All the Western companies you’d have to combine to get something like Alibaba
qz.com
qz.com
Take a moment to think about this: Alibaba is a huge company, growing in an absolutely enormous market, providing a pile of services, and most American technologists know nothing about it. Expand this thinking to countries: there are markets that are only just beginning to enjoy the degree of technological luxury the US and Europe enjoys. Who will serve them? These are people just like us, they have needs and desires much like ours. Who will satisfy them?
If you're an entrepreneur, there are millions if not billions of people who are on the cusp of becoming your target market, and the dominant technological discourse and journalistic coverage gives you no insight into the market they occupy. Not the languages they speak, not the companies who would be your competitors, not the cultural differences that would make selling difficult. Nothing.
I hope this article opens peoples' eyes to the fact that the US-based-or-english-speaking countries are soon going to be a relatively small portion of the world. We need news sources like this to practice the globalization sermon they all preach.
In fact, there's no guarantee this US expansion is going to work either.
I'd also observe that people would often interpret a Silicon Valley company trying to build a solution for some other culture as arrogant, parochial, or both, so there's really no winning here.
I disagree with your characterization of the way US-based 'technologists' view the world. In my experience, almost every single technologist I've come into contact with is much much more well versed in what's going on globally.
Also, I have to take issue with your exaggeration here. You're making a generalization. I know about Alibaba, of course. Most people I know also know about Alibaba. So don't say we "know nothing about it." This article was posted and voted to the top of the list on an English based website where the majority of the visitors are working in Western countries.
Your comment seems to make some assumptions that I don't understand. When you say "Who will serve them? These are people just like us, they have needs and desires much like ours." Who is saying anything different? You seem angry with a group of people but it's generally not technologists that have the viewpoint you're addressing.
As someone who wasn't born in this country and has found nothing but respect and openness from my technical colleagues, I have to say I'm pretty confused as to what you're referring to. It's certainly not the majority of North American/European technologists I've talked to.
And they will be served by people just like us, technologists.
I know plenty of American technologists who are well aware of Chinese internet properties, how could they not, when disproportionately many American technologists are of Asian descent, but many of them have made the decision that it is preferable to run your startup in the relative unfettered chaos of Silicon Valley than to navigate the maze and minefield of considerations of running an internet service in China.
I'm pretty sure Google would love to have another billion Gmail users or Google search users, or to have Google Play store available (for paid apps) in China. Do you think the fact that these services are blocked are because of ignorance?
Otherwise your comment is spot on: American companies don't compete in China not because they don't want to, but because they can't.
Check out other Asian markets (South Korea, Japan, Russia) and you may notice something interesting: many western companies failed to excel there too, even though there are no strict regulations.
eBay was not affected by GFW when they competed with Alibaba's Taobao marketplace a few years ago in China. eBay failed due to their own strategic mistakes.
Facebook has done very well in South Korea and Japan. Russia is similar to China in the "rule of law" category.
2. Illegal activities of these local firms: Does any US-based firm dare to share illegal documents, videos on their platform? This may be a big difference between US-based companies and Chinese's ones. Another aspect is under-table money, US companies are more more and more strictly regulated by law that prohibits them from giving under table money to local governors. There is ton of unethical ways that Chine firms can do to beat you.
3. Localization There is vast, majority people in developing countries who can't speak English;therefore, blocking them from approach US products. It turns to be a great opportunities copy-cat model for Chinese firms.
4. In some countries such as China, citizens more and more pride of their nation. Chinese are great in this aspect since they usually are member of various social guilds that respect and help each other. This tendency is in contrast to US culture that promotes individual. Thus, Chinese tend to use local products than US's one.
5. A firm in centralized governments such as China not only act as a business that seeks for profit but also act as a political tool for government. So, they receive a lot of support from government such as infrastructure, money, ...
For those above reasons, I totally think that Chinese firms are in great advantage to the competition in compare to US's ones. What I put in my consideration is how these Chinese firms can succeed in global, or Western market. If they win, what I cited above maybe wrong.
3. US companies are more capable of not speaking English than Chinese companies are in not speaking Chinese. Spanish is already a big language in the US given our proximity to Mexico and South America. India and much of Africa speaks a western language (English, French, Portuguese) as a defacto unifying language...
4. Tell that to the Taiwanese, HK'ers, and Singaporeans who prefer Facebook and Twitter to Kaixing, Renren, or Weibo. Also, how many Chinese want to drive around in a QQ or Xiali vs. a Toyota or Audi? What about iPhone vs. Xioami? Chinese are much more open and pragmatic than say...the Japanese or Koreans.
5. The loans that the SOE's are getting today from the banks are really going to hurt us this year or the next. The whole solvency of the nation is at risk.
That means, effectively, that every relationship with a Chinese arm of one's company is a partnership with the Chinese government, if push comes to shove, rather than a subsidiary relationship.
This is the clearest explanation I've found of the enormous difference between the somewhat alien structure of Chinese ventures and the familiar Western model:
"By “the Party,” I’m of course referring to the Communist Party of China (CPC, also known as the Chinese Communist Party or CCP), the political organization founded in 1921 which, under Mao Zedong, fought a revolutionary war that ultimately brought it to power in 1949. It is a Leninist party, which means that unlike most Western political parties, it is a tightly-organized, hierarchical organization similar to a military unit or religious order. In the United States, there is no such thing as being a “member” of the Republican or Democratic Party — the closest thing would be to register to vote in either party’s primary. Republican or Democratic “committees,” on either the local or national level, are really just funding and support co-ops for helping candidates; they are in no position to issue orders to voters, activists, candidates, or elected officials. Joining the Communist Party of China, in contrast, is a formal and highly selective process that takes several years to complete. Once initiated, a member must obey Party directives and take on whatever task (including official positions) the Party assigns. If they misbehave, or even break a law, they will be detained, investigated, and punished by the Party, not the police — only after being expelled from the Party will they be turned over to the country’s regular legal system for prosecution.
The best way to think of the Party is to imagine the human resources department of a huge multinational corporation — except that in this case, this HR department is so powerful it gets to appoint everyone from the Board and the CEO to the lowliest janitor, so it effectively calls the shots. In China, every government ministry, every military unit, every state-owned company – and in many cases private companies as well – has a Party committee that decides all major personnel issues and, in doing so, essentially acts as the power behind the throne. Now sometimes the boss of the more visible entity is also head of the Party unit, which means the formal boss actually does call the shots. But if the two roles are split — as they are, for instance, in every province — you can bet that the Party chief is the one holding most of the real power.
The Party’s 78 million members (a little over 5% of China’s total population) are essentially a pool of pre-screened candidates who can be slotted into whatever official role the Party leadership decides — with the understanding, of course, that their primary loyalty remains to the Party that put them there. Directives from Party superiors — on who to assign or promote, or what policies to pursue– are ultimately far more important than instructions received from more formal channels like ministries, courts, or corporate boards."
http://chovanec.wordpress.com/2011/05/08/primer-on-chinas-le...
The biggest internet companies like Alibaba, Tencent, Baidu are mostly foreign owned and initially funded by foreign venture capital. The real difference is that they are operated by Chinese nationals who don't have a Western headquarter to report to. McDonalds, KFC, Starbucks etc., on the other hand, succeeded probably because they didn't have to face a fast evolving market and could adapt their business models to China at their own pace.
Google China was led by a Chinese American academic from Taiwan (though well liked by the Chinese) and staffed with managers recruited from Google's Chinese American employees, who had cushy US jobs to go back to and did not want to lose career opportunities in the US. The managers of their local competitors didn't have such luxuries.
Tactically it may be true that stricter ethics rules make things harder. But that didn't stop businesses like Starbucks from succeeding eventually, because their business model can be transplanted.
Alibaba didn't have success handed to it. Its initial B2B model was ho hum. It had to or did recreate itself, multiple times. Its Taobao was initially a loss leader with free listings. TMall was also not given a high chance of success. It had ferocious competitors. It created its own business models and executed well to ensure their success.
Starbucks had plenty of problems with their Chinese partners; they worked hard to get to the point where they were actually allowed to run stores by themselves without a parasitic local partners, and I think this is only true in second tier cities right now.
Many successful fast food companies use a franchise model. Starbucks is rather unique that it doesn't. I don't know enough to say whether their local partners are parasitic.
Neither were they divisions of some foreign conglomerates. I think that is more relevant than the fact the founders were foreign born. Certainly you would think of Jerry Yang or Sergey Brin or Pierre Omidyar as American as any other. They are not foreigners just because they are foreign born.
America in contrast is a country of naturalized immigrants as well as natural borns; as a result, many understand what it means to be outside China because of their dual cultural backgrounds...the same not being true in China. So who has a better chance in operating outside in developing countries? Its funny how China really tries to get, but can't really get, Africa, for example.
Hmm I am curious if you actually have nonzero interest in naturalizing into Chinese citizenship. I think it is not impossible to do so and at least in the past the locals would be rather proud if you do have such an interest. Not that I think citizenship should be prerequisite for business success but I do believe it reasonable that you need to demonstrate that your loyalty lies with the locals before you are considered one of them. Naturalization into US citizenship does require a loyalty oath in case you don't know.
(Seems like we are running into the limit of the nesting levels so I replied to GP instead)
> Hmm I am curious if you actually have nonzero interest in naturalizing into Chinese citizenship.
The chances of me even getting a green card are very low. It is almost unheard of for a foreigner to naturalize, and when it happens, almost the president has to intervene.
Also, China doesn't support dual citizenship like the states does. So becoming a Chinese citizen means renouncing your US citizenship.
BTW, plenty of Chinese business leaders (in China) are US citizens or US greencard holders. Many have exit plans for if things go badly in China (good guangxi doesn't always last forever), and they have their kids already in the states or Europe warming up houses for that possibility.
That is incorrect. Becoming a US citizen means renouncing your native citizenship as well. The only exception is if you were born into dual citizenships in which case you don't need naturalization at all.
No one has naturalized into Chinese citizenship, but china has consistently refused to acknowledge dual citizenship for anyone younger than 18 or not born into it. It has nothing to do with oaths.
Plenty of people have been naturalized into Chinese citizenship, at least in Hongkong. Here is the requirement http://www.gov.hk/en/residents/immigration/chinese/naturalis... and I do see that it requires abandonment of foreign citizenship although it does not say what level of documentation is needed, if any. If it were an oath then it would be symmetric with US. With China ruled by the CCP it is also understandable that the demand for naturalization may not be that high in the first place.
> Based on the U.S. Department of State regulation on dual citizenship (7 FAM 1162), the Supreme Court of the United States has stated that dual citizenship is a "status long recognized in the law" and that "a person may have and exercise rights of nationality in two countries and be subject to the responsibilities of both. The mere fact he asserts the rights of one citizenship does not without more mean that he renounces the other", (Kawakita v. U.S., 343 U.S. 717) (1952). In Schneider v. Rusk 377 U.S. 163 (1964), the U.S. Supreme Court ruled that a naturalized U.S. citizen has the right to return to his native country and to resume his former citizenship, and also to remain a U.S. citizen even if he never returns to the United States.
US citizens naturalizing out, on the other hand, can lose their citizenship:
> The U.S. citizen may lose his dual citizenship by obtaining naturalization in a foreign state, taking an oath or making an affirmation or other formal declaration of allegiance to a foreign state or political subdivision thereof, or serving in the armed forces of a foreign state if this action was performed with the intention of renouncing U.S. citizenship.[27]
But in practice they don't:
> Current U.S. State Department rules presume that an individual does not intend to give up citizenship when performing one of the above potentially expatriating acts. If asked, the individual can always answer that they did not intend to give it up; this is sufficient to retain their citizenship.[38] Hence, the U.S. effectively allows citizens to acquire new citizenships while remaining a U.S. citizen, becoming a dual citizen.
http://en.wikipedia.org/wiki/United_States_nationality_law#D...
It is true that you have to renounce your US citizenship to a Consul for the US to consider you no longer a subject of its (taxation power :-).
If a Chinese American travels to China using Chinese passport instead of a visa issued by the Chinese government he or she would not be able to obtain consular support if he/she runs into legal troubles. If he/she wants a visa from the Chinese government and consular support from the US embassy then he/she can't pretend to be a Chinese citizen any longer.
Yahoo wasn't pleased and sole about 15% of their shares.
In the US the threshold to become a "bank holding company" is 10% equity ownership. Becoming a BHC subjects you to the regulation by the FRB or state banking boards.
My favorite quote in this regard is by William Gibson: "The future is already here — it's just not very evenly distributed"
LOL. I don't get how your comment is at the top. People in technology field know about it.
Your question should be how China is blocking out other tech companies unless they are willing to share their user info or join a state-owned venture so they can learn your technology, process and know-how then push you out. You make it sound like no one from U.S. want China or other market.
The FACT TO THE MATTER is how other countries is either making it extremely difficult for U.S. tech company to enter or corrupted to hell that you have to pay out of your ass in each and every step of the way to do business with them.
This comment is the most retarded comment there is. PEOPLE IN TECH KNOW WHAT'S GOING ON!
Getting a direct line to the outside internet doesn't require bribing an official, nor is it illegal for a company to have a connection that doesn't go through the GFW (at least right now).
Your question should be how China is blocking out other tech companies unless they are willing to share their user info or join a state-owned venture so they can learn your technology, process and know-how then push you out. You make it sound like no one from U.S. want China or other market.
The FACT TO THE MATTER is how other countries is either making it extremely difficult for U.S. tech company to enter or corrupted to hell that you have to pay out of your ass in each and every step of the way to do business with them.
and better fit the Hacker News guidelines, which strongly discourage personal insults and uncivil tone. P.S. In English, which is perhaps not your native language (in which case, welcome aboard, because we indeed need more participation here from outside the English-speaking world), the usual idiom is "the fact of the matter" rather than "the fact to the matter." And on Hacker News, we rarely use chat-speak abbreviations like "LOL" (I learned that years ago when one of my comments that used abbreviation was downvoted heavily, even though I was literally laughing out loud as I typed the comment) and we only rarely write in all-capitals for emphasis. But your point is well taken.
Agreed. It's not just in the tech sector, and not just in the commerce sector either. The US (and many English-speaking countries) tend to be incredibly US-centric and euro-centric in their worldview and news coverage.
For example, right now, the world's largest democracy is holding the largest democratic election in the history of human civilization[0]. In the US, you'd be hard-pressed to find people who even know the names of the candidates[1]. Most people I talk to aren't even aware that it's happening - which is delightfully ironic for a country that has a history of proselytizing the gospel of democracy by using its military to install "democratic" governments abroad[2]!
[0] For those interested in reading up: https://en.wikipedia.org/wiki/Indian_general_election,_2014
[1] Sort of a trick question in parliamentary systems (as opposed to the presidential system in the US), but my statement applies whether you ask about the names of the two major parties or the names of their leaders.
[2] Iraq is the example that most people are familiar with, though this tradition goes back a century or more.
[1]neither do several hundred million Europeans
I find this attitude very weird. Every time I encounter it in the real world, it comes off as a humble brag. As in, oh the rest of the west is so ignorant and dumb, me? I know all about your culture.
From my experience, huge demographics of people around the world don't really care about what happens outside their tribes. On the other hand, no one goes around chiding say Indian villagers on why they are not more aware of the complex inter-dynamics of the current Russian-European conflict. Somehow expecting everyone to be aware of your favorite world topic appears to be the same equivalent of assuming that everyone that writes code be well versed in whatever stack you are familiar in.
From the sounds of it, Alibaba has it covered
US entrepreneurs have a shot, but they'll be a day late and a dollar short in many of the more developed international markets right now. Especially in Asia, where local equivalents to all of these majors services have been around for about as long as Alibaba has. Not every market is as dominated by a handful of major tech giants as China's (Alibaba, Tencent, etc.). But most markets with widespread internet coverage and smartphone usage have their domestic megaplayers.
That's not to say these markets can't be penetrated. But we should realize that the world hasn't exactly held its breath waiting for our tech's arrival. It's been busy.
I agree that the US media haven't done much to cover these markets. But a lot of people who've done business overseas, particularly in mobile, have experienced them. American entrepreneurs have had the luxury to focus exclusively (or at least predominantly) on the American market for decades, because it's a huge and affluent market. But I agree; there are enormous opportunities abroad. Not many of them are blue oceans anymore, though.
One enormous challenge with developing technologies for truly global audiences is that the infrastructure, culture, and socioeconomic reality of most countries varies enormously. There isn't a homogeneous global consumer base, so much as a global consumer base fragmented by local idiosyncrasies. Navigating these is tricky, but worthwhile.
They've raised over $4b and created over 20,000 jobs since they started in 2007. Pretty ingenious.
As others have already pointed out how Google compares, take Amazon for instance:
Online Payments - Amazon Payments
Cloud Services - Amazon Web Services
Mobile Apps - Amazon AppStore
Mobile OS - Amazon FireOS
Maps and Navigation - Amazon Maps API
Retail Outlets - N/A
Group Buying - Amazon Local
Cloud Storage - Amazon CloudDrive / Amazon S3
Mobile Messaging - N/A
Car Service, Ride Sharing - N/A
C2C e-commerice - Amazon Services/Amazon WebStore (not quite the same, but close)
Online Travel Booking - N/A
B2C e-commerce - Amazon.com
E-Learning - http://www.tenmarks.com/ (owned by Amazon)
Microblogging - N/A
Music Streaming - Amazon Cloud Player
Streaming Video - Amazon Prime Instant Streaming
Money-market funds - N/A
12/18 isn't bad.
* Self-service warehousing and distribution (Fulfillment by Amazon)
* Package Delivery (Google Shopping Express, AmazonFresh) TV setup box (Amazon FireTV)
* Search Engine (Google Search) Web Browser (Chrome)
* Laptop/Desktop OS (Chrome OS)
* Wearable Tech (Android Wear, Google Glass) etc.
Also for many offerings like Aliyun and Aliyun OS pale in comparison in the features offered by AWS or Android.
I went to an Alibaba presentation in the US awhile ago. They want to pursue the same strategy as Google and focus deep on big data and Machine Learning rather than building out huge logistic infrastructure like Amazon. This is probably a good idea since the margins are better.
On that basis Yahoo's stake in Alibaba has got to be 18/18, plus content publishing, directories, email and search.
cloud services ---- google cloud platform
mobile apps ---- google play
mobile OS ---- android
maps and nav ---- google maps
physical retail ---- ? no google product
shopping deals ---- google offers
cloud storage ---- google drive
instant messaging ---- google hangouts
car service ---- uber (via google ventures)
c2c ecommerce ---- ? no google product
travel booking ---- google flights
b2c ecommerce ---- ? no google product
e-learning ---- ? no google product
social media ---- google+
music streaming ---- google play music (all access)
video streaming ---- youtube / google play movies
money market ---- ? no google product
all the western companies you'd have to combine to cover alibaba's markets would seem to me to be google, and maybe one or two others. i included uber because i know about that one, you could probably fill in a few more gaps with other google ventures companies.
How does Alipay's user experience compare to Paypal's? Is it the lack of competition that has enabled them to expand their reach so widely (by not having to focus so much effort on each venture)? For example, the experience of shopping on AliExpress is (imo) sub-par when compared to most Western online shopping experiences I've had (Amazon, Zappos, and even smaller retailers).
I don't know a whole ton about the Eastern market to be honest, so I'm open to being educated.
I think it partially explains Alibaba's success in China. how you do shopping and paying is very much dependent on the "tradition" and regulation environment, and a local company can optimize that better than a global one.
Aliexpress is a mess though, i agree with that. But I think the language barrier faced by the shop owners there may be the biggest problem.
To your question "Is it the lack of competition..." I would say this is not the case. There has been plenty of competition. Alipay grew its adoption on its integration with Taobao in similar ways as PayPal was integrated with eBay.
They also contributed a pile of money to EdX. Those are 2 examples off the top of my head
As an investor, I can see how a monopolistic behemoth might be good, assuming we ignore possible legal problems. But I'd also worry that a huge company like that would not be able to focus effectively on the probably hundreds or thousands of products and markets in which they must be involved. Huge companies like Exxon, say, are at least focused primarily on energy needs; Amazon on online retailing; Apple or Sony on consumer electronics and software. What is Alibaba focused on? (And yes, the same question could be asked about Google, although search and ads are probably the biggest things.)
What is Alibaba currently really world-class at, OTHER than owning the Chinese market from top to bottom? Owning the Chinese market is probably caused as much by cronyism as by being really good at anything.
For others who may be in the same boat, I found some additional details here:
"Alibaba will not own most of its Chinese assets, including Taobao Marketplace and Alibaba.com. So the companies that are the core of Alibaba’s Chinese operations — the main reason for the anticipated heated investor demand — will not even be owned by Alibaba... Instead, the company is using a so-called variable interest entity structure."
http://dealbook.nytimes.com/2014/05/06/i-p-o-revives-debate-...
Fact is, Alibaba isn't all that large at all. And 57% revenue growth on ~$8 billion in annual sales, while excellent, is not earth shattering. A lot of US tech companies have pulled off that kind of growth, Amazon included.
And you say "Amazon included." Have you ever seen Amazon's sales growth charted? It's the definition of hockey stick growth. Of course they're included, but who else is?
Amazon/eBay transaction fees (~10%) seem ridiculously high. They almost eat up all margins of many industries. Many small business sellers are complaining about it.
This is not to say that Alibaba is not an incredible company, just that this is an incomplete comparison.
I wonder how it will affect YHOO -- Probably worth buying Jan 2015 $40 calls since Yahoo owns 24% stake, maybe even short AMZN on day of IPO.
It suddenly appeared in my search results last month when looking to buy something, with a lot of results - from alibaba itself and from aliexpress. As with any website I don't know of, I queried trustpilot for them.
It's not good at all[1][2]. Most reviews talk about scams. We may praise them for being a very tech heavy company and being about to make their IPO, but let's not forget the actual service value provided to customer.
Does anyone has insight on how those reviews may be misleading ?
Personally, I've mostly had mostly good experiences with those two sites - almost all of the items I ordered arrived and worked well. The two exceptions was when I bought a very low price product, but I got a refund for it, and another example was when I bought a large lot of items at almost a 5th of their price, and paid by Western Union... it was my fault for not knowing better.
Hulu is a Chinese company.
Edit:
I was mistaken by the fact that it has a Chinese name and a pretty big Chinese subdivision... Hulu is an American company. facepalm