Alibaba Group

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Alibaba Group
Type Privately held company
Industry Internet, e-commerce, computer software
Founded Hangzhou (1999)
Headquarters Hangzhou, China
Area served China and overseas
Key people Jack Ma (Ma Yun), Executive Chairman
Jonathan Lu, CEO
Revenue USD 7.5 billion (2013) [1]
Owner(s) Jack Ma
Employees 24,000 (2012)
Website www.alibaba.com
Alibaba Group
Simplified Chinese 阿里巴巴集团
Traditional Chinese 阿里巴巴集團
Alibaba Headquarters in Hangzhou
Alibaba screenshot

Alibaba Group is a privately owned Hangzhou-based group of Internet-based e-commerce businesses including business-to-business online web portals, online retail and payment services, a shopping search engine and data-centric cloud computing services. In 2012, two of Alibaba’s portals together handled 1.1 trillion yuan ($170 billion) in sales, more than competitors eBay and Amazon.com combined.[2] The company primarily operates in the People’s Republic of China, and in March 2013 was estimated by The Economist magazine to have a valuation between $55 billion to more than $120 billion.[2]

The group began in 1999 when Jack Ma founded the web site Alibaba.com, a business-to-business portal to connect Chinese manufacturers with overseas buyers. Alibaba's consumer-to-consumer portal Taobao, similar to eBay, features nearly a billion products and is one of the 20 most-visited websites globally. Alibaba Group's sites account for over 60% of the parcels delivered in China.[2]

Alipay, an online payment escrow service, accounts for roughly half of all online payment transactions within China. The vast majority of these payments occur using Alibaba services.[3] The company is seeking an initial public offering in the United States after a deal could not be reached with Hong Kong regulators.[4]

Companies and affiliated entities[edit]

Alibaba.com[edit]

Alibaba.com Limited (simplified Chinese: 阿里巴巴网络有限公司; traditional Chinese: 阿里巴巴網絡有限公司), the primary company of Alibaba Group, is the world’s largest online business-to-business trading platform for small businesses.[citation needed]

Founded in Hangzhou in eastern China, Alibaba.com has three main services. The company’s English language portal Alibaba.com handles sales between importers and exporters from more than 240 countries and regions.[5] The Chinese portal 1688.com was developed for domestic business-to-business trade in China. In addition, Alibaba.com offers a transaction-based retail website, AliExpress.com, which allows smaller buyers to buy small quantities of goods at wholesale prices.

In 2013, 1688.com launched a direct channel that is responsible for $30 million in daily transaction value.[6]

Taobao[edit]

Main article: Taobao

Taobao Marketplace, or Taobao, is China's largest consumer-to-consumer online shopping platform.[7] Founded in 2003, it offers a variety of products for retail sale. In October 2013 it was the third most visited web site in China, according to Alexa.com.[8] Taobao's growth was attributed to offering free registration and commission-free transactions using a free third-party payment platform.[9]

Advertising makes up 85 percent of the company's total revenue, allowing it to break even in 2009. Taobao's 2010 profit was estimated to be 1.5 billion yuan (US $235.7 million), only about 0.4 percent of their total sales figure of 400 billion yuan (US $62.9 billion) that year, way below the industry average of 2 percent, according to iResearch estimates.[10]

According to Zhang Yu, the director of Taobao, the number of stores on Taobao with annual sales under 100 thousand yuan increased by 60% between 2011 and 2013. Over the same period, the number of stores with sales between 10 thousand and 1 million yuan increased by 30%, and the number of stores with sales over 1 million yuan increased by 33%.[11] Taobao's total sales (including Tmall) exceeded 1 trillion yuan (USD 160 billion) in 2012. And on November 11, 2012, the biggest online shopping promotion activity, Taobao accomplished 19.1 billion yuan (USD 3.07 billion) sales in one day.[12]

Tmall.com[edit]

Main article: Tmall

Tmall.com was introduced in April 2008 as an online retail platform to complement the Taobao consumer-to-consumer portal and became a separate business in June 2011. As of October 2013 it was the eighth most visited web site in China,[8] offering global brands to an increasingly affluent Chinese consumer base.

Juhuasuan[edit]

Juhuasuan.com is a group shopping website in China. It was launched by Taobao in March 2010 and became a separate business in October 2011. Juhuasuan offers "flash sales," products that are available only for a fixed time period, which can last from one or two days to a full month. To buy at the discounted price, buyers must purchase the item within that defined time.

eTao[edit]

eTao.com was beta-launched by Taobao in October 2010 as a comparison shopping website, and became a separate business in June 2011. It offers search results from most Chinese online shopping platforms,[citation needed] including product searches, sales and coupon searches. Online shoppers can use the site to compare prices from different sellers and identify products to buy. According to the Alibaba Group web site, eTao offers products from Amazon China, Dangdang, Gome, Yihaodian, Nike China and Vancl, as well as Taobao and Tmall.[5]

Alipay[edit]

Launched in 2004, Alipay.com (simplified Chinese: 支付宝; traditional Chinese: 支付寶; pinyin: Zhīfùbǎo) is a third-party online payment platform with no transaction fees.[13] According to analyst research report, Alipay has the biggest market share in China with 300 million users and control of just under half of China's online payment market in February 2014. According to Credit Suisse, the total value of online transactions in China grew from an insignificant size in 2008 to around RMB 4 trillion (US$660 billion) in 2012.[14]

Alipay provides an escrow service, in which consumers can verify whether they are happy with goods they have bought before releasing money to the seller. This service was offered for what the company says are China's weak consumer protection laws, which have reduced consumer confidence in C2C and even B2C quality control.[citation needed]

The company says Alipay operates with more than 65 financial institutions including Visa and Mastercard[15] to provide payment services for Taobao and Tmall as well as more than 460,000 Chinese businesses. Internationally, more than 300 worldwide merchants use Alipay to sell directly to consumers in China.[citation needed] It currently supports transactions in 12 foreign currencies.

The payment methods are MasterCard, Visa, Boleto Bancário, Transferência Bancária, Maestro, WebMoney, and QIWI Кошелек as of May 2014.[16]

The PBOC, China's central bank, issued licensing regulations in June 2010 for third-party payment providers. It also issued separate guidelines for foreign-funded payment institutions. Because of this, Alipay, which accounts for half of China's non-bank online payment market, was restructured as a domestic company controlled by Alibaba CEO Jack Ma in order to facilitate the regulatory approval for the license.[17] The 2010 transfer of Alipay's ownership was controversial, with media reports in 2011 that Yahoo! and Softbank (Alibaba Group's controlling shareholders) were not informed of the sale for nominal value. Chinese business publications Century Weekly criticised Ma, who stated that Alibaba Group's board of directors was aware of the transaction.[18] The incident was widely criticized in foreign and Chinese media as harming foreign trust in making Chinese investments.[19] The ownership dispute was resolved by Alibaba Group, Yahoo!, and Softbank in July 2011.[20]

In 2013 Alipay launched a financial product platform called Yuebao (余额宝).[21] As of June 2013 the company still had what it called "a minor paperwork problem" with the China Securities Regulatory Commission, but the company said that they planned to expand the product while these are sorted out.[22]

Alibaba Cloud Computing[edit]

Alibaba Cloud Computing (www.aliyun.com) aims to build a cloud computing service platform, including e-commerce data mining e-commerce data processing, and data customization. It was established in September 2009 in conjunction with the 10th anniversary of Alibaba Group.[5]

AliExpress[edit]

Launched in 2010, AliExpress.com is an online retail service made up of mostly small sellers offering products to online buyers. The site has registered users and buyers in more than 220 countries.[citation needed]

China Yahoo![edit]

In October 2005, Alibaba Group formed a strategic partnership with Yahoo! and acquired China Yahoo! (www.yahoo.com.cn), a Chinese portal that focuses on Internet services like news, email, and search. In April 2013, Alibaba Group announced that, as part of the agreement to buy back the Yahoo! Mail stake, technological support for China Yahoo! Mail service would be suspended and the China Yahoo! Mail account migration would begin. Several options were offered to users to make the transition as smooth as possible, and China Yahoo! users had four months to migrate their accounts to the Aliyun mail service, the Yahoo! Mail service in the United States, or to another third-party e-mail provider of the user's choice.[23] Yahoo! China closed its mail service on August 19, 2013. E-mails sent to Yahoo! China accounts can be forwarded to an Alimail box until December 31, 2014. Users are also allowed to transfer e-mail accounts to yahoo.com or any other e-mail service. It is estimated there are no more than a million users with Yahoo! Mail for China and chances are they also own other e-mail accounts.[24]

Laiwang[edit]

In October 2013, the company's chairman Jack Ma announced that the company would no longer use Tencent's messaging application WeChat, and would henceforth promote its own messaging application and service, Laiwang.[25]

ChinaVision Media Group[edit]

In March 2014, Alibaba agreed to acquire a controlling stake in ChinaVision Media Group for $804 million. The two firms announced they would establish a strategic committee for potential future opportunities in online entertainment and other media areas.[26]

Youku Tudou[edit]

In April 2014, Alibaba and Yunfeng Capital, a private equity company controlled by Alibaba’s founder, Jack Ma, agreed to acquire a combined 18.5 percent stake in Youku Tudou, which broadcasts a series of popular television programs and other videos over the Internet.[27]

11 Main[edit]

On June 11, 2014, Alibaba launched U.S. shopping site 11 Main. The 11 Main marketplace hosts more than 1,000 merchants in categories such as clothing, fashion accessories and jewelry as well as interior goods and arts and crafts and it plans to keep adding more, the company said.[28][29]

Corporate governance[edit]

As of January 2013, Jack Ma was Alibaba Group's chief executive officer.[7] Ma announced his intention to step down from this post on January 15, 2013.

CEO Jonathan Lu confirmed this IPO again in July 2013, quoted in the press as saying, “We are ready and can do an IPO any time.” He also revealed that the firm has still not decided where to list, but is looking at the stock exchanges of New York and Hong Kong.[30] On September 25, 2013, a media report confirmed that negotiations with Hong Kong regulators had deteriorated and a US IPO is being sought by the company as of the date of the report. Analysts estimated that the Alibaba IPO would have added US$25 million to the Hong Kong Exchanges and Clearing (HKEx)'s annual revenues.[4]

History[edit]

The company was founded in the current CEO, Jack Ma's Apartment.[31] Jack Ma said, "One day I was in San Francisco in a coffee shop, and I was thinking Alibaba is a good name. And then a waitress came, and I said do you know about Alibaba? And she said yes. I said what do you know about Alibaba, and she said ‘Alibaba and 40 thieves'. And I said yes, this is the name! Then I went onto the street and found 30 people and asked them, ‘Do you know Alibaba?’ People from India, people from Germany, people from Tokyo and China… They all knew about Alibaba. Alibaba — open sesame. Alibaba is a kind, smart business person, and he helped the village. So…easy to spell, and globally known. Alibaba opens sesame for small- to medium-sized companies. We also registered the name Alimama, in case someone wants to marry us!"[32][33]

Company timeline[edit]

  • In December 1998, Jack Ma and other 17 founders released their first online marketplace named "Alibaba Online".
  • From 1999 to 2000, Alibaba Group raised a total of US$25 million from SoftBank, Goldman Sachs, Fidelity and some other institutions.[34]
  • In December 2001, Alibaba.com achieved profitability.
  • In May 2003, Taobao was founded as a consumer e-commerce platform.
  • In December 2004, Alipay, which started as a service on the Taobao platform, became a separate business.
  • In October 2005, Alibaba Group took over the operation of China Yahoo! as part of its strategic partnership with Yahoo! Inc.
  • In November, 2007, Alibaba.com successfully listed on the Hong Kong Stock Exchange.
  • In April 2008, Taobao established Taobao Mall (Tmall.com), a retail website, to complement its C2C marketplace.
  • In September 2008, Alibaba Group R&D Institute was established.
  • In September 2009, Alibaba Group established Alibaba Cloud Computing in conjunction with its 10-year anniversary.
  • In May 2010, Alibaba Group announced a plan to earmark 0.3% of its annual revenues to fund environmental protection initiatives.
  • In October 2010, Taobao beta-launched eTao as a shopping search engine.
  • In June 2011, Alibaba Group reorganized Taobao into three separate companies: Taobao Marketplace, Taobao Mall (Tmall.com) and eTao.
  • In July 2011, Alibaba Cloud Computing launched its first self-developed mobile operating system, Aliyun OS over K-Touch Cloud Smartphone.[35]
  • In January 2012, Tmall.com changed its Chinese name as part of a rebranding exercise.[5]
  • In March 2014, Alibaba group said it will begin the process of filing for an initial public offering in the U.S.[36]
  • Prior to its IPO filing on Form F-1 as a foreign issuer in the U.S., Alibaba undertook an aggressive acquisition spree - previously atypical for the company - acquiring numerous majority and minority stakes in companies including micro-blogging service Weibo, China Vision Holdings, and car sharing service Lyft.[37]
  • On May 6, 2014 Alibaba Group filed registration documents to go public in the U.S. in what may be one of the biggest initial public offerings in American history.[38]
  • On June 5, 2014 Alibaba group agreed to take a 50 percent stake in Guangzhou Evergrande Football Club, winners of 2013 Asian Champions League, for 1.2 billion yuan ($192 million).[39]
  • In June 2014, Alibaba acquired the Chinese mobile internet firm UCWeb. The price of the purchase has not been disclosed but the company did claim that the acquisition creates the biggest merger in the history of China's internet sector.[40]

Gold Supplier membership and related controversy[edit]

Alibaba.com offers a Gold Supplier membership to try to ensure that each seller is genuine.[citation needed] "To qualify for a Gold Supplier membership, a supplier must complete an authentication and verification process by a reputable third-party security service provider appointed by Alibaba.com".[citation needed] While the majority of suppliers are reported to be genuine,[citation needed] there have been cases of sellers seeking to defraud unsuspecting buyers. In February, 2011 controversy ensued when Alibaba's corporate office admitted that it had granted the mark of integrity of its “China Gold Supplier” program to more than 2,000 dealers that had subsequently defrauded buyers; the firm's share price dropped "abruptly" after the announcement.[41] A statement from the firm reported than Yan Limin, the General Manager of Alibaba.com at the time, had been dismissed in March for "misconduct"; Phil Muncaster of UK's The Register additionally reported that "a further 28 employees had been involved in dodgy dealings".[42] As the Economist noted, the company's response has conflicting components: Alibaba's promulgated view that its corrective actions indicate its commitment to quality and integrity (where it contrasts itself with other scandal-associated Chinese business sectors), versus a damage control view suggesting that the subscription-driven, third-party verified “China Gold Supplier” program was endangered by diminished trust in its endorsement system, removing the incentive for global buyers to choosing Alibaba as their Business-to-business service, thus more broadly endangering Alibaba through impact on its brand and capabilities (the latter via the "defenestration of senior people").[41] Overall, the scandal has placed the head of Alibaba Group, Jack Ma—who is described as having been furious over the scandal—in a position to personally fight to win back trust.[43]

Research and development[edit]

Alibaba introduced the Alibaba Group R&D institute in 2008. One year later, Alibaba filed around 350 patent and utility model applications.[44]

Brick and mortar stores[edit]

According to Li Chuan, a senior executive at Alibaba, the company was planning in 2013 to open traditional brick and mortar retail outlets in partnership with Chinese real estate company Wanda.[45]

Shark fin sales[edit]

In December 2008, Alibaba.com Corporation, the parent corporation of Taobao.com and Alibaba.com, announced that all Alibaba group websites will be shark fin-free on January 1, 2009.[46][47]

Uranium sales[edit]

In May 2012, a US law enforcement agent posing as an American broker representing persons in Iran, posted an advert on Alibaba.com seeking to purchase uranium. In August 2013, Patrick Campbell of Sierra Leone was arrested at New York's John F. Kennedy International Airport. Mr Campbell is accused of seeking to arrange the export of the yellowcake from Sierra Leone to the Iranian port of Bandar Abbas, packed in drums and disguised as the mineral chromite. When confronted, he admitted to having brought a sample of raw uranium ore with him, the complaint says.[48] As of August 23, 2013, the listing was removed from Alibaba.com as it was in violation of Alibaba.com's policy on Firearms, Ammunition and Weapons: "Any servicing, instruction, processing, or aid of producing any biological, chemical, or nuclear weapons, or any other Weapons of Mass Destruction (WMD) or its known associated agents is strictly prohibited by international law and is accordingly prohibited on the Site."[49]

References[edit]

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  2. ^ a b c "E-commerce in China: The Alibaba phenomenon". The Economist. 23 March 2013. 
  3. ^ "Alibaba: The world’s greatest bazaar". The Economist. 23 March 2013. 
  4. ^ a b "UPDATE 3-U.S. to get coveted Alibaba IPO after Hong Kong talks founder". Reuters. 25 September 2013. Retrieved 26 September 2013. 
  5. ^ a b c d "Alibaba Group Company Overview". Alibaba Group Company Overview (Web Site). Alibaba Group. Retrieved 18 October 2013. 
  6. ^ Hsu, Alex (17 Jul 2013). "Alibaba’s 1688.com Launches New Direct Channel, Responsible for 30 Million USD Per Day in Transactions Value". BrightWire News. 
  7. ^ a b Einhorn, Bruce (January 15, 2013). "Alibaba's Jack Ma Is Moving On, With an IPO Looming". Bloomberg Businessweek. businessweek.com. Retrieved 16 January 2013 
  8. ^ a b "Taobao's Alexa Statistics". Alexa.com. Alexa.com. Retrieved 18 October 2013. 
  9. ^ Zhe, Sun (Jan 2012). "From Stall to Mall". News China. 
  10. ^ Zhe, Sun (Jan 2012). "From Stall to Mall". News China. 
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  12. ^ Total Taobao Sales Exceeded 1 Trillion Yuan in 2012 China Internet Watch, December 12, 2013
  13. ^ Zhe, Sun (Jan 2012). "From Stall to Mall". News China. 
  14. ^ John Watling (14 February 2014). "China’s Internet Giants Lead in Online Finance". The Financialist. Credit Suisse. Retrieved 15 February 2014. 
  15. ^ "About Alipay". Alipay. Retrieved 10 October 2013. 
  16. ^ https://alipay.alibaba.com/checkout.htm (free registration required)
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  26. ^ Donny Kwok and Denny Thomas (12 March 2014). "Alibaba buys ChinaVision stake for $804 million; gains TV, movie content". Reuters. 
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  33. ^ http://web.archive.org/web/20070227023026/- The original forum post referred to in the wordlab article; it does not appear to have been posted by Alibaba staff.
  34. ^ "Company Overview". Retrieved 24 January 2014. 
  35. ^ Jones, Terril Yue (28 July 2011). "UPDATE 2-Alibaba launches smartphone running its Cloud OS". Reuters. Retrieved 23 September 2012. 
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  37. ^ work=[PrivCo "Alibaba Continues Pre-IPO Spending Spree"]. February 2013. Retrieved 8 July 2013. 
  38. ^ Ryan Mac and Brian Solomon. "Chinese E-commerce Giant Alibaba Files For IPO". 
  39. ^ "China's Alibaba to buy 50% stake in Guangzhou Evergrande Football Club". 
  40. ^ "Alibaba continues quest to own the Chinese internet". CNN. 
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  45. ^ Hsu, Alex (3 Jul 2013). "Alibaba to Open Brick and Mortar Stores in Wanda Plazas Across China". BrightWire News. 
  46. ^ China&#821. UnderwaterTimes.com. Retrieved on 2013-09-21.
  47. ^ Shark fins removed from 'front window' of China-based website, but apparently still available to buyers - latimes.com. Latimesblogs.latimes.com (2009-01-09). Retrieved on 2013-09-21.
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  49. ^ Safety & Security Center - Learn How to Enhance the Safety of Your Online Transactions. Alibaba.com. Retrieved on 2013-09-21.

External links[edit]

Coordinates: 30°11′31.12″N 120°11′9.79″E / 30.1919778°N 120.1860528°E / 30.1919778; 120.1860528