make Alibaba Founder and Chairman Jack Ma happy, he told CNBC in an interview.

“This month I’m not very happy—I think too much pressure,” Ma said, who also commented he didn’t start Alibaba to get rich, and only had a vision to build a respectable business. “I try to make myself happy, because I know that if I’m not happy my colleagues are not happy, and my shareholders are not happy, and my customers are not happy.”

Although Alibaba’s $25 billion IPO spoke volumes about the value of China’s E-commerce giant, Ma said the pressure of keeping up with demand is hard to manage, and said in the interview that “if he is not happy he’s jumping like monkeys.” Since then Ma has worked to find a balance, in both his work and personal life. The stress of leading such a powerful company and being the richest man in China is a tough combination, Ma said in the interview.

“Maybe the stock goes so up, maybe people have high expectations on you, maybe I think too much about the future and have too many things to worry about,” Ma said. “IPO is great because … I’m happy with the results, but honestly I think when people think too highly of you, you have the responsibility to calm down and be yourself.”

“People say, ‘Well Jack, rich people is good.’ Yeah it is good, but not the richest man in the world of China. It’s a greater pain because when you’re (the) richest person in the world, everybody is surrounding you for money,” he said. “Today when I walk on the street, people look at you in a different—I want people to see this is entrepreneur, this is a guy who is having fun himself, and I want to be myself.”

A New York Times article cites a KPMG report about projections for the future of China’s E-commerce growth, which said by 2020 the Chinese E-commerce market is “projected to be the size of those of the United States, Britain, Germany, Japan and France combined.” The Chinese market already tops that of the U.S., in large part due to China’s significantly larger population. Ma has stressed in multiple interviews that the company wants to expand Singles’ Day globally.

The figures alone would support such an expansion as Alibaba is already leading in single-day sales. Last year in the U.S., brick-and-mortar retail sales hit $12.3 billion on Thanksgiving and Black Friday combined, according to Fortune, and Cyber Monday’s sales were around $2.3 billion.

Outside of Alibaba’s prep for Singles’ Day, the days and weeks following aren’t any easier for the booming company. Ma said keeping up with demands of delivering those $9 billion in products, or roughly 330 million packages, is an ongoing logistical challenge since packages must be delivered within 3-5 days. Alibaba’s Singles’ Day success may just be setting the stage for what’s to come for the company as Ma also recently revealed that Alipay is anticipated to go public.

Ma said Tuesday (Nov. 11) that his Alipay payments unit “will definitely go public but didn’t say when. He did, however, say that “The main goal of listing isn’t for more money, but to let more people share in and be part of it.” Negotiations are also reportedly in the works for Alipay to partner with Apple Pay, extending Apples’ reach throughout Asia. Ma has also said the company may be interested working with PayPal to expand payment options.

But first it must tackle logistics of keeping up with demand of what it’s promised to deliver.

“[China] struggles with delivery, largely because of decades of underinvestment in inland logistics infrastructure and inefficient local regulation,” the New York Times article said. “Goods are slow to arrive in the interior of the country, and damage is a persistent problem, affecting both consumers and small businesses.”

Alibaba may hit a snag with deliveries as the county’s delivery capacity may be maxed out, according to data collected by Cainiao Internet Technology, which collected data from more than 50,000 delivery outlets and 657 logistics centers. Time zones may be another issue. Because Aliexpress.com, a multi-language site used to attract foreign byers, Singles’ Day promotions hit at different times throughout the day. But the time zones may not have been factored into logistics sales and delivery.

“So far the number of packages has exceeded the capacity of the country’s delivery system,” Cainiao CEO Tong Wenhong said. “China Post, the state-owned postal and delivery services provider, had predicted that the number of packages would reach 500 million nationwide. The result was 15 percent higher than that.”

If Alibaba wants Singles’ Day to be a global event, the company must find a way to tailor its process to deliver the goods to avoid such issues with consumers. Last year, Alibaba Director of International Business Wu Quian said some orders to places like Russia, where Aliexpress is the country’s largest e-commerce option, took three months. This led to Russian President Vladimir Putin replacing the head of Russia’s postal service and led to the new hire flying to China to talk with Alibaba executives about improving delivery options.

The Alibaba hype isn’t likely to go away any time soon as Alibaba also just announced it was eyeing its first bond sale, Reuters reported. The massive Singles’ Day sales will add to the desire to get involved with Alibaba, according to that article.

“Everyone will want this,” one market participant told IFR, according to the Reuters article.”It’s a first-time borrower, it’s high quality and it’s a marquee name. This is a great global story.”

“What Alibaba as a company is doing is important and exciting for global commerce,” Matthew Duch, senior portfolio manager at Calvert Investments, said in that same article. “They are tapping the holy grail of retail, the Chinese consumer.”

What’s Next For Alipay, Apple Pay? Alibaba’s Executive Vice Chairman Shares

Bringing Apple Pay into the Chinese market and facing the country’s difficult regulatory measures could be difficult for Apple, but Alibaba’s Executive Vice Chairman Joseph Tsai told the Wall Street Journal an Alipay/Apple Pay deal could be the start of a mutually-beneficial partnership.

The AliPay, Alibaba “marriage” has been in the works since at least last month,  but Tsai’s interview gave more insight into the Chinese e-Commerce company’s strategy for the possible deal and Alibaba’s U.S. market plans. Tsai explained that the deal would allow people using Apple Pay to use Alipay bank accounts to fund the transactions.

“A lot of specific points are being discussed and worked out. Apple has sold a lot of phones in China. If people want to use Apple Pay in China, Apple would have certain restrictions and limitations on operating payment businesses in China,” Tsai said. “So we are thinking whether there is any opportunity for us to work together where Apple Pay and Alipay can somehow work together in China…We are positive about the potential cooperation, but it depends on the details being worked out.”

He also went into specifics about those details, which include the regulatory component of Apple acquiring a license to operate business in the country. It also involves the “operational component,” he said, which means ensuring the back-end operation of Alipay could work with the front-end of Apple Pay.

“At the end of the day, you are funding the payment transactions from the Alipay account through Apple Pay, so that flow of money has to be very smooth. And there’s a lot of technology involved,” Tsai said.

Alibaba is well-positioned for strong growth, Tsai said, because the “e-Commerce penetration in China is still very low,” and Alibaba’s 300 million active shoppers on its own platform suggests it is well positioned to adapt with the growing E-commerce space. Because e-Commerce still only makes up 9 percent of total commerce in China, according to Tsai, there’s room to grow. Alibaba’s platform of users is only half of China’s Internet population, and just a quarter of the country’s total population, he added.

Alibaba is also working to secure a stronger position in the U.S. market.

“On the investment side, our strategy is to invest minority stakes in U.S. companies that are run by entrepreneurs. We want to support entrepreneurs because we want to be in the U.S. market, support growth and understand how people in the U.S. innovate. That’s our main investment strategy in the U.S. When it comes to business, the key issue is whether we are going to have something in the U.S. market that will really target U.S. consumers,” Tsai said.

“We think in the long run that’s an interesting market to us. But today, our focus is very much on cross-border activities where we help U.S. small businesses and merchants, and even large businesses like Costco, by giving them access to 300 million Chinese consumers.”

 

——————————–

Latest Insights: 

With an estimated 64 million connected cars on the road by year’s end, QSRs are scrambling to win consumer drive-time dollars via in-dash ordering capabilities, while automakers like Tesla are developing new retail-centric charging stations. The PYMNTS Commerce Connected Playbook explores how the connected car is putting $230 billion worth of connected car spend into overdrive.

Click to comment

TRENDING RIGHT NOW

To Top