Alibaba
Alibaba Group (Chinese) Taobao.com (阿里巴巴集团) is a Chinese company operating in the field of e-commerce, the owner of the web portals Taobao.com, Tmall , Alibaba.com , AliExpress and several others. The main activities are trade operations between companies under the B2B scheme and online retail; it also owns one of the world’s largest cloud computing infrastructures, has assets in the media and entertainment industry. The company operates primarily in the PRC. It is officially registered in the Cayman Islands, with its headquarters located in Hangzhou.
The company’s management team includes Jack Ma (founder and CEO until 2013), Maggie Wu (chairman of the board of directors), and Michael Evans (company CEO).
Alibaba’s Success Story
On June 28, 1999, Jack Ma founded Alibaba.com in his apartment in Hangzhou with 17 students. The company’s name was taken from the character Ali Baba from the Middle Eastern folk tale One Thousand and One Nights because of his universal appeal. “I was in a coffee shop in San Francisco one day, and I thought Alibaba was a good name. And then the waitress came over and I asked her what she knew about Alibaba. She said, ‘Open sesame.’ And I said, ‘Yeah, that’s a good name!’ Then I went outside and found 30 people and asked them, ‘Do you know Alibaba?’ People from India, Germany, Japan, and China. They all knew Alibaba: Alibaba – Open sesame. Alibaba and the 40 thieves. Alibaba is kind, smart, and a businessman. Those were their answers. Alibaba uses a lowercase “a” with a recognizable human face inside as its logo. Presumably, this is the face of a happy customer. Below the emblem is the inscription “Alibaba.com”. The company’s designers used a bright orange color to design the logo.
Initially, the online store Alibaba.com was created, it was planned as a platform where small and medium-sized businesses could trade. After the launch of the online store, the Alibaba Group company itself was created , but things were not going well there. In late 1999, Jack Ma managed to attract investors from American Goldman Sachs and SoftBank, a Japanese telecommunications company, receiving $25 million to expand the business. In 2002, Alibaba.com made its first profit (commissions from transactions began to exceed the costs of infrastructure development) ! The project was not only saved, but also continued to develop.
With over 1 million users, the company decided to expand its business. So in 2003, the TaoBao auction was launched, in 2004, the Alipay payment service, as well as the tmall platform. Later, seeing the success of these platforms, the idea of creating Aliexpress appeared. Jack Ma was aiming to get at least a large part of the Chinese market, and at most, the entire market, since at that time the already world-famous marketplace eBay announced its immediate plans to expand into the Asian market. To increase its competitiveness, Alibaba allowed sellers to register on its platforms for free.
eBay, seeing Alibaba as a serious competitor, bought EachNet, which at the time was one of the major players in the Chinese e-commerce market. By acquiring EachNet, eBay took almost 85% of the market. At first glance, it seemed that eBay had finally become the leader, but this was not the case. In 2004, Alibaba Group, having released the Alipay service, caused serious damage to eBay’s business. Online payments were banned in China, but the entrepreneur still developed such a service and released it in support of his platforms. The Chinese government not only did not interfere, but also supported Jack Ma. In addition to its main function, the Alipay service protected buyers’ money from fraudsters. At the same time, the Taobao platform released a number of new and useful options, for example, its own messenger, which significantly simplified the discussion and the purchase itself.
In 2005, Yahoo! acquired 43% of Alibaba’s shares, and the company will buy back half of the shares in the future. In 2009, the subsidiary Alibaba Cloud was launched. It was one of the largest cloud services, which was used both for the needs of its own sites and for selling capacities to other companies.
In 2010, Alibaba Group launched the world-famous AliExpress trading platform. Initially, buyers from all over the world could only buy goods from Chinese sellers, but this policy was later revised, and today sellers from many countries of the world trade here .
At the beginning of 2011, more than 65 million sellers from 240 countries had registered on all Alibaba platforms. That same year, a decision was made to split Taobao into Taobao Marketplace and Tmall. In 2013, it was planned to open stationary retail outlets in the Wanda Plaza shopping center from Wanda Group. But later, this idea had to be abandoned. In the same year, Alibaba, together with 8 other companies, created the logistics enterprise Cainiao.
On September 19, 2014, Alibaba’s initial public offering (IPO) on the New York Stock Exchange raised $25 billion , giving the company a market value of $231 billion , making it the world’s largest IPO at the time. Thirty-five banks participated in the offering, with six leading banks – Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, and Morgan Stanley (joint bookrunners) – playing key roles. In April 2016, Alibaba bought a controlling stake in Lazada Group, a Singapore-based e-commerce company with sites in Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, for $1 billion.
At the beginning of 2018, due to the growth of shares, the company’s value exceeded 500 billion dollars . In the same year, the company acquired a food delivery service. Also in the same year, the company’s management announced the launch of a project to create unmanned vehicles that will meet the 4th level of safety of autonomous movement. To support the company, the Chinese authorities have enshrined in law the regulations for the process of production and testing of unmanned vehicles.
In late 2020, Jack Ma criticized the Chinese financial system and advocated for its reform. The Chinese leadership did not like this. This is how Alibaba’s conflict with the Chinese authorities began, which had certain consequences for the company. Thus, in early 2021, the state fined the company 18.228 billion yuan (approximately $ 2.8 billion ). for monopolistic behavior. There were other conflicts that followed, resulting in large financial losses. In just one and a half years of confrontation with the state, $ 344 billion in market capitalization was lost. The company’s relations with the authorities subsequently improved.
Interesting facts about Alibaba
- Alibaba Group invests heavily in various projects aimed at protecting the environment, and not only in China;
- As of the end of 2021, the company has more than 95,000 employees, which is much more than Yahoo and Facebook combined;
- Jack Ma’s unconventional approach to doing business is the main guarantee of the company’s success. He did not copy the behavior of his competitors in the market, but acted radically differently;
- At the initial stage of the company’s creation, only 4 out of 17 people understood IT. Jack Ma, who was focused on the middle class of the population, which was just mastering the Internet, rejected about 90% of the developments offered to him. The main reason was that if he did not understand, then other users who did not understand IT would not understand either.
Today, the company has about 700 subsidiaries located in China and 520 companies in other countries around the world.