“Open Sesame” in China

Jack Ma
Jack Ma

Mr. Ma, what inspired the name Alibaba?

Ma: When we started Alibaba.com, our mission was to build a global company connecting buyers and sellers around the world. We were hoping to find a name that everyone around the world recognized and could easily remember. Someone suggested the name “Alibaba” and I began to ask all of my foreign friends if they ever heard of “Alibaba”. It turned out that no matter what country people were from, they all knew this name, and so we thought it would make a great website name for a global company.

In China, just as everywhere, whenever people think of the Alibaba story, they think of “Open Sesame” to a cave full of treasure. Because the internet represents this same kind of opportunity to businesspeople – it can unlock hidden treasure – we think it is a very fitting name both inside and outside of China.

Does Alibaba have a better line to Chinese customers than eBay does?

Ma: While eBay is a global company founded in the US, we are a global company founded in China. Just as eBay really understands the US market, we have a deep understanding of the China market. We grew up here, we understand the culture, and most importantly, we understand the customers. So yes, we have a strong advantage here in China.

What additional advantages does the portal offer its users – when compared with competing suppliers?

Ma: We focused on business-to-business trade before the term “B2B” became hot in e-commerce. Most of the big US companies have focused on serving multinationals with their e-commerce services. We focus on the little guys – the entrepreneurs and medium-sized businesses who always had a difficult time finding trading partners before the internet. So we have an advantage over the Ariba’s and Commerce One’s because we focus on SME’s – which happens to be the group of businesses that most benefit from using the Internet.

Why is so much bought and sold over the Internet in China?

Ma: In China, everything is new. Before the internet, marketplaces, shopping malls, and even the range of products available was very limited. Because China has developed so quickly, we provide a service for which there was no existing alternative. So people in China have leapfrogged straight to the internet for e-commerce, while in the West, the transition has sometimes been slower.

Why is the Chinese market so lucrative for suppliers throughout the world?

Ma: China has a stable environment, low labor costs, good quality, and a very entrepreneurial spirit. So it is not surprising that China has become the manufacturer to the world.

What advantage does Alibaba gain from its alliance with Yahoo?

Ma: It gives us a global partner with great technology and a great brand. And in China, it allows us to add search to our e-commerce portfolio. By adding search, we now can offer our customers many ways to market their products and services, along with a payment solution, AliPay, to transact online.

Do you see your alliance as a model for international business success in China?

Ma: I think so, at least in the Internet industry. No US company is a leader in China’s internet, because so far no one has been able to localize their products well enough. The Internet is like water – it moulds to the local cultural and economic environment more than any other product or service. So Yahoo was wise to put control of their local services in the hands of a local partner. I think more companies will start to do the same.

Do you regard yourself as a competitor of the Chinese search engine Baidu? Why aren’t you striving for an alliance with Baidu?

Ma: We compete with Baidu on search. But of course, our other sites are great partners with Baidu. Just like everywhere in the internet industry these days, it is possible and common to compete with and cooperate with the same company.

Just like Google and Baidu, Yahoo has agreed to refrain from producing politically unwelcome search results. Doesn’t that limit the business opportunities for an e-commerce supplier like Alibaba?

Ma: It is only natural that companies follow the local laws in the countries they operate in. But we chose not to focus on politics for business reasons, rather than for political reasons. We’ve always been focused on e-commerce. It is what we understand, and what we do best.