ALIBABA GROUP: FOSTERING AN E-COMMERCE ......W16858 ALIBABA GROUP: FOSTERING AN E-COMMERCE ECOSYSTEM...

W16858

ALIBABA GROUP: FOSTERING AN E-COMMERCE ECOSYSTEM

Seung Ho Park and Ziqian Zhao wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com.

Copyright © 2016, China Europe International Business School and Richard Ivey of Business Foundation Version: 2016-12-19

Alibaba Group (Alibaba) was the largest e-commerce platform operator in China. In 1999, it started as a small business-to-business (B2B) wholesale platform that focused on import and export businesses. The company then tapped into the retail end of the e-commerce market in 2003 with the consumer-to-consumer (C2C) marketplace Taobao (a Chinese term for “treasure hunt”), from which sprouted the business-to-consumer (B2C) platform Tmall and the e-payment tool Alipay, which processed online transactions. Alibaba engaged in other profit models and service possibilities surrounding these e-commerce platforms, including the product search engine Etao.com, the branded group-buying marketing program Juhuasuan, and financial services, such as providing small business loans to creditworthy sellers on these platforms.

Inspired by the calls of sellers and buyers, Alibaba gradually formed an e-commerce ecosystem where third-party individuals and operations such as models, photographers, storefront builders, seller performance-enhancement applications, and commissioned sales agents prospered. It also heavily invested in e-commerce infrastructures, such as the public cloud-computing service Aliyun and a national logistics network that united major national express service providers to boost logistics efficiency. In 2012, as the mobile Internet age dawned in China, it started investing in dozens of mobile Internet-based applications (apps) to capture major mobile portals and absorb more Internet traffic.

In 2014, Alibaba went public on the New York Stock Exchange with the stock symbol BABA. In its prospectus, the company boasted about its e-commerce ecosystem, which was being built over time, adding one building block at a time. Alibaba cofounder Jack Ma, who was chairman and chief executive officer at the time, declared that its mission was to “make it easy to do business anywhere.”1 However, the ecosystem, which was well suited for people’s Internet habits in the past, would not likely be up to date in the mobile age, when browsing for information no longer posed a problem and people became fascinated by mobile apps that provided practical and entertaining services. Internet traffic, representing people’s attention, started to take a new pattern. Having thrived on pooling Internet traffic through displaying a huge variety of merchandise on its platform, Alibaba could not afford to now lose Internet traffic to countless customized small apps.

For the exclusive use of P. SCHEIDELER, 2019.

This document is authorized for use only by PROF. DR. PETER SCHEIDELER in 2019.

9B16M217 THE INCEPTION OF ALIBABA.COM Alibaba.com started as an English-language wholesale marketplace to help small and medium-sized companies (SMEs) sell their products globally on the Internet. Buyers from the United States and Europe, who previously had to scout for goods through layers of middlemen and trading companies, could go straight to the source.2 Alibaba’s founder Ma stated, “What we do is to give small companies e-commerce ability by helping them source partners and information around the world.”3 Ma compared Alibaba.com to a Middle Eastern bazaar where anyone could lay out their goods and haggle with buyers. He claimed that Alibaba was “just a platform for business people to meet” and that it did not “take legal responsibility” in the case of faulty goods or nonpayment. However, he said it did “help members if they [had] any trading problems.”4 The downside of “a comprehensive platform” was that the company was under attack by “the verticals” in 27 industries.5 The rivals refuted Ma’s argument, claiming that a lack of screening was actually very risky.6 Their business model included screening for membership, enabling membership fees, and advertising fee collection. Ma liked to play differently: “Let the others go after the whales, we want to catch the shrimps.”7 The “global and horizontal” and “free-for-all” business idea was often ridiculed8 because it could not derive revenues directly from transactions or membership fees, which could harm the membership base. In the first two years since its inception, Alibaba hardly made any profit from advertising.9 Even though its advertising packages were priced significantly lower priced than those offered by the “whale-targeting” rivals,10 they were still unaffordable for the “shrimps.” The company envisioned that it could generate revenue and profits from add-on features such as shipping, trade financing, on-site inspections, quality control services, and insurance. Ma also intended to collect fees from advertising and promotions from premium members. 11 As Ma put it, “if one million users are transacting daily, Citibank and UPS [United Parcel Service] will come to me. We can offer a discount to customers in exchange for a commission.” Clearly, the business model was based on a huge member base. The free listing service attracted many users to Alibaba.com. The company reached an online membership of more than 100,000 people in 181 countries during the first year,12 and this grew to 450,000 by early 2001.13 Ma made the cover of Forbes Global as the first Chinese entrepreneur featured in the magazine.14 Alibaba picked “the best starting point,” as indicated in the Forbes story. Asia was home to about 70 per cent of the world’s exporting companies, with 400,000 of them located in China.15 Global operations exhausted Alibaba’s team. By early 2001, the company realized that it was fighting battles on every front. The company had to adjust its operational focus back to China while keeping its global outreach. A senior manager commented, “You can be a global company based in China. You have to be successful in a region first, before you expand. . . . By definition, we are global every day. But we do not need the global costs of operating outside of China.” 16 In early 2001, Alibaba’s management sensed that a business model based purely on online transactions could be “too ambitious” because China lacked a mature credit system and nationwide logistics network. The company decided to take a step back as an online trade fair,17 only exchanging information, but the actual transactions had to take place offline. The company claimed that its primary competitor in China was the Canton Trade Fair, 18 the largest yearly physical trade fair in Guangzhou. The company’s chief technology officer at the time commented that his job at Alibaba was to “push Alibaba.com to the higher levels of online transaction, including shipping and payment.”19 After refocusing on the China market, Alibaba.com.cn (the China website, later changed to 1688.com) was able to carry out domestic transactions online by launching TrustPass in 2002. TrustPass allowed



9B16M217 wholesalers to host premium storefronts with access to premium data analytic applications.20 It offered registered users credit information about potential businesses partners, which came from credit service companies, customers, and other Alibaba members.21 The company started to generate revenue primarily from the sales of China’s TrustPass memberships and online marketing services. Alibaba maintained a dominant position, primarily due to its early-mover advantage: it had accumulated a user base when B2B e-commerce started showing signs of taking off in 2003 and 2004.22 By 2005, a strong momentum in online trading was evident in China (see Exhibit 1). In the same year, Alibaba’s user base was already larger than the sum of its competitors. Along with Alibaba’s growing global presence, it ran into increasing challenges in its operation and public exposure. In 2003, Alibaba.com was accused of selling imitations of famous brands of cigarettes, touting “good quality and cheap price.”23 This became the beginning of a series of public exposure nightmares for the company. TAOBAO.COM In 2002, Alibaba sensed a big threat. The world’s leading C2C e-commerce site, eBay, acquired one-third of EachNet, China’s version of eBay. A year later, eBay was in control of more than 80 per cent of China’s C2C market.24 In China, the line between individuals and small businesses was unclear—many people had entrepreneurial ambitions. Alibaba felt an urgent need to prevent eBay from entering Alibaba’s core B2B market and undermining Alibaba.com’s competitiveness. In May 2003, Alibaba launched Taobao, a wholly-owned subsidiary, to enter the C2C market and compete directly with eBay. Alibaba’s revenue came mainly from the international B2B trade website Alibaba.com, and the domestic counterpart Alibaba.com.cn had already established a dominant position. “We can’t find our nearest competitor with a telescope,”25 Ma bragged about the company’s leading position in China. He also said, “China is well poised to become the world’s biggest e-commerce market with a forecast of 200 million Internet users, so we must invest now.”26 He predicted that once Taobao fully integrated the B2C and C2C models, it would eventually overtake its parent in terms of revenue and staff size. 27 Taobao used the same “free-for-all” strategy to combat eBay’s fee-based auction service; it also adopted the instant-messaging tool Taobao Wangwang to simulate face-to-face negotiations between sellers and buyers, which gave Chinese users more confidence than eBay’s communications.28 A year later, in July 2004, Taobao announced its victory over eBay.29 Its market share reached 72.2 per cent in 2005,30 and the winner grabbed the expanding market. Driven by the popularization of broadband and the robust growth of China’s Internet population (see Exhibit 2), 2005 saw C2C online sales in China climb to $1.7 million, an increase of 200 per cent from 2004.31 In 2004, the growing transaction volume sparked the interest of China’s banking system, which made it possible for Alibaba.com to partner with four of China’s largest banks to test-launch Alipay. Alipay was a proprietary online escrow service that fully guaranteed each Alipay transaction. It reimbursed any buyer or seller who was found to be a victim of fraud. “We are going to fully guarantee the service with our own money,” Ma said.32 More than 80 per cent of the listings on Taobao utilized Alipay, and Alipay transactions doubled. According to an iResearch study, Alipay garnered China’s highest customer satisfaction levels, with 70 per cent of customers reporting being satisfied or very satisfied compared to just 49 per cent for eBay’s EachNet payment service.33



9B16M217 Taobao devised a dynamic store evaluation system for all sellers based on the buyer’s rating after each transaction. The ratings could have a strong effect on a store’s position among the vast number of stores listing products. When a dispute between a buyer and a seller could not be resolved, the buyer could file for arbitration to Taobao. Opening a store on Taobao was free, but sellers had to maintain a reserve of at least ¥1,00034 (approximately US$120 at the time) in case Taobao determined that it had harmed buyers’ interests and decided to penalize them. THE FIRST MONETIZATION ATTEMPT In 2004, despite the breathtaking growth of Taobao, Duncan Clark, chairman of BDA China Ltd., a technology-research company, warned, “If Alibaba wants to live up to Jack’s promise of becoming a major force in global business, it will need to be taking a fee on the deals it is facilitating.”35 However, Alibaba’s chief financial officer, Joe Tsai, responded, “If we start acting like a trading company, where we take a cut of every deal, I think a lot of people won’t come back.”36 Ma said in 2004 that more money would be invested in Taobao and that the company was prepared to provide free services for five years.37

However, in May 2006, Taobao made its first attempt at monetization by offering sellers the opportunity to bid on keywords to influence the order of their product listings, which were previously arranged chronologically. The service was called Zhao Cai Jin Bao (Chinese for “bring in money and treasure”), and was essentially a form of pay-for-performance advertising. Sellers were outraged, accusing this premium service of “creating discrimination in all transactions.”38 Some of the more radical sellers formed alliances and stopped their operations in protest against Taobao, trying to force Taobao to keep its promise of keeping the service “free-for-all” for another three years. By June, Taobao had to hold a referendum to decide the fate of the “bring in money and treasure” service. The result was in favour of the protestors, and the keyword-bidding service was suspended after six months of research by top programmers and industry experts. Ma apologized to sellers through a letter written in an amicable tone and posted on Taobao’s home page stating, “The company’s cash reserve could support Taobao.com’s free policy for another 20 years. . . . Taobao today shouldn’t focus on making quick money, but how to become the world’s best e-commerce site.”39

INCUBATING B2C AND THE SECOND MONETIZATION ATTEMPT The failed keyword-bidding service reminded management that small sellers could not afford premium advertising as big sellers could. In the same month that the “bring money and treasure” program was called off, Taobao launched a B2C platform within the general C2C platform, which provided an application of customer discrimination strategy on the seller’s side. The company now comprised two B2B marketplaces (international import/export and domestic trade) and the C2C marketplace Taobao, which was mainly domestic. The B2C model was intended to direct business customers from Alibaba.com and Alibaba.com.cn to Taobao, which was originally a consumer platform. Taobao aggressively tried to introduce brand manufacturers and traditional wholesalers. Ma claimed in 2006 that it was “a new form of ‘B2C’ platform”40 that was different from the self-operated one-stop online malls that profited from in-and-out price gaps. In a survey conducted at the end of 2005, 43 per cent of respondents expressed concerns over the quality of online goods and after-sale service. There had been a growing number of customer complaints,41 and the lack of supervision mechanism worried first-time buyers on Taobao. There were also conservative buyers



9B16M217 who did not trust any form of unscreened online sellers, even if Alipay guaranteed the transaction. This was partially because, for some goods categories, consumers were not able to tell the difference between genuine branded goods and imitation goods. Introducing B2C sellers on Taobao could mitigate the problem because these sellers were either manufacturers or big sellers who were willing to spend large amounts of money on building their online presence, rather than simply the ¥1,000 penalty reserve deposited by small sellers. The B2C model was embedded in the C2C platform, which eliminated equal opportunity for business sellers and consumer sellers. Taobao needed to find distinctive mechanisms for the two “species,” especially in regard to its plan to monetize. In 2008, the pressure from venture capital investors to generate revenue grew stronger. By this time, the “five-year free-for-all” promise made in 2003 had been fulfilled. Taobao decided to block Baidu, a dominant Chinese online search engine, from automatically capturing its product information. Buyers could no longer search Taobao products using Baidu, but instead had to rely on Taobao’s embedded search engine. It heralded Taobao’s second attempt at launching keyword bidding in 2009. This time it succeeded.42 Over the years, Taobao had developed many ways to monetize its huge Internet audience; most of these helped stores to launch marketing campaigns (see Exhibit 3). TAOBAO MALL (TMALL) In 2008, Taobao officially launched “Taobao Shangcheng (Taobao Mall),” the B2C platform embedded in Taobao.com. Taobao Mall raised the bar for sellers. It imposed screening and set bars. It also started to collect annual fees, including advance deposit fees, technical service fees, and transaction commissions (ranging from 0.5 to 5.0 per cent). With the vast buyer base and the same initiative paving the way two years earlier, brand producers who had previously ignored online channels started to embrace them. Traditional outlets were feeling the threat from successful online distributors. The customer base had grown to be more mature and layered. Some began to expect not only low prices but also an exclusive listing of high-quality goods and genuine branded goods that freed them from worries of being cheated. In November 2010, Alibaba created a new domain for Taobao Mall, separating the brand from Taobao.com to give the new brand more prominence. Daniel Zhang, Taobao.com’s chief financial officer at the time, explained that this move was to differentiate the new brand and “give people a very clear idea that this is the first choice to find high-quality products.”43 With Taobao Mall positioned as a premium platform, Taobao C2C sellers (referred to collectively as Taobao Marketplace) were repositioned as providers of “long-tail” goods, where buyers could find personalized, tailor-made, or innovative products in very small batches. It was dubbed “Omnipotent Taobao.” GREATER TAOBAO STRATEGY To grab more Internet traffic and sustain its growth, in October 2010, Alibaba joined Microsoft to launch a new product search engine, Etao.com, which listed images and product prices from a number of dominant e-commerce websites, to challenge Baidu’s dominance of China’s search market.44 In June 2011, Alibaba announced a major restructuring of its flagship unit Taobao into three separate companies—Tmall, Taobao Marketplace, and Etao. The Alibaba Group said the restructuring would enable individual subunits to better focus on separate market segments45 and be more flexible in servicing their



9B16M217 distinct customer bases.46 Four months later, Taobao spun off another unit, Juhuasuan, marketed as China’s number one group-buying marketing brand, based on Taobao’s huge user base. Juhuasuan was launched in March 2010, and by December 2011, it accounted for 52.8 per cent of China’s group-buying industry.47 Alibaba’s business had reached various milestones, and its structure had by this time undergone major changes (see Exhibit 4 and Exhibit 5). Alibaba’s C2C and B2C business outperformed its B2B business (see Exhibit 6). Therefore, Taobao and related units became the company’s much more valued core business. Alibaba announced a “greater Taobao strategy” in 2008, which meant that Taobao’s strategic direction was to turn into a comprehensive infrastructure supplier for the entire e-commerce ecosystem, offering a multitude of services to SME sellers. On many occasions, Ma reinforced the metaphor that these fundamental seller services were the “water, electricity, and gas” that people needed in their daily life.48 AN OPEN ECOSYSTEM AND ITS INTERNAL CONFLICTS Taobao management realized that key to the “greater taobao strategy” was building an open platform, which led to the launch in December 2009 of the “Taobao Partner Plan.” All kinds of peripheral third-party affiliates—covering information technology, distribution channels, customer services, marketing services, warehousing, and logistics—were brought together to meet sellers’ customized needs.49 In August 2010, Zeng Ming, Alibaba’s chief strategic officer at the time, commented,

We have reached a deeper understanding of how to operate an open ecosystem. It definitely should not be a closed and self-sufficient central planning system. It is too arrogant for Taobao to just shut the door and do something we imagine is right. Opening up means assembling all kinds of efforts to build an ecosystem around e-commerce. The role of our partners is indispensable.

The Taobao Partner Plan included more advanced accreditation, evaluation and training systems, and various support programs.50 Within this program, sellers could either utilize Taobao’s official services, such as keyword bidding, business analytics tools, and the storefront builder, or choose third-party services to maximize product photo effects, find models, manage orders and storage, find courier services, or outsource the customer service component or even the entire operation.51

With a greater variety of business “species” thriving in the Taobao community, some conflicts started to surface. Trust issues between sellers and buyers became evident, and debate arose over equal opportunity between paying and nonpaying sellers (Tmall and Taobao sellers) and even between different paying sellers. Any policy adjustment or even minor style change to Taobao’s main page could cause great disruption in the ecosystem.52



9B16M217 Tmall and Taobao Tmall shared Taobao’s Internet traffic and buyer base, so the search engine produced a list of products and prices next to a store name and platform label (whether Tmall or not), and it would move to the store upon the user’s click. Taobao’s search engine would produce a product list with both Taobao and Tmall products, significantly increasing the chance that the user would click on a Tmall product. Tmall sellers sometimes charged more for the same product, but they normally offered better services, and the chances that buyers received fake or imitation products were very low. Taobao sellers disliked this arrangement because they thought Tmall was taking advantage of their traffic. The “China Gold Suppliers” Scandal In February 2011, both the chief executive officer and the chief operating officer of Alibaba.com resigned, taking responsibility for a “systematic breakdown in the company’s culture of integrity.” The company found that more than 2,000 of its China Gold Suppliers had engaged in fraud against buyers and that 100 field sales representatives had helped fraudsters evade the company’s verification measures. “The investigations were part of Alibaba Group’s broader effort to gain credibility among customers as a reliable source of goods as it works to maintain its lead in China’s booming e-commerce market and looks to expand overseas,” stated the Wall Street Journal.53 Big versus Small on Tmall In October 2011, four months after Tmall was separated from Taobao, it announced a large increase in technical service fees and advance deposits, which was greeted with open criticism from small sellers on Tmall. Many sellers on Tmall were bigger than most mom-and-pop operations on Taobao but not profitable enough to afford the inflated fees. They were faced with a dilemma—either pay higher fees or be forced to leave Tmall for the Taobao marketplace, where sellers were often stereotyped as offering fake goods or bad after-sales service. Alibaba’s original intention behind the fee increase was to select and retain better-qualified large merchants to improve the overall brand image of Tmall. However, the small sellers just assumed that Tmall was forcing them to leave, so thousands of them directed their resentment toward the big sellers. They used a loophole in the system to paralyze big sellers by placing large orders to “buy out” big sellers without actual payment. The incident shocked online shoppers all over the country and was nicknamed the “October Siege.” As a result, Tmall agreed to invest US$225 million to help small sellers grow, on the condition that they did not sell counterfeit products. Eventually, the new fee standard was imposed.54 CONTINUED RESTRUCTURING Incidents like the “October Siege” and various other grudges voiced by different stakeholders in the marketplace caused the company to reflect on its role, mission, and form of existence. In June 2012, to promote the “one company” concept, Alibaba privatized Alibaba.com, which had been listed on the Hong Kong Stock Exchange since November 2007. Alibaba.com consisted mainly of the organization’s B2B businesses. Alibaba claimed that it had plans to restructure and make all of its businesses public.55

To mirror the equal status of various “species” in the e-commerce ecosystem, Ma decided that the organization should mirror the decentralized state of the market. In July 2012, Alibaba grouped all



9B16M217 businesses into seven clusters on equal footing—including Taobao, Etao, Tmall, Juhuasuan,56Alibaba.com (the international B2B company), 1688.com (the domestic B2B company), and Ali Cloud—to form CBBS, a consumer, distributor, manufacturer, e-commerce service provider value chain. Alipay and the newly founded small loan unit remained as independent subsidiaries of Alibaba to reinforce the “one company” concept.57 At the end of 2012, Alibaba laid out a strategy of building a “market-oriented, platform-based, diversified, and data-supported ecosystem.” Alibaba’s senior manager explained, “We are not God. We should not be allocating resources.”58

In January 2013, Alibaba restructured its seven business clusters into 25 business units. “This could be the most difficult organizational and cultural change in 13 years!” commented Ma in the first line of one of his internal emails. 59 Industry critics commented that it could significantly add difficulties to internal coordination. However, senior managers of the company had a completely different mindset: they wanted to build a decentralized organization, completely different from the traditional hierarchy. As one senior manager put it, “In the past, lots of business units complained about the Group’s slow reactions to their exclusive needs due to the fact that the Group needed to prioritize common interests. Small organizations were more flexible and responded to market trends much faster.” Taobao was defined as an incubator for all other businesses and did not appear in the new structure.60 Ma wrote another email to employees to explain the goal of Alibaba’s continuous structural change—making bigger organizations smaller to create a business ecological system that could support thousands of small operations.61 Alibaba believed that the various communities of a successful external ecosystem must be properly represented in a simulated internal ecosystem, which required that the company disrupt the traditional pyramid structure and every management policy that it applied. The new ecological system, as explained by Ma, should consist of five basic elements: a well-recorded credit system, a sufficient financing system, a socialized logistics infrastructure, big data, and a shared and synergized resource platform for SMEs.62 The biggest challenge was that synergy among the seven existing business units was already difficult to realize, and the new total of 25 companies threatened to increase these difficulties exponentially. As one manager put it, “Sometimes, when we need to find resources, we need to ‘sell and return gratitude.’ The basis of synergy is no longer based on official command, but personal reciprocation activities.” The ecosystem that Alibaba had created (see Exhibit 8) was not consistent with the ideal business flow (see Exhibit 7). BUILDING INFRASTRUCTURES Every year since 2009, November 11 was “singles day”—an event created by Taobao and featuring once-a-year discounts, which triggered nationwide shopping manias. However, the massive campaign had also been straining China’s logistics systems. Domestic express delivery companies had to “be fully prepared” for an explosive amount of parcels.63 Each year, singles-day transaction volumes broke the previous year’s record. Logistics facilities across the country were overwhelmed. Boosting transaction volumes was no longer Alibaba’s main task. The organization had to think beyond helping sellers and buyers find each other and turn its focus to building China’s logistics, financial, and data infrastructures. In January 2011, Alibaba announced that it would spend US$1.51 billion on logistics and raise another US$3.04 billion from partners to integrate warehouse networks across China, mainly to provide e-commerce to consumers across China.64 In 2010 and 2011, Alibaba started two microfinance subsidiaries



9B16M217 that provided microloans to SMEs operating on Taobao.com and Alibaba.com. The loan application process operated entirely online.65 It developed a credit assessment model and used behaviours and data generated by the sellers’ daily transactions to perform credit assessments and risk management.66 In July 2011, Alibaba’s spinoff company Aliyun launched a cloud-based smartphone operating system called Aliyun OS, aiming to help sellers manage their storefronts on smartphones. Alibaba decided that the two things that could possibly hinder mobile commerce were safety and payment mechanisms. Having already resolved payment issues through Alipay, Alibaba created Aliyun with the strategic position to enhance the safety of online transactions. In December 2013, Aliyun planned to set up data centres outside China to provide public cloud services to local enterprises and Chinese companies’ overseas operations.67 Aliyun had already become China’s largest cloud-computing platform, providing service to hundreds of thousands of Chinese websites and e-commerce vendors, banks, game developers, and others. Three-quarters of the 188 million orders generated from the 2013 singles-day online sales were processed by Aliyun.68 BUYING INTO THE MOBILE SPACE In January 2009, the Chinese government granted 3G licenses to telecommunications operators and began to invest aggressively to build necessary infrastructure, which initiated the mobile Internet age in China. With mobile Internet, people could use small fractions of time to socialize (chat, share pictures or locations, or play games with friends). Countless functional or entertaining apps, especially those that were enjoyable, were taking people’s attention away from online shopping. Alibaba suddenly realized that it was not only competing within the e-commerce industry but also with every Internet traffic distraction. For example, Tencent Holdings Limited (Tencent) adapted its popular computer software-based instant-messaging software QQ to create WeChat, a widely adopted mobile-based chatting app. Baidu invested in 91.com to become China’s largest app distributor. The strong momentum of mobile e-commerce (see Exhibit 9) prompted Alibaba to rethink its mobile strategy, which had been lagging behind. In 2014, Alibaba initiated a series of investments, not only in e-commerce-related areas, but also in areas such as mass entertainment, consumer consumption of merchandise and services, social networking, location-based and financial services, and hotels. The numerous investments were mocked as being “money for time.” In March 2013, Ma stated that Alibaba’s future competitive strategy in the mobile space was “M&As [mergers and acquisitions] and hiring more staff.”69 In 2012, according to an industry analyst, Alibaba did not yet have an established and coherent strategy in the mobile arena.70 According to Forbes’s China Mobile Internet Top 30 List, released in April 2015, Alibaba ranked third in terms of mobile-based annual revenue, behind Tencent and Baidu. Together, the “big three” Internet companies reaped nearly half of the overall industry revenue.71 Alibaba’s gross merchandise value and mobile percentage value both soared after the organization made significant investments in the mobile Internet space (see Exhibit 10). CHALLENGES IN THE FUTURE Online transactions constituted the majority of Alibaba’s revenue and profit, thanks to heavy investment in cloud-computing facilities and numerous investments in smartphone-based apps. However, nontraditional forms of business, such as cloud computing and Internet infrastructure, microloans, online marketing, and smartphone-based apps, had already added many alternative revenue sources to Alibaba’s annual report.



9B16M217 As a percentage of overall revenue, alternative revenue increased from 3.1 per cent in 2012 to 8.9 per cent in 2015 (see Exhibit 6). However, the implications of app investments were limited to financial results. Synergy with e-commerce created by these investments was not as obvious as that created by infrastructure investments, such as offering microloans to platform-based sellers, Cainiao logistics, and cloud-based storefront management. Organization-wise, Ma had been the “glue that held the company together.” He was seen as “a culture, a nucleus,” and a “champion for SMEs.”72 But as Alibaba grew substantially, personal influence was simply not substantial enough. Ma needed to choose between formal command and the market to serve as a new organizational mechanism. He chose the market as his rationale for further splitting a highly centralized organization into 25 business divisions. But that choice had two sides: The separation provided more autonomy for the companies, including more vitality and room for making creative innovations. However, it raised the question of whether the transaction mechanism among different divisions would undermine the “one-company concept” and minimize the opportunity for realizing a uniform vision.



9B16M217

EXHIBIT 1: GROWTH OF CHINA’S E-COMMERCE MARKET (2002–2013) a. E-commerce Business-to-Business (B2B) Small and Medium-Sized Enterprises (SME)

Compared to Overall (online and offline) B2B Trading (in ¥ Billion)

Note: The 2007 penetration rate was estimated by the case authors based on the years 2006 and 2008. The rate refers to e-commerce B2B trading as a percentage of overall B2B volume. Source: iResearch Reports, China SME B2B E-commerce Sector Research 2009–2010, April 16, 2010; iResearch Reports, China SME B2B E-commerce Sector Research 2011–2012, April 12, 2012; iResearch Reports, China SME B2B E-commerce Sector Research 2014, April 11, 2014.

80 140

320

650

1,280

2,120

1,570

1,860

2,506

3,400

4,308

5,200

0.80%1.2%

2.1%

3.6%

6.2%6.9%

7.6%

9.1%9.6%

11.0%

12.4%

13.7%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

0

1,000

2,000

3,000

4,000

5,000

6,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

E‐commerce B2B SME Trading Volume E‐commerce B2B SME Penetration Rate



9B16M217

EXHIBIT 1 (CONTINUED) b. E-commerce B2B SMEs Compared to E-commerce Overall (in ¥ Billion), 2008–2013

Note: The rest of e-commerce trading includes location-based services, online travelling reservations, consumer online shopping, and B2B bulk e-commerce transactions. Source: Created by the authors with information from “iResearch: China E-commerce Market Remained Fast and Steady Growth in 2014,” iReasearch, February 1, 2015, accessed October 12, 2016, www.iresearch.com.cn/view/245910.html; iResearch; “iResearch: Chinese E-commerce in 2010 Annual Data Release,” January 17, 2011, accessed January 13, 2016, www.iresearch.com.cn/view/131667.html.

2,900 3,600

4,800

6,400

8,100

10,100

1,570 1,860 2,506

3,400 4,308

5,200

0

2,000

4,000

6,000

8,000

10,000

12,000

2008 2009 2010 2011 2012 2013

E‐commerce Overall Volume E‐commerce B2B SME Trading Volume



9B16M217

EXHIBIT 2: CHINA’S INTERNET POPULATION (IN MILLIONS) (2000–2015)

Source: Created by the authors with information from China Internet Network Information Center, No.1–No.36 Yearly Reports, accessed January 13, 2016, www.cnnic.net.cn/hlwfzyj/hlwxzbg/hlwtjbg/.

EXHIBIT 3: TAOBAO FEES

Pay-for-Performance Marketing Services: Sellers would bid for keywords appearing in search results on a cost-per-click basis at prices established by the online auction system. This service was also provided by third-party marketing affiliates.

Display Marketing: Sellers would bid for display positions at fixed prices or prices established by a real-time bidding system on a cost-per-thousand impression basis. This service was also provided by third-party marketing affiliates.

Taobaoke Program: Sellers could choose to join Taobao Alliances to pay Taobao commissions based on a percentage of gross merchandise value for transactions settled through Alipay from users sourced from third-party marketing affiliates, called “Taobaoke.”

Storefront Fees: Sellers would pay Taobao for the use of Wangpu, a storefront building software that assists sellers in upgrading, decorating, and managing their storefronts.73

Source: Alibaba Group Holding Limited, Prospectus Form F-1, 47–48, May 6, 2014, accessed October 12, 2016, https://www.sec.gov/Archives/edgar/data/1577552/000119312514184994/d709111df1.htm.

22.5 33.7 59.1 79.5

94.0 111.0

137.0

210.0

298.0

384.0

457.3

513.1

564.0

617.6 648.8

667.7

0

100

200

300

400

500

600

700

China's Internet Population (in millions)



9B16M217

EXHIBIT 4: ALIBABA’S BUSINESS GROWTH MILESTONES (1999–2014) Year Business Launched or

Acquired Description

1999 Alibaba.com An English-language global wholesale marketplace Alibaba.com.cn (later known

as 1688.com) A Chinese marketplace for domestic wholesale trade

2002 TrustPass Membership on 1688.com that allowed storefronts to build trust

2003 Taobao.com Online shopping website 2004 Aliwangwang A personal computer-based instant-messaging tool

between buyers and sellers launched on Taobao.com Alipay A third-party online payment platform originally launched by

Alibaba Group and later sold to a related company in 2009 2007 Listing of Alibaba on the

Hong Kong Stock Exchange An initial public offering that was later delisted in 2012

Alimama An online marketing technology platform 2008 Taobao Mall (later known as

Tmall.com) A dedicated platform for third-party brands and retailers (launched on Taobao marketplace, spun off as an independent platform in 2011)

2009 Alibaba Cloud Computing (later known as Aliyun)

Cloud-computing service

Acquisition of HiChina China’s leading Internet infrastructure service provider 2010 Juhuasuan An online group-buying marketplace (launched on Taobao

marketplace, spun off as an independent platform in 2011) AliExpress Enabler of exporters in China to reach and directly transact

with consumers around the world Acquisition of Vendio and

Auctiva Providers of e-commerce solutions to U.S. small businesses

Mobile Taobao Application An application for smartphones Acquisition of One-Touch A provider of one-stop services for exporters in China 2013 Alibaba Smart TV OS An operating system for Alibaba Smart TV Financial Services A small and micro financial services company (later known

as Ant Financial Services Group) Laiwang Alibaba’s mobile social networking app 2014 Tmall Global An extension of Tmall.com to enable international brands to

offer products directly to consumers in China Acquisition of UCWeb A mobile browser Ali Telecom Mobile virtual network operators’ service Acquisition of ChinaVision

(later known as Alibaba Pictures Group)

Movie and television program production company

Joint venture with Intime Developer of an online-to-offline business in China Investment in AutoNavi A digital mapping company Listing of Alibaba on the New

York Stock Exchange An initial public offering that was listed in 2014

Ant Financial Services Group A related company of Alibaba Group Taobao Travel (later known

as Alitrip) A related company of Alibaba Group

Source: “History and Milestones,” Alibaba’s official website, accessed December 28, 2015, www.alibabagroup.com/en/about/history.



9B16M217

EXHIBIT 5: ALIBABA’S BUSINESS STRUCTURE

China International

Retail Taobao Marketplace AliExpress

Online shopping destination Global consumer marketplace Tmall Platform

Brands and retail platform Juhuasuan

Group-buying marketplace

Wholesale 1688.com Alibaba.com

Wholesale marketplace Global wholesale marketplace Source: Alibaba Group, SEC filing Form 20-F, June 25, 2015, accessed January 8, 2016, www.sec.gov/Archives/edgar /data/1577552/000104746915005768/a2225010z20-f.htm.

EXHIBIT 6: FINANCIAL DATA BY BUSINESS CLUSTERS

2012 2013 2014 2015

China Commerce

Business Type ¥

% of Revenue

¥ % of

Revenue ¥

% of Revenue

¥ % of

Revenue

Retail 13,422 67.0 26,970 78.1 42,832 81.6 59,732 78.4

Wholesale 2,215 11.1 2,197 6.4 2,300 4.4 3,205 4.2

International Commerce

Retail 223 1.1 392 1.1 938 1.8 1,768 2.3

Wholesale 3,542 17.7 3,768 10.9 3,913 7.5 4,718 6.2

Cloud-Computing and Internet

Infra- structure

515 2.6 650 1.9 773 1.5 1,271 1.7

Others 108 0.5 540 1.6 1,748 3.3 5,510 7.2

Total 20,025 100.0 34,517 100.0 52,504 100.0 76,204 100.0

Note: Revenue from China commerce retail is primarily generated from the company’s China and retail marketplaces; revenue from China commerce wholesale is primarily generated from 1688.com and includes fees from memberships and value-added services and online marketing services revenue; revenue from international commerce retail is primarily generated from AliExpress; revenue from international commerce wholesale is primarily generated from Alibaba.com and includes fees from memberships and value-added services and online marketing services revenue; revenue from cloud-computing and Internet infrastructure is primarily generated from the provision of services, such as data storage, elastic computing, database and large scale computing services, as well as web hosting and domain name registration; other revenue mainly represents interest income generated from microloans, revenue from online marketing and other services provided by UCWeb and AutoNavi, and SME annual fee received from Ant Financial Services. Source: Alibaba Group, SEC Filing Form 20-F, June 25 2015, accessed December 28, 2015, www.sec.gov/Archives/edgar /data/1577552/000104746915005768/a2225010z20-f.htm.



9B16M217

EXHIBIT 7: THE NETWORK EFFECT ON AND ACROSS ALIBABA GROUP’S MARKETPLACES

Buyers Retail Sellers Wholesale Sellers

Chinese consumers buy on Taobao Marketplace, Tmall, and Juhuasuan.

While browsing or searching on Taobao Marketplace, consumers see product listings from both Taobao Marketplace and Tmall.

Global consumers buy on AliExpress.

Global wholesalers buy on Alibaba.com.

Small sellers in China sell on Taobao Marketplace and AliExpress.

Chinese brands sell on Taobao Marketplace, Tmall, Juhuasuan, and AliExpress; global brands sell on Tmall Global.

Sellers source products on 1688.com.

Chinese wholesalers and manufacturers supply retail merchants in China on 1688.com and global wholesale buyers on Alibaba.com.

Chinese wholesalers and manufacturers supply directly to global consumers on AliExpress.

Global wholesalers and manufacturers supply global wholesale buyers on Alibaba.com.

Source: Alibaba Group Holding Limited, Prospectus Form F-1, May 6, 2014, accessed October 12, 2016, www.sec.gov/Archives/edgar/data/1577552/000119312514184994/d709111df1.htm.



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9B16M217

EXHIBIT 9: ALIBABA’S MOBILE GROSS MERCHANDISE VALUE PENETRATION AND MONETIZATION (IN ¥ BILLION)

2013 (Q2)

2013(Q3)

2013(Q4)

2014(Q1)

2014(Q2)

2014(Q3)

2014 (Q4)

2015(Q1)

GMV 345 374 529 430 501 556 787 600

Mobile GMV 41 56 106 116 165 200 331 306 Mobile GMV as a Percentage of GMV

12% 15% 20% 27% 33% 36% 42% 51%

Mobile Revenue 0.24 0.34 1.18 1.14 2.46 3.74 6.48 5.29 Mobile Revenue as a Percentage of Mobile GMV

0.58% 0.61% 1.12% 0.98% 1.49% 1.87% 1.96% 1.73%

Note: GMV = gross merchandise value; Q1 = first quarter; Q2 = second quarter; Q3 = third quarter; Q4 = fourth quarter Source: Created by the authors with information from Alibaba Group, SEC filing Form 20-F, June 25, 2015, accessed January 8, 2016, www.sec.gov/Archives/edgar/data/1577552/000104746915005768/a2225010z20-f.htm.



9B16M217

EXHIBIT 10: ALIBABA GROUP’S MOST SIGNIFICANT INVESTMENTS IN THE MOBILE INTERNET SPACE

Mobile Internet UCWeb is a leading developer of mobile web browsers in China. Alibaba held approximately 66 per

cent of the economic interest of UCWeb in the form of convertible preferred shares acquired over several years.

Weibo, known as “China’s Twitter,” is a leading social media platform in China, listed on the NASDAQ Stock Exchange. It is controlled and operated by Sina Corporation. In April 2013, Alibaba built a strategic alliance with Weibo to jointly explore social commerce and develop innovative marketing solutions. By April 2014, in connection with Weibo’s initial public offering, Alibaba increased its equity in Weibo to approximately 30 per cent.

TangoMe, a leader in mobile messaging services based in the United States, offers free voice, video, and text messaging to consumers globally. Alibaba’s equity interest in TangoMe was approximately 20 per cent.

Online to Offline AutoNavi, listed on the NASDAQ Stock Exchange, is a leading provider of digital map content,

navigation, and local-based solutions in China. In July 2014, AutoNavi was privatized and became Alibaba’s wholly-owned subsidiary. As an industry analyst expressed, in the mobile Internet age, digital mapping constituted the link between mobile phones and location-based services.74 By February 2014, when Alibaba initially acquired 28 per cent of AutoNavi’s equity interest, Baidu, through its digital map services, had acquired more than 200 million users.

Intime, listed on the Hong Kong Stock Exchange, is one of China’s leading department store operators. In March 2014, Alibaba acquired 9.9 per cent equity interest in Intime and issued sufficient convertible bonds to increase its ownership to approximately 26 per cent. In addition, a joint venture was established, in which Alibaba held an 80 per cent interest, to develop an online-to-offline business in China involving shopping malls, department stores, and supermarkets.

Digital Media Alibaba had long been trying to diversify into the entertainment space. In November 6, 2015, Alibaba

agreed to buy Youku Tudou for a total of $4.8 billion. Youku Tudou is China’s leading Internet television company and derives revenues from video advertising. Alibaba management believes that the Youku Tudou deal will be critical for its digital media strategy, which will also complement the e-commerce business. Daniel Zhang, Alibaba’s chief executive officer, stated that “digital products, especially video, are just as important as physical goods in e-commerce, and Youku Tudou’s high-quality video content will be a core component of Alibaba’s digital product offering in the future.”75

In March 2014, Alibaba acquired 60 per cent equity interest in ChinaVision, a producer of movies and television programs listed on the Hong Kong Stock Exchange. In August, ChinaVision was renamed Alibaba Pictures Group, Limited. Before the acquisition, the company had been producing movies and television dramas, as well as tapping into the online and mobile business.76

Through complex arrangements, Alibaba offered loan financing to Wasu Media Holding Co. Ltd. (Wasu), listed on the Shenzhen Stock Exchange, and engaged in digital media broadcasting and distribution in China. This deal allowed Alibaba and Wasu to enter into strategic arrangements to enhance Alibaba’s digital entertainment strategy.

Source: Alibaba Group, SEC filing Form 20-F, June 25, 2015, accessed January 8, 2016, www.sec.gov/Archives/edgar /data/1577552/000104746915005768/a2225010z20-f.htm.



9B16M217 ENDNOTES

1 “Jack Ma’s Speech at IPO Road Shows,” HJ English, September 8, 2014, accessed September 30, 2015, www.hjenglish.com/fanyi/p666367/. 2 Fong Mei, “Career Journal: Chinese Charm School; Seminars Help Businessmen Conform to Western Manners; Tip: Always Answer E-mail,” Wall Street Journal (Eastern Edition), January 13, 2004, B1. 3 Angela Leary, “Trade Treasure,” Asian Business 36, no. 3 (March 2000): 14–16, accessed September 30, 2015. 4 Ibid. 5 Alan Stewart, “E-marketplace Widens China's Trade Doors,” Financial Times, September 6, 2000, accessed September 30, 2015. 6 Justin Doebele, “Fast as a Rabbit, Patient as a Turtle,” Forbes, July 17, 2000, accessed September 3, 2015, www.forbes.com/forbes/2000/0717/6602074a.html. 7 Ibid. 8 Jing Linbo, Alibaba’s Empire of E-businessman, 1st Edition (Beijing: Economics and Management Publishing House, 2009), 72. 9 Doebele, op. cit. 10 Kimberly Song, “The World Is My Oyster,” Far Eastern Economic Review 166, no. 9 (2003): 44–45. 11 Doebele, op. cit. 12 Leary, op. cit. 13 Eric Harwit, “Chinese Millionaires,” The China Business Review 28, no.1 (2001): 20–21. 14 “Forbes’ Exclusive Interview with Jack Ma,” tech.163.com, December 19, 2014, accessed September 30, 2015, http://tech.163.com/14/1219/16/ADREB8G300094ODU.html. 15 Doebele, op. cit. 16 F. Warren McFarlan, David Lane, and Carin-Isabel Knoop, “Alibaba.com (B),” (London, ON: Ivey Publishing, December 17, 2001), 8. Available from Ivey Publishing, product no. 302073. 17 F. Warren McFarlan, Carin-Isabel Knoop, and David Lane, “Alibaba.com (A),” (London, ON: Ivey Publishing, November 30, 2000), 19. Available from Ivey Publishing, product no. 301047. 18 McFarlan, Lane, and Knoop, op. cit. 19 Ibid. 20 Alibaba Group Holding Limited, “Form F-1,” May 6, 2014, EDGAR Online, accessed September 30, 2015. 21 “In Brief,” China Daily (North American Edition), September 12, 2001, 6. 22 Linbo, op. cit. 23 Myron Levin, “Big Tobacco’s Real Problem with Fakes,” Financial Times, November 24, 2003, 1. 24 “eBay’s Road to Globalization,” China E-commerce Research Center, January 31, 2013, accessed May 21, 2015, http://b2b.toocle.com/detail--6081886.html. 25 Dickie Mure, “Alibaba Chief Expects Earnings to Double,” Financial Times, November 12, 2003, 1. 26 “E-commerce Giant Alibaba Invests in Taobao.com,” China Internet Information Center News, July 10, 2003, accessed December 12, 2016, www.china.org.cn/english/BAT/69509.htm. 27 Ibid. 28 “eBay China and Taobao's Competitions on the China Online Retail Market,” China E-commerce Research Center, June 3, 2014, accessed May 21, 2015, http://b2b.toocle.com/detail--6176051.html. 29 Zhang Xuguagn, “eBay Encounters Challenges in China, Taobao Announcing Overall Triumph Over Eachnet,” Beijing Morning Post, July 18, 2004, accessed May 21, 2015, http://tech.163.com/04/0708/08/0QOM9PIN000915CE.html. 30 “Taobao.com Launches B2C Services,” PR Newswire, May 10, 2006, accessed September 30, 2015, www.prnewswire.com/news-releases/taobaocom-launches-b2c-services-69973867.html. 31 Clive Thompson, “Ebay: Heads East,” Fast Company 107 (July/Aug 2006): 86–89, accessed December 12, 2016, https://www.fastcompany.com/57099/ebay-heads-east. 32 “Alibaba.com Launches Online Payment Solution in China,” PR Newswire, February 2, 2005, 1, accessed December 12, 2016, www.prnewswire.com/news-releases/alibabacom-launches-online-payment-solution-in-china-66214412.html. 33 “Alipa Expands Its Online Payment Solution to Include Visa,” PR Newswire, April 20, 2005, 1, accessed December 12, 2016, www.prnewswire.com/news-releases/alipaytm-expands-its-online-payment-solution-to-include-visar-54352337.html. 34 ¥ = CNY = Chinese yuan; all currency amounts are in ¥ unless otherwise specified; $US1.00 = ¥6.49 on December 31, 2015. 35 Kathy Chen, “Alibaba.com Faces Test for Continuing Growth,” Asian Wall Street Journal, Victoria, Hong Kong, February 18, 2004, A.1. 36 Ibid. 37 Liu Baijia, “Alibaba: No Need to Rush for IPO,” China Daily (North American Edition), January 4, 2005, 10. 38 Sun Libin, “Taobao Users Rejected Zhao Cai Jin Bao, Taobao’s Arbitrary Action Went South,” IT Time Weekly, July 10, 2006, accessed May 21, 2015, http://tech.qq.com/a/20060710/000234.htm. 39 Ibid. 40 Dong Yi, “Taobao Enters B2C, Jack Ma Sweeps the Deck of E-commerce,” Guangdong Yangcheng Evening News Digital Media, May 12, 2006, accessed May 22, 2015, www.ycwb.com/gb/content/2006-05/12/content_1123027.htm. 41 Zhu Zhe, “E-commerce Chalking Up Strong Growth: Survey,” China Daily (North American Edition), February 20, 2006, 1.



9B16M217 42 Chen Di, “Taobao’s Abnormal 9 Years,” China Chain Store, November 2011, accessed May 22, 2015, www.linkshop.com.cn/web/archives/2011/185433.shtml. 43 Loretta Chao, “Alibaba Splits Taobao Mall from Site,” The Wall Street Journal Asia, November 2, 2010. 44 “Taobao Launches Web Search Engine,” China Business News, October 12, 2010, accessed September 30, 2015. 45 Loretta Chao, “Alibaba Breaks Up E-commerce Unit,” Wall Street Journal, June 17, 2011, accessed November 15, 2016, www.wsj.com/articles/SB10001424052702304186404576388643278558636. 46 “Taobao Split into Three,” Beijing Times, June 17, 2011, accessed May 22, 2015, http://tech.163.com/11/0617/05/76NQCPDO000915BF.html. 47 “China: Alibaba Opens Doors to Its Group-buying Platform,” Asia News Monitor (Bangkok), December 31, 2011. 48 “The Greater Taobao Adopted the Open Strategy, Ma Yun Compared Taobao as Water, Electricity and Gas,” Hexun, September 8, 2008, accessed October 10, 2015, http://tech.hexun.com/2008-09-08/108648485.html. 49 Zhong Huili, “Alibaba Creates Taobao Era,” Qianjiang Evening News, January 26, 2010, accessed May 22, 2015, http://qjwb.zjol.com.cn/html/2010-01/26/content_244713.htm?div=-1. 50 “Taobao Partner Plan Upgrades, Four Systems in Place to Create ‘Hundred-Year’ Partnerships,” Nanfang Daily, August 18, 2010, accessed May 22, 2015, http://epaper.southcn.com/nfdaily/html/2010-08/18/content_6871362.htm. 51 “Services to Sellers,” Taobao, accessed May 22, 2015, http://fuwu.taobao.com. 52 “Taobao's Frontpage Layout Change Impacts Tmall and Taobao Stores,” Imaijia, May 20, 2014, accessed October 10, 2015, http://maijia.taobao.com/detail/analyse/20140520/68192.htm. 53 Loretta Chao, Yvonne Lee, “Alibaba Frauds Lead to Shake-Up,” Wall Street Journal (Eastern Edition), February 22, 2011, B1. 54 “The Pains of E-commerce Transformation,” Outlook Weekly, October 22, 2011, accessed May 22, 2015, http://news.xinhuanet.com/politics/2011-10/22/c_122186327.htm. 55 “Alibaba Delisted on HKSE, Aiming Group Listing,” Tencent Finance, June 20, 2012, accessed May 22, 2015, http://biz.zjol.com.cn/05biz/system/2012/06/20/018595321.shtml. 56 A fee-based group-buying listing based on sellers’ base and buyers’ traffic on Taobao and Tmall. 57 “Alibaba Splits Its B2B Company into 7 Units,” Fenghuang Wang Finance, July 23, 2012, accessed May 22, 2015, http://finance.ifeng.com/usstock/huagu/20120723/6803978.shtml. 58 Chen Jiying, “Why Did Alibaba Split Itself?,” China News Weekly, June 20, 2013, accessed May 22, 2015, http://finance.inewsweek.cn/20130620,45796.html. 59 Sun Yu, “Alibaba Splits: 7 Units Turned 25,” Beijing Morning Post, November 11, 2013, accessed May 22, 2015, http://news.ccidnet.com/art/1032/20130111/4638315_1.html. 60 Chen Jiying, “Why Did Alibaba Split Itself?,” China News Weekly 13, June 20, 2013, 71. 61 Li Li, “Alibaba’s 7 Units Split into 25: Jack Ma’s Entangled Wit,” China Business Journal, January 20, 2013, accessed May 22, 2015, http://tech.ifeng.com/internet/detail_2013_01/20/21387351_0.shtml?_from_ralated. 62 Jiying, op. cit. 63 Annie Zhu, “China’s Record Spending on ‘Singles Day’ Puts Pressure on Local Logistics Providers,” Journal of Commerce, November 13, 2013, accessed December 12, 2016, www.joc.com/economy-watch/china-economy-news/china%E2%80%99s-record-spending-%E2%80%98singles%E2%80%99-day%E2%80%99-puts-pressure-local-logistics-providers_20131112.html. 64 Owen Fletcher, “Alibaba Invests in Warehouses,” The Wall Street Journal Asia, January 20, 2011, 18. 65 “Alibaba Establishes Small Loans Lender in Chonqqing,” TMT China Weekly, June 24, 2011. 66 Ibid. 67 Wei He, “Alibaba Spinoff Moves Further into the Cloud,” China Daily (US Edition), December 25, 2013, 15, accessed December 12, 2016, http://usa.chinadaily.com.cn/epaper/2013-12/25/content_17196057.htm. 68 Ibid. 69 Fan Junjie, “Why Did Alibaba Invest in Mobile Internet?,” TMT Post, April 30, 2013, accessed May 27, 2015, www.tmtpost.com/34070.html. 70 “Alibaba Anxious about Mobile Internet, Jack Ma Pushes the Adoption of Laiwang,” Tencent Technology, October 21, 2012, accessed May 27, 2015, http://tech.qq.com/zt2012/tmtdecode/451.htm. 71 “Tencent, Baidu and Ali Topped Mobile Internet,” China Top Brands, May 5, 2015, accessed May 27, 2015, www.chinatopbrands.org/a/shouyeN/pinpaizixun/20150505/39576.html. 72 McFarlan, Lane, and Knoop, “Alibaba.com (B),” op. cit. 73 Alibaba Group Holding Limited, op. cit. 74 Liang Chen, “Why Buy Autonavi?,” Tencent, February 11, 2014, accessed May 29, 2015, http://tech.qq.com/a/20140211/006098.htm. 75 Shirley Pelts, “Why Has Alibaba Acquired Youku Tudou?,” Yahoo! Finance, November 23, 2015, accessed January 20, 2016, http://finance.yahoo.com/news/why-alibaba-acquired-youku-tudou-114343226.html. 76 “Why Buy ChinaVision?” Fenghuang Wang Finance, March 13, 2013, accessed May 29, 2015, http://finance.ifeng.com/a/20140313/11878891_0.shtml.



ALIBABA GROUP: FOSTERING AN E-COMMERCE ......W16858 ALIBABA GROUP: FOSTERING AN E-COMMERCE ECOSYSTEM...

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