The world of Alibaba; How a Chinese Company Transformed World Trade (Part 7)

Section 7/Google

BingMag.com The world of Alibaba; How a Chinese Company Transformed World Trade (Part 7)

Section 7/Google

I knocked on the door of the apartment and expected to meet a group of engineers, product developers, and website designers who were rushing this way and that, ready to be unveiled. But the situation was quite the opposite. It was the middle of the day; But the apartment was almost empty, and there were only two programmers left, who were napping on the floor next to two computers with their screens off.

An engineer came out of the kitchen and was sipping Hort noodles from a bowl. I asked, "Where are the others?"

- The power supply to the complex has been cut off. Go home and rest.

He went back into the kitchen and left me asleep with two engineers. I imagined a group of IBs working far, far away in Silicon Valley, in very clean and cool offices, and their row of servers was honking. But we could not even get electricity here. I could not imagine how this group was going to defeat the most powerful internet company in the world.

A week later, Taobao was ready for its official unveiling. We announced at a very crowded press conference in Hangzhou that we have invested $ 12 million in the company and will build a consumer market optimized for Chinese users. It was supposed to be free for three years. Jack believed China needed its own e-commerce mechanism, and since the market was still in its infancy, it was too early to get money from the customer.

Jack told reporters: "Today we are not going to specify Taobao How does he want to make money? Now Taobao's focus is on developing an e-commerce for real people and providing them with good services. I believe this market is very large. If you look at the consumer websites that are now in China, most of them are a simple copy of the American examples.

Taobao's free offering made a significant difference to eBay; Because eBay took money from its users. We gambled on the assumption that eBay would not do the same, because it would put a lot of pressure on Wall Street investors; Because they had invested $ 180 million in the company up to that point and expected it to generate capital as soon as possible. Immediately after our press conference, reporters contacted eBay to see if they were also interested in providing free services. "EBay will continue to charge," said Ebi, a local public relations officer who was surprised. "Because he believes it is very important to get paid for listing goods as well as services, and to keep the online market environment healthy." We reached our goal by the end of the day. We caught eBay in a triangle where it became very difficult to change the situation. Making money for listing goods as well as services is very important and keeps the online market environment healthy

Marketing leverage "Three years free Taobao attracted new users to the site. This strategy was very responsive, especially in a China-free environment; Because users wanted to try something before paying for it. As our war of words escalated, eBay claimed 95 percent of China's consumer market share and told investors and the media that eBay had never lost a game in any of the dominant markets before. The effects of online marketplace networks were too great to be overcome. However, eBay's 95% stake in China represented only tens of millions of Chinese Internet users who had previously engaged in e-commerce. 99% of Chinese people had not yet bought anything online. Instead of focusing on attracting eBay sellers, we tried to get the attention of other people. Since we had millions of users in that position who used our English-language website and were users of our Chinese B2B website, Alibaba China, we typically had a community of vendors who could easily do retail business alongside their wholesale market. Let them start.

From day one, we realized that free Taobao supply was not enough. Undoubtedly great for attracting users; But we have to think of a way to keep the user. Jack told the group not to worry about all the details of eBay's trade mechanism in the United States. He believed that the important thing was to focus on Chinese users and develop something that would work for them, not to offer what he had previously tried in the United States.

The first step was to understand the e-commerce mechanism for China. Unlike eBay's method, there is no auction mechanism. EBay started by getting people out of PEZ and other auto dealerships out of storage and putting them up for sale online; But consumer culture in China was something completely new. The Chinese did not keep 100-year-old consumer goods in their warehouses. After the widespread poverty that followed the Cultural Revolution, no one could afford to buy goods and collect collections; Unless he wants to collect some of Mao's Red Book. We found that what users wanted from us was just a simple showcase to put their goods up for sale. Our goal was not to create an environment where large numbers of buyers would bid on a particular product. Our goal was to create an environment in which a large number of vendors compete to offer the widest range of goods and the best quality of customer service; Customers who can in any case buy their goods from the millions of start-up retailers across China.

Taobao, who acted according to this general guideline, was different from Chinese eBay. Ebi, who feared that buyers and sellers would bypass his mechanism to avoid paying site bills, changed his approach and left the two parties unaware of each other so that they could not communicate before making a deal. In an environment where people used to have personal relationships before making a deal, this was a big deterrent to business.

Our approach was quite the opposite. Since all of our services were completely free, it did not matter at all whether the retailers were selling their goods through our site. In fact, we even encouraged users to make calls so they could get to know each other and meet for big purchases. We were sure that just as we had found a way for Alibaba.com to make money in other ways without deducting the amount deposited, here too we would find a way to make money if the sellers could make money. But the most important thing was to create a space that would give sellers more opportunities to sell goods than the offline world, not less.

So we decided to design live chat software to enable buyers Contact sellers directly and live. The Chinese people were crazy about chat software, and doing business in China was unthinkable without it. Doing so without chat software was like telling a retailer in the US that he or she would have to carelessly call and only contact customers via letter. That's when we launched a chat product called Wangwang, with a very cute look and flashy emoticons. Buyers and sellers quickly became accustomed to chat software and accepted it as part of the normal transaction process.

eBay couldn't even think of offering a service like Wangwang. If buyers and sellers were allowed to chat live, the entire eBay business plan would be destroyed. If they could talk and negotiate in the chat, they would be free to pay the eBay account for listing and the transaction fee. In a country where young people spend most of their time chatting on the Internet, eBay was a few points behind in doing so.

Another distinguishing factor was the way we paid. Although the government had considerable influence and control over the information and news domains, the authorities were somewhat reluctant to take up e-commerce. In fact, the main reason that allowed the Internet to spread in China was the possibility of its economic benefits. For this reason, as long as e-commerce companies behaved responsibly, the government was relatively incentive. The only exception was the online payments sector, which was smoothly under the very regular and regulatory sector of China's banking system. E-commerce payments were in a very sluggish state, and there were no specific rules or regulations for how companies would manage online payments. Jack explained the problem to me and explained how he wanted to deal with it.

- The main problem with online payments so far has been that we do not have any proper accounting standards to show in China how to pay online. Done. This is because all state-owned banks want to set their own standards and are not at all willing to cooperate with other banks on this issue; But a solution has come to my mind. We start something called AliPay and then partner with all the banks.

He explained that the difference between AliPay and eBay's PayPal service is that AliPay avoids direct transfers between buyers and Does not support customers. This system is based on a third party that can overcome the great problem of e-commerce in China; The same problem of mistrust between buyer and seller. Therefore, when a buyer places an order, he deposits his money into an AliPay intermediary account opened in one of the banks. The seller then sends the product. After the buyer has verified the product and verified it, saying that it was delivered exactly according to the same online description, the money will be transferred from the AliPay account to the seller's bank account.

Jack added: It is not new. Once in Korea, Ebi did this experiment and became careless. But we are sure it will work here. When AliPay is big enough, we can have direct transfers as well. "AliPay is growing and growing to become one of China's largest banks one day."

Jack has always been with his big dreams.

Google

That day was also one of the typical rainy days of Hangzhou Fall 2004. So when I received that unexpected email, I was shocked. The Googlers were coming to China and wanting to meet us.

The Googlers, Larry Peugeot Sergei Brin, went public last month and became the new billionaire champions of the Internet industry. It was impossible to find a magazine that did not have a photo of the two on the cover. Meeting them was somewhat like meeting the wizard of Oz; Because mysterious auras surrounded them.

We, who had carefully studied Google's development, were always amazed at their work. But this astonishment was also reasonably scary. Google's visit to China had only one meaning: Google was focusing on the Chinese market. In our worst nightmares, we saw a room full of experts clinging to Google headquarters and pressing the "destroy Alibaba" button and get rid of it! With all that said, it was clear that when the Google knocked on the door, it was better to open the door to them. If there was even the slightest chance that we would have them by our side and not in front of us, we would seize that opportunity, so Jack and Joe Sai and I agreed to go to Shanghai to meet with the Google delegation in a private meeting at the Grand Board./p>

As Google-based search advertising grew dramatically, I became even more admired by Google. After that long week in quarantine, I spent a lot of time monitoring and developing our advertising campaign. I noticed that I was nailed to my computer day and night and I was constantly reviewing Google advertising reports to see how many new visitors visited the site every day, every hour and every minute. It was amazing to be able to run an international advertising campaign from a small apartment in China. I was addicted to Google and wondered how something so simple could be so powerful.

Over the course of a year, our advertising budget increased from $ 600 to $ 1 million and we became the largest customer. Google ads in China. As our advertising budget grew, so did our relationship with the company, and in the spring of 2004, a colleague and I went to Google Plex in Silicon Valley to tell Google employees about our experiences with on-site advertising.

Traveling from Hangzhou to Googleplex was like going on a long trip and visiting a sacred place. We knew this was one of the only opportunities in one's life to get a closer look at the core of the Internet industry. As we walked into Google's modern main courtyard, between metal and glass buildings, we saw Google employees playing volleyball, skating from building to building, sitting out in shorts and sunglasses, and sitting in a latte cafe. They talk about the great innovation of their future. The other galaxy was both parallel and very different from China's booming Internet industry. If Alibaba's depressing offices in Hangzhou were like a scrap shovel, the flamboyant Googleplex was like a zero-kilometer Porsche. Both were technically cars; But they had no similarities except being a car. I could not help but be overwhelmed by all the power concentrated in an office.

I felt the same way five months later as I waited in the lobby of a hotel in Shanghai to meet Sergei and Larry. Joe and Jack were on their way, and as I was arriving very early, I spent my time walking around the lobby, staring out the window at the Huangpu River, trying to distinguish colonial-era buildings along the runway from the dense Shanghai towers. Since I had not met the Googlers on my trip to Google headquarters, I was eager to finally see them up close and see what they looked like.

When Joe and Jack finally arrived, the three of us sat down together to find a solution. Find. The Googlers did not tell us anything about the purpose of the meeting; So the last thing we could do was guess their intentions. We were skeptical and even hoped that Google would offer a major partnership or request to buy the company for a hefty sum. In any case, we decided to play cautiously. "Google has requested a meeting, so let's see what they have to say," Joe said. We don't need to reach out to them at all.

We reached the meeting room, and a number of Google employees greeted us and told us to sit down so that the rest of the group could return from a short break. We looked around the room and it became clear to us that the Google leaders were not just meeting with us that day. It was full of chairs all around, and on the table was a pile of paper and documents and half-eaten food. My impression was that we had been invited to a formal meeting to explore potential opportunities for cooperation; But it seemed more straightforward to be in the middle of one of Google's in-house think tanks.

We waited for a while with staff, a group of senior executives from the International Operations and Sales Division. We have been told that they intend to turn their attention to international markets now that the profits of the stock market have taken over. Needless to say; But they talked about the private jet they rented for this trip around the world.

Suddenly Larry Page entered the room, shook hands with us, and sat down at the table. I had read so much about him that I expected to meet a progressive and kind manager; But my first impression was that he was one of those classic techies. He, who was hunched over in his chair, tended to look more at Google employees than we did as he spoke in that monotonous voice below. His head and shoulders seemed to move at the same time, so he behaved a bit like an iron man. Even his own colleagues were embarrassed by his somewhat disgusting behavior. He was a very respectable man; But it was not easy to get along with him.

Larry completely destroyed all our hopes and aspirations for Google to come up with an offer to buy. He asked, "Well, what is Alibaba?"

It was clear that Larry did not have a clear idea of what we were doing; But that did not matter to Jack. It took a few minutes to explain the history and how Alibaba worked to the Google team. Jack jumps up and down in excitement as usual; But the Google group, which had probably heard the same story over and over again in recent years, seemed completely uninterested.

Google's intentions were still hidden from us. So we asked them to talk to us a little bit about the purpose of the meeting. Instead of responding, Google started filming us about the type of activities and revenue plan.

- Where do most of your ads work? Only in big cities or all over the country?

- How do you sell goods to consumers? Do you use intermediaries or do you sell directly?

- How many members does your sales team have? How much do you pay them per month? What are their responsibilities?

At first we tried to answer with the utmost politeness; But as time went on, the purpose of the meeting became clearer to us. They were Googleging us. They took us downstairs and looked for tips to find and feed the Google device. As the questions piled up, I realized that Alibaba is one of a series of companies that the Google Group has met with their executives to extract information from them and ultimately use against themselves.

I looked at Jack to see how he reacted. His smile had given way to a frown, and he was sinking deeper and deeper into his chair. I read in his face that he was disappointed and even upset. Joe looked just as nervous. As our answers gradually became more defensive, the atmosphere of the meeting became more and more disturbing.

When one of those important and sensitive questions was asked, I tried to soften the atmosphere of the meeting by joking and saying, "When the answer "We are asking you to tell us what Google's secret search engine algorithm is." Joe and Jack laughed; But the stone faces of Larry and his team did not change and they continued their interrogation. Maybe they knew we were getting more and more annoyed when one of the younger Google jumpers jumped in:

- As you know, Alibaba is one of the biggest customers of Google ads in China. .

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BingMag.com The world of Alibaba; How a Chinese Company Transformed World Trade (Part 7)

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