Alibaba | CHINDIA ALERT: You'll be living in their world, very soon

22/05/2014

Serving the People: Chinese Law Student Opens Noodle Shop, Kicks Off Debate – China Real Time Report – WSJ

A Peking University law student who was worried about finding a job and set up a noodle shop last month has become a social media sensation.

Zhang Tianyi has won online praise for his entrepreneurial spirit – though the 24-year-old has attracted heaps of criticism that he is wasting his skills. But his effort has struck a chord with many college graduates who are also finding it hard to land a job.

This week he got an official pat on the back from a senior government official who hailed Mr. Zhang, likening him to hugely successful entrepreneurs like Jack Ma, who founded Alibaba and turned it into an e-commerce powerhouse.

“I’d like to try those noodles,” said Xin Changxing, vice minister of human resources and social security, speaking at a news briefing. “He’s innovating and looking for a market niche.”

China in numbers: building a trading empire, brick by imitation brick | The Times

5,137 . . . is the number of shops on Alibaba’s Taobao ecommerce platform that claim to sell Lego — a favourite toy of a pushy Chinese middle class convinced that the Danish bricks will make their children creative, inventive and generally more brilliant.

Chinese children play with Lego bricks

The prices offered at many of the Lego-selling online stores are often ridiculously and suspiciously cheap. The Taobao trading system, one of the shinier jewels in Alibaba’s crown as the internet titan seeks what could be the world’s biggest tech listing in America, allows customers to haggle directly with the vendor. An aggressive-enough negotiation can land you a substantial bag of Lego-esque bricks for the equivalent of a couple of quid.

Alarms bells rightly ring. Not all of these 5,137 Taobao-based Lego stores, needless to say, are selling genuine Lego. Lego itself does not publicly guess at the extent to which its product is ripped off: lawyers with the battle scars of Chinese infringement suits suspect the proportion of those 5,137 selling fake Lego may be as high as 80 per cent.

The notion that China is a seething, nest of counterfeiting, trademark infringement and fraudulence is not new; nor is the fact that the stratospheric growth of ecommerce in China has significantly enlarged the speed and volume at which fake goods change hands.

The big question, as lawyers and companies arrive in Hong Kong this week for the world’s biggest intellectual property convention, is whether anything much is changing. Jack Lew, the US Treasury Secretary, will arrive today in Beijing and demand greater protection of intellectual property. It is unclear whether that will change much either.

The signals are not great. Last week, the Chinese food and drug authority warned that 75 per cent of foreign-branded drugs sold online (though mostly not through Taobao stores) in China were fake. The extent of the problem was especially grisly for cancer sufferers, whose online pursuit of cheap generic oncology medicine will, eight times out of ten, land them with fake drugs.

The difficulty here is that Taobao’s greatest quality — its huge accessibility for vendors — is also the source of the problem. Even if a store selling counterfeited goods is closed down, there are no barriers to prevent its owner opening a new one, under a new name, hours later. As the operator of Taobao, Alibaba has undertaken a limited range of regulatory functions. But on one critical issue it does not step in: if a company such as Lego believes that fake bricks bearing its brand are being sold from a Taobao store, Lego bears the burden of proving that the product is fake. Crucially, Lego cannot use the laughably low prices of the fake Lego as evidence.

A recent experiment by Taobao to designate all versions of a particular product (not Lego) fake if they fell below a particular price resulted in 42,000 stores being immediately closed. Six months later, almost all had re-opened.

The problem for Beijing is that Alibaba and Taobao are arguably too big to fail. The public cannot live without ecommerce any more and the authorities have identified the encouragement of innovation and the release of entrepreneurial spirits (of the sort being vigorously nurtured on Taobao) as the keys to building a sustainable economy.

As a listed company and as a provider of the medium for immense, minute-by-minute infringement of intellectual property, Alibaba may soon find itself under greater pressure to play the policeman. It may be able to resist that as long as the the plaintiffs are foreigners: it may not find that so easy when the brands being ripped off are Chinese and the complaints are domestic.

via China in numbers: building a trading empire, brick by imitation brick | The Times.

Posted in China alert, Economics, Intellectual Property Rights, Retail | Leave a Comment »

Tags: Alibaba, Beijing, China, Hong Kong, Jack Lew, Lego, Taobao

02/05/2014

Philanthropy: China’s Carnegie | The Economist

“THE problem of our age is the proper administration of wealth,” wrote Andrew Carnegie in 1889. More than a century later, the citizens of supposedly Communist China could hardly disagree. Carnegie, one of the wealthiest men of America’s Gilded Age, soon set about giving his money away, and on April 24th Jack Ma, one of the wealthiest men of China’s Gilded Age, suggested he would start to do the same. Mr Ma and Joseph Tsai, co-founders of Alibaba, an online marketplace, announced the creation of philanthropic trusts that could be worth as much as $3 billion. “Somebody has to do something,” says Mr Ma of China’s environmental and health-care problems. “Our job is to wake people up.”

It is easy to be cynical about this. The gift is a move taken straight out of a Silicon Valley public-relations playbook, ahead of Alibaba’s expected initial public offering this year, which could value the company at $150 billion. But it could still have a remarkable effect not just on China’s fast-expanding class of super-rich, but also on its government.

China’s wealthy are a notoriously stingy lot. When two of America’s best-known philanthropists, Bill Gates, who has advised Mr Ma, and Warren Buffett, visited the country in 2010, a meeting they held was notable for the number of Chinese tycoons who stayed away. Of 122 billionaires around the world who have signed the Giving Pledge promoted by Messrs Buffett and Gates, promising to give away half their wealth by the end of their lives, not a single one is Chinese, even though China now has 358 billionaires, one-fifth of the global total.

The main reason for this is fear: many have made their money in the shadows of a supposedly socialist country, so few of China’s rich are keen to identify themselves publicly. China’s princelings, related to the leadership, are often the least enthusiastic of all, especially when the regime of Xi Jinping, China’s president, is condemning corruption, albeit selectively. Having made his money more publicly, Mr Ma may be an exception, but his foundation still adds pressure on other Chinese tycoons. Mr Xi should help, by publicly applauding Mr Ma and by making all donations tax-deductible.

It is also a prompt for Mr Xi to promote civil society. With its countryside teeming with poor children needing education and old people needing health care, the regime has decided to give non-governmental organisations (NGOs) more freedom to operate, under party scrutiny. Mr Xi needs to let them play a larger, more independent role. This highlights the party’s central dilemma: it is scared of allowing independent groups of citizens to flourish and help solve problems, and yet that is exactly what China needs. As long as civil society is kept weak, China’s social problems will get worse. Passing a new charity law, stalled for years, to clarify charities’ legal status would be a useful step in the right direction.

The question for Mr Ma is how far he is prepared to nudge the regime in this direction. His public stance is, sensibly, that he wants to work with the government, not confront it. But the areas he is likely to focus on—education, health care and the environment—matter enormously, and technology can spur political change. Mr Ma recently launched kits for smartphone users to crowdsource data on poor water quality across China, a sly dose of insurrection. Carnegie became famous not just for the money he gave away and the example he set to other philanthropists, but for the way he prompted the American government to embrace education, civic programmes and social reform. Mr Ma’s money and example can do the same for China, if only the Communist Party will allow it.

via Philanthropy: China’s Carnegie | The Economist.

Giving in

Posted in China alert, Economics, philantropy, Social & cultural | Leave a Comment »

Tags: Alibaba, Andrew Carnegie, Bill Gates, China, Communist Party, Giving Pledge, Jack Ma, Xi JinPing

19/02/2014

The Secret of China’s Taobao’s Success – Businessweek

Amazon has earned the moniker “the everything store” in the U.S., but in China Alibaba’s e-commerce sites, especially Taobao.com, dominate, with Amazon (AMZN) almost nowhere to be seen.

Image representing Taobao as depicted in Crunc...

Image via CrunchBase

Taobao really is the everything store: The Alibaba-owned retail platform sells everything from sunglasses to cadavers (for $21,000, to people claiming to be medical students). A friend in Beijing recently purchased the dress she would wear to her sister’s wedding from Taobao because “there are many more choices” than she could imagine finding in any shopping mall or bridal shop.

While Jack Ma’s e-commerce empire has triumphed in China for many reasons, including guanxi, business foresight, and good technology, its dominance was hardly assured.

In 2004, Amazon purchased the Chinese online bookseller and retailer Joyo.com for $74 million. The site failed to live up to its high hopes, and today Amazon commands less than 3 percent of China’s e-tail market. Similarly, EBay (EBAY)acquired once-popular Chinese e-commerce site EachNet, but market share quickly dwindled as Alibaba’s sites boomed. Even as U.S. technology companies flounder in China, McKinsey Global Institute predicts that China’s total e-commerce market could be worth $650 billion by 2020.

One of the secrets of Taobao’s success is its adeptness at understanding the quirks of “how Chinese shoppers want to transact,” says Barney Tan, a senior lecturer in business at the University of Sydney, who focuses on China’s e-commerce. “Taobao has catered to Chinese preferences for doing business—for example, it’s enabled buyers and sellers to negotiate and bargain on prices.”

Given common (often warranted) fears about being cheated online, Taobao has also “incorporated an optional escrow service to allow shoppers to pay for goods only after they’ve received and inspected them.” Its Alipay system, which somewhat resembles PayPal, can debit a Chinese bank account, so no financial card is required for online shopping sprees.

As Tan sums up a common sentiment in China, “If you want to sell something in China, you sell it on Taobao.” Not only wealthy urbanites seem to agree: Already more than 2 million Taobao stores are registered to rural IP addresses in China—a gain of 25 percent in just one year. China’s shoppers and entrepreneurs alike are turning to the ubiquitous platform.

via The Secret of Taobao’s Success – Businessweek.

Posted in China alert, eCommerce, Economics | Leave a Comment »

Tags: Alibaba, Amazon, China, China Alibaba, EBAY, Jack Ma, PayPal, Taobao, University of Sydney

11/01/2014

China parents count cost of sending children to overseas universities – FT.com

Jack Ma, one of China’s best-known entrepreneurs, thinks business success in China has nothing to do with prestigious foreign degrees: “When you want to judge whether a person . . . is excellent or not don’t look at whether they went to Harvard or Stanford,” he is famous for saying.

More and more Chinese parents apparently disagree with the co-founder of internet company Alibaba: they are increasingly spending three or four years’ annual family income to send their only child for foreign study. Some are now asking whether it is worth the investment.

The number of Chinese studying overseas has more than tripled in the past decade and continues to shoot up. The rise has been particularly dramatic among lower-middle-class families: according to a report from the Chinese Academy of Social Sciences, up to the end of 2009 students from such families made up only 2 per cent of all those who studied overseas, but by the end of 2010 the proportion had risen to 34 per cent.

For many Chinese families with children overseas, money is no object. But many lower middle-class and working-class families are counting on their only child to support them in their old age.

Foreign universities also increasingly rely on fees from Chinese students to boost their income. But is it worth spending Rmb1m-2m ($165,000-$330,00) on preparing for and completing an overseas degree, only to return to a job market where seven million graduates cannot find jobs?

According to Chinese recruitment agencies and human resources professionals, people who have studied overseas – known as “haigui”, or sea turtles, because they have one foot on land and one in the sea – command little if any salary premium when they start entry-level jobs back in China.

via China parents count cost of sending children to overseas universities – FT.com.

Posted in Affluence, China alert, Economics, education, overseas university, Social & cultural | 1 Comment »

Tags: Alibaba, Asia, China, Chinese, Chinese Academy of Social Sciences, Chinese students, Jack Ma, Overseas Chinese, United States

12/11/2013

China in numbers: secondhand view with salutary warning | The Times

3,000km . . . is the combined length of bargain-price underpants (if laid end-to-end) sold on Chinese websites between midnight on Sunday and 1am on Monday morning. If all the cut-price bras sold in the same period were piled on top of one another, the resulting pillar of lingerie would be three times the height of Mount Everest.

In those first, financially incontinent 60 minutes of Monday morning, China’s largest handler of online payments took 25 million orders with a combined value of 6.7 billion yuan (£686 million). About 340,000 of those orders were placed in the first minute. It was as if the world were about to end and China suddenly decided that the only hope of salvation lay in half-price knickers.

Astounding numbers of this sort were in plentiful supply on Monday as China delighted in the mad calculus of consumerism. It looks heartily encouraging, but appearances are deceptive. The cause of the online shopping frenzy was a deluge of sales promotions timed to coincide with “Singles Day” — a magnificently contrived “festival” prompted by the date 11.11. The whole thing was invented only four years ago.

Every online retailer in China (and there are an awful lot of them) was slashing prices as part of the fun. By mid-afternoon of Singles Day, the Alibaba online portal said that its sales promotions had generated more than ten billion yuan. That is already more than total online sales in the United States last year on “Black Friday”, the shopping day that follows Thanksgiving and historically is the biggest day for retail in the American calendar.

The temptation is to treat Singles Day as a bellwether, both of the general strength of online retail and of the ability of China’s nascent consumer economy to concoct its own events from thin air and convince people the best way of celebrating them is by shopping.

The reality, though, is less cut and dried. Taobao, the online shopping mall that enjoyed such fantastic sales on Monday, has another internet retail division that is telling a rather different story. For some months now, various courts in China have created online stores on Taobao to conduct what they call “judicial auctions” — sales of the various goods seized by the courts in criminal cases. The Government’s crackdown on corruption, now almost a year old, has swollen the items seized very significantly.

The auction site for the city of Wenzhou alone runs to more than 100 pages of items, including large vintage wine collections, mobile phones, office buildings, wedding rings, watches and even buses. Overwhelmingly, though, the items under the hammer are residential property, mostly medium to high-end flats. Activity in Wenzhou has always been seen as a weather vane for Chinese property prices and the signals are not encouraging.

The flats go on sale on the judicial auction sites with an estimated reserve price and, because the courts want a sale, that price tends to be at a decent discount to the prevailing market price. An additional appeal is that there is also no commission charged.

Yet many do not make the reserve price. Out of a batch of 157 auctions conducted by the Luchent District Court in Wenzhou, 72 fell through because there was no bid at all. Local property agents are starting to get very twitchy over what Taobao is telling them about the secondhand market.

Discounts may work for underpants, but they do not appear to do so for second-hand property. Chinese are still buying newly built apartments with gusto, on the assumption that eventually the resale market will be robust: the auctions seem to be sounding an alarm over that assumption.

via China in numbers: secondhand view with salutary warning | The Times.

Posted in Affluence, China alert, corruption, Economics, online sales, real estate | Leave a Comment »

Tags: Alibaba, China, Mount Everest, Online shopping, sales promotions, Singles Day, Taobao, Wenzhou

20/10/2013

The Balance of Global Corporate Power Is Sliding Eastward – Businessweek

… a new report from the McKinsey Global Institute forecasts the economic future not of nations, but of dominant global companies. Today there are roughly 8,000 companies worldwide with annual revenues exceeding $1 billion. Together these heavy hitters generate consolidated global revenue equivalent to 90 percent of global gross domestic product, or $57 trillion. Three out of four of these leading companies are located in developed countries, but McKinsey predicts the balance of power will gradually shift eastward and southward.

Half of all large global corporations are headquartered in the U.S., Canada, and Western Europe, which together account for 11 percent of global population. Meanwhile, only 2 percent of large global corporations are based in South Asia, where 23 percent of the world’s population lives.

By 2025, McKinsey predicts another 7,000 companies will surpass annual revenues of $1 billion, and that 7 out of 10 of these emerging companies will be headquartered in the developing world. In particular, the report names Chinese telecommunications giant Huawei, Brazilian aircraft manufacturer Embraer (ERJ), and Indian industrial conglomerate Aditya Birla Group as examples of emerging titans.

The impacts of the gradual shift won’t be felt only in corporate boardrooms. “This geographic rebalancing … will shift more of the world’s decision making, capital, standard setting, and innovation to emerging markets,” the report says. Perhaps in the future, professionals in the U.S. and Europe may have reason to worry if Alibaba or Tencent (700:HK) halt services unexpectedly for a week.

via The Balance of Global Corporate Power Is Sliding Eastward – Businessweek.

Posted in China alert, Economics, India alert | Leave a Comment »

Tags: Aditya Birla Group, Alibaba, Embraer, global companies, global corporations, Gross domestic product, Huawei, McKinsey, McKinsey & Company, McKinsey Global Institute, South Asia, Western Europe

30/05/2013

In China, Big Data Is Becoming Big Business

Business Week: “With 1.3 billion people, a quickly expanding urban economy, and rising rates of Internet and smartphone penetration, China generates an immense amount of data annually. If streams of that data can be appropriately sifted, analyzed, and stored, companies seeking to understand China’s often-fickle consumers could have access to valuable real-time insights—and perhaps early warning to the next big consumer trends.

Shopping drives Beijing's Sanlitun area

At a presentation last week at Peking University’s Guanghua School of Management, China’s premier business school, associate professor of marketing Meng Su predicted: “China will soon become world’s most important data market.” He advised job seekers in China and elsewhere to consider training for a new career path as “data scientists,” which he described as “one of the most valuable jobs in the next 10 years.” Interpreting big data seems poised to become big business.

China’s government has signaled its intention to help domestic enterprises develop the infrastructure necessary to store and analyze “big data”—that is, data sets too large to be handled by traditional database-management tools and software. The current Five Year Plan, which aims to stimulate “higher-quality growth,” names seven strategic “emerging industries,” including next-generation information technology.

Meanwhile, leading Chinese firms, especially Internet companies, have already begun to incorporate big data into their strategies. Jack Ma, founder and then-chief executive officer of China’s e-tail giant Alibaba, declared last fall that the company should focus on three pillars of future business: e-commerce, finance (providing loans to small and medium enterprises in China), and data mining. In January, Alibaba underwent a restructuring that, among other changes, created a data-platform division with about 800 employees, as reported in the Chinese financial magazine, Caixin. The Alibaba Group has just begun to scratch the surface of analyzing the reams of user data generated through its business-to-business e-commerce site and its massive consumer-to-consumer platform, Taobao.com.

Professor Su warned, however, that the hype around big data in China may be a case of too much, too soon: “If everyone is talking about something, there is probably already a bubble,” at least of expectations, he said. “Most Chinese companies don’t own enough data, let alone know how to utilize, analyze, or monetize their data.” In other words, a select number of companies in China that do own large quantities of user-generated data—such as Alibaba and Baidu (BIDU)—hold the cards and may profitably sell that valuable information to other vendors.”

via In China, Big Data Is Becoming Big Business – Businessweek.

Posted in China alert, Consumer, Economics, Technology | Leave a Comment »

Tags: Alibaba, Alibaba Group, Baidu, Big data, Business, China, Data mining, Guanghua School of Management, Jack Ma, marketing, technology

13/05/2013

* Alibaba’s Jack Ma and actor Jet Li open tai chi school in China

SCMP: “Movie star Jet Li has joined up with renowned Chinese internet entrepreneur Jack Ma to open a tai chi school in a bid to promote the traditional exercise.

Ma is founder of the world’s biggest online retailer, Alibaba, where he stepped down as chief executive last week saying he wanted to do more in education and the environment.

Former Alibaba CEO Jack Ma performs tai chi at the opening ceremony. Photo: Reuters

He is a keen devotee of tai chi, and has made references to Chinese martial arts in both business strategy and corporate culture.

Jet Li speaks at the unveiling of the school in Hangzhou. Photo: AFP

Li rose to fame for his kung fu skills and has starred in such films such as the Chinese historical epic Hero and the Hollywood blockbuster The Mummy: Tomb of the Dragon Emperor.

The school in Hangzhou will teach tai chi and martial arts under a disciple of a well-known master, said a statement from Ma’s company provided on Monday.

It is part of a larger development in a wetlands park which includes commercial services, according to the statement.

The film star and the entrepreneur already have a jointly-owned cultural company which provides tai chi training to company employees.”

via Alibaba’s Jack Ma and actor Jet Li open tai chi school in China | South China Morning Post.

Posted in China alert, Economics, Social & cultural | Leave a Comment »

Tags: Alibaba, Chinese martial arts, entertainment, Hangzhou, Jack Ma, Jet Li, Mummy: Tomb of the Dragon Emperor, T'ai chi ch'uan

19/09/2012

* CIC Invested About $2 Billion in Alibaba

WSJ: “China’s sovereign wealth fund invested about $2 billion in Alibaba Group Holding Ltd. as the Chinese Internet company bought back a large stake owned by Yahoo Inc., according to people with knowledge of the deal.

Alibaba said late Tuesday that it had completed an initial buyback of half of Yahoo’s 40% stake in Alibaba in a deal valued at approximately $7.6 billion. China Investment Corp. led a consortium of Chinese investors including buyout funds Boyu Capital, Citic Capital, and China Development Bank Corp.’s private-equity arm.

Alibaba’s deal with Yahoo valued the Chinese e-commerce company, which includes Alibaba.com, payment service Alipay and other properties, at about $40 billion.

Under terms of the deal, Yahoo is receiving about $6.3 billion in cash, $800 million in preferred stock in Alibaba and $550 million as a result of amending the firms’ technology and intellectual-property licensing agreement.

Yahoo retains about a 23% stake in Alibaba, following the transaction announced Tuesday. Alibaba said it has the right to repurchase half of Yahoo’s remaining stake.

CIC, which has about $410 billion in assets under management, said in June interview that it had confidence in China’s economic growth and was actively scouting overseas investment opportunities leveraged to China’s growth prospects.”

via CIC Invested About $2 Billion in Alibaba – WSJ.com.

Posted in China alert, Economics | Leave a Comment »

Tags: Alibaba, Alibaba Group, Alipay, Business, China, China Development Bank, China Investment Corporation, citic capital, economy, technology, Yahoo

CHINDIA ALERT: You'll be living in their world, very soon

Chindia Alert: You’ll be Living in their World Very Soon

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Serving the People: Chinese Law Student Opens Noodle Shop, Kicks Off Debate – China Real Time Report – WSJ

China in numbers: building a trading empire, brick by imitation brick | The Times

The Secret of China’s Taobao’s Success – Businessweek

China in numbers: secondhand view with salutary warning | The Times

The Balance of Global Corporate Power Is Sliding Eastward – Businessweek

In China, Big Data Is Becoming Big Business

* CIC Invested About $2 Billion in Alibaba

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