Alibaba’s Jack Ma Sets His Sights on a New Target
After conquering grocery deliveries, Alibaba Group Holding Ltd. is setting its sights on a new part of China’s US$4 trillion (about $8 trillion) retail sector: department stores.
The e-commerce giant, which is also venturing into cloud computing and entertainment, is increasingly looking at traditional brick-and-mortar businesses, chairperson Jack Ma, vice chairperson Joseph Tsai and chief executive officer Daniel Zhang said in interviews with Bloomberg News on the company’s 18th anniversary. Alibaba, started in Ma’s apartment in 1999, is worth US$458 billion (F$921.52bn) today.
The executives, speaking less than a month after Amazon.com Inc. closed its US$13.7 billion (F$27.57bn) acquisition of Whole Foods Market Inc., discussed Alibaba’s strategy for dealing with competition, its vision on data and challenges the company will face. Ma said Alibaba will need to embrace a different mindset given its current size, and move away from its asset-light approach to grab a bigger share of global trade.
“I think when you are young, tiny, a light model is good. When you are strong, big -think about it -- you need heavy things. There is no heavy is good, or light is good -- a mix is good. To be efficient, you need to connect light and heavy models together. But with Alibaba’s size today, you should not leave the heavy model to others, it’s something you have to do because the infrastructure you are building up, you have to invest,” Ma said.
“It’s just like when you are climbing a mountain, when you are only 1000 meters high, you enjoy it. It’s fine. Below 100 meters, you think everything is fine but when it gets to 4000 meters, you don’t have enough air. You don’t have a lot of people working with you, and you don’t even know who to share your thoughts and worries with. And now we are probably like 5000 or 6000 metres high, so we get lonely,” he said.
Alibaba is also increasingly finding itself in competition with Tencent Holdings Ltd. over payments, cloud computing and financial services. Tencent Chairman Pony Ma (not a relation) and Jack Ma both aspire to expand beyond China. Alibaba is also battling Amazon as it seeks growth in Southeast Asia, with e-commerce in Indonesia alone projected to reach $65 billion (F$130.78bn) by 2020 from $8 billion (F$16bn) now, according to a report by Macquarie Research.
Data is Oil
With China’s tighter cyber security laws, technology companies face more challenges in the country.
Alibaba is already China’s biggest cloudcomputing provider, with the unit projected to make up 15 per cent of Alibaba’s revenue by 2021, according to JPMorgan Chase & Co. “Nine years ago, when Alibaba shifted its position from an e-commerce company to a data company, we had a huge fight internally and finally decided that we were shifting. So we haven’t called ourselves an e-commerce company internally for nine years,” Ma said. “I don’t know how we can make money out of data. Data is so important for human development in society. It’s gonna be as precious as oil in the last century. So we have to work that out,” he said.
China’s government
Ma has spent years cultivating his image as a rebel fighting the system and knocking down walls protecting state-owned enterprises. He’s offered to “stir things up” for big banks, with Alipay introducing a moneymarket fund that siphoned away bank deposits.
Ma has said his policy for dealing with the government is to fall in love, but not to marry.
I think when you are young, tiny, a light model is good. When you are strong, big -- think about it -- you need heavy things. There is no heavy is good, or light is good -- a mix is good. To be efficient, you need to connect light and heavy models together. But with Alibaba’s size today, you should not leave the heavy model to others, it’s something you have to do because the infrastructure you are building up, you have to invest. Jack Ma Alibaba Group Holding Ltd founder