Mega-shop’s giant appetite
Alibaba and NZ
Walking t hrough Alibaba’s Xixi Hangzhou campus, home to 20,000 employees, is like descriptions of Google’s or Facebook’s headquarters: quirky, innovative — and everything on a huge scale.
And after a three-hour tour of the campus — one of three Alibaba sites in Hangzhou — it seems that working for one of the world’s largest e-commerce companies is as much a way of life as a job, with a blurred line between work and home life.
Alibaba is worth about $630 billion and deals with an average of 55 million packages a day. It is listed on the New York Stock Exchange, employs 60,000 people and has operations in more than 200 countries.
The obvious comparison is with US giant Amazon.com. Based on its share price, Amazon is bigger, with a total market value of about $1 trillion. But Alibaba is more profitable, and by some measures it is already much bigger in e-commerce.
Alibaba’s annual 11.11 shopping festival, also known as Singles’ Day, is the biggest shopping day in the world, surpassing Black Friday and Cyber Monday in the US.
During last year’s 11.11 event, Alibaba made sales worth $36b — including three large luxury yachts and 100 Maserati cars.
The company owns shopping platforms Tmall, Tmall Global, Taobao and AliExpress, among others, and more than 40 subsidiaries including online/offline supermarket chain Hema Fresh, Lazada Group, Alizila and Alibaba Pictures.
Some might describe the Alibaba working environment as quirky. Others might see it as cult-like. Every year, the company hosts a “group wedding” where t housands of employees — many of whom met on campus — tie the knot, with company founder and executive chairman Jack Ma attending as an unofficial celebrant.
Then there is the attention to celebrating workplace milestones. Alibaba employees are given a pin badge after their first year with the company, a necklace after three years and an 18-carat gold ring after five years with Alibaba.
Nick Siu, director of marketing firm The Agency 88, which specialises in Asian markets, says Chinese work ethics are centred on a collective approach.
“Rings can show compassion and commitment in Chinese, and to me it would show a true commitment from each party to each other. It can also signify a long-term relationship which, again, whilst potentially strange from a western value-set, given the collective belief system by Chinese, this is not entirely unreasonable,” Sui says.
The average age of an Alibaba employee is 27, and the Hangzhou campus feels more like a university than a gigantic office complex.
The campus grounds are perfectly groomed, with verges featuring the company name mown into the grass, there are figurines of the Taobao company mascot, and a museum. However, the three life-sized statues of naked men probably aren’t something you’d see at most tech companies. A female employee said the naked artworks symbolised transparency in the workplace and were to encourage employees to be open.
When Ma pays a visit, he works from a gated house on the campus.
Alibaba’s global head of Tmall, Yi Qian, who visits New Zealand regularly, says that platform is the way in which many Kiwi companies are able to sell products in China.
Tmall’s global business started four years ago, with the aim of introducing high-quality products for the growing number of middle- to upper-class Chinese. It now serves 70 million customers and is aiming for 100 million.
“[A] rapid consumption upgrade is happening,” Yi says. “This happened in
developed countries 10 or 15 years ago, but it’s happening in China [now].” Tmall sells products from 18,000 brands and 80 countries, including more than 400 New Zealand brands. The sellers include large retailers such as Costco, Chemist Warehouse and Macy’s, as well as thousands of small and medium-sized businesses.
New Zealand firms using the platform include Fonterra, Antipodes, Linden Leaves, Ecostore, Anchor, Trilogy, Anmum, Whittaker’s, Healtheries and a2 Milk.
The lure of success on the platform and word-of-mouth recommendations are enticing other New Zealand companies to get onboard, Yi says. “Right now it’s much easier as we have a lot of good success stories,” he says.
“The beginning was always difficult because the brand had to think about why they should do it, why they should put in resources to do it, but now I think the train is getting more reversed, it’s actually more of the brands coming directly to us.”
Tmall’s sales of products from New Zealand grew more than 200 per cent in the first quarter of this year, compared with the same time last year.
Chinese consumers’ perceptions of New Zealand are driving their purchase habits, says Yi. “The Chinese consumer is always looking at New Zealand products as good, natural and organic.” Health, beauty and wellness categories will continue to show strong growth, he says.
Fresh and organic foods and petfood are the categories likely to enjoy the most growth in the near future, says Yi. “Chinese consumers want more varied products from [Australasia]. Previously it was very dominated by supplements and infant formula, but it has diversified a lot. People look for a lot more different categories.
“We all think that fresh is the big growth area for the business.”
Brand New Zealand is powerful in China, says NZ Trade and Enterprise Shanghai trade commissioner Damon Paling. “If you look at some of the fastmoving consumer goods categories, there’s more time and money invested into ‘what’s my China brand story’, in what’s the relevance of New Zealand from a provenance perspective and what’s unique about me because I’m competing with all of these other countries.”
Research shows Chinese consumers are more likely to buy a New Zealand product if they, a family member or friend have visited this country.
Alibaba had humble beginnings, with Ma and the other 17 founders starting the business from his Hangzhou apartment in 1999. The apartment is now Alibaba property, reserved for key personnel working on major or secret projects.
Alibaba’s goal is to have 2 billion consumers on its platform by 2036, and to be a company that spans three centuries. “The idea is: it was one year last century, 100 years this century and a year next century,” says a company spokesman.
There are more than 100,000 brands selling on Alibaba’s platform globally, 580 million active monthly mobile users and 525 million consumers.
Alibaba is now targeting US$1 trillion in gross merchandise volume by 2020, 24-hour delivery in China and 72 hours elsewhere in the world.
The retail giant has its finger in many pies, including the entertainment and movie businesses, logistics, e-commerce and travel. It also has a 33 per cent stake in Ant Financial, which powers its digital wallet Alipay.
One thing it doesn’t want is its own delivery network, which would require 1 million employees, the company says. Alibaba is pushing for a larger presence outside China, and began rolling out its global strategy in 2015, opening offices in countries including India, Japan, Germany and Australia, which services New Zealand.
“The three key opportunities we are focused on in New Zealand right now are global buy, global pay and global travel,” says a spokesman. Global buy means having more New Zealand products available to purchase on platforms such as Tmall and global pay refers to its rollout of the Alipay payment infrastructure to New Zealand merchants.