www.venturetdf.com/china/cn_alibaba_july14.php -
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Published on: 7/14/2004
Last Visited: 12/31/2007
Jack Ma, CEO, Alibaba
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When Jack Ma, the Chinese internet entrepreneur, visited investors in the US a few months ago, he was taken aback by their sceptical view of his battle with eBay for control of China's market in consumer-to-consumer online auctions.
"Everybody said: 'It sounds like Jack is fighting with Mike Tyson - he has no chance'," recalls Mr Ma, the slightly-built founder and chief executive of e-commerce company Alibaba.com."I was so disappointed."
But the ebullient Mr Ma is not letting such lack of faith get him down.He says Alibaba's one-year-old consumer auction arm, Taobao.com, is taking the fight to eBay's China unit, Eachnet.And he claims that Taobao already has more users than eBay in China.
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The technological and financial resources commanded by such companies make them formidable opponents, as Mr Ma well knows.
The former English teacher says that, over the last year, eBay has been willing to spend heavily to seal exclusive advertising deals with China's most visited websites, forcing Taobao.com to rely heavily on word-of-mouth campaigns and clever publicity to attract new users.
"They blocked all our advertising," he says.
But Mr Ma says that international internet companies are prone to making three mistakes in China - underestimating the differences between the local market and the US market, incurring higher costs than local rivals and "going global" too quickly.
"The cost for eBay and international companies to come to China is so high," says Mr Ma. "They spend $100m, we spend $10m, but the effect is the same."Low costs and strong cashflow at its parent Alibaba mean Taobao can rapidly develop a customer base by offering its services free, he says.
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Whatever their ownership, Mr Ma is convinced local roots and local knowledge give China-based companies a big advantage over their international rivals.
"They are the sharks in the ocean, we are the crocodiles in the Yangtze River," he says.
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