Jack Ma: The man who took on eBay and won

The floating of his online marketplace Alibaba has made him China’s richest man and a global player

Ben Chu
Friday 31 October 2014 20:47
Executive Chairman of the Alibaba Group Jack Ma
Executive Chairman of the Alibaba Group Jack Ma

In 1995, a young Chinese translator travelled to Malibu with a brief to persuade an American to pay his debts to an aggrieved Far Eastern business partner. Things did not go well.

The American pulled a gun on the 5ft tall Chinese man and locked him up in a beach hut for two days. The translator finally managed to talk his way out of captivity by promising the American that they would start an internet company together.

The irony is that the translator did not even know what the internet was. He does now. The prisoner of Malibu has become China’s richest man, and it is the internet that has elevated Jack Ma, 50, to that summit of prosperity.

In the wake of that traumatic trip to the United States, Ma researched the internet and realised the awesome commercial potential of the web in the fast-growing Chinese economy. In 1999, he and a group of colleagues pooled their $60,000 savings and established Alibaba, an online marketplace connecting small Chinese firms with foreign buyers. Alibaba earned its money by taking a commission from each transaction, no matter how small.

Growth over the past 15 years has been explosive. Today, Alibaba has expanded and diversified into an e-commerce leviathan, offering a vast array of services ranging from peer-to-peer online trading to facilitating electronic payments. On a single day last year, the company hosted $5.75bn worth of transactions. In the world’s second largest economy Alibaba has an 80 per cent share of an e-commerce market that is still growing fast.

Last month, the owners cashed in. Alibaba group raised $25bn in equity on the New York Stock Exchange in the largest single stock market fundraising drive in history. The total company has a valuation of about $250bn. Going public catapulted Ma, who controls a 6 per cent stake in the company, into the constellation of global super wealth. The American magazine Forbes this week estimated Ma’s personal wealth at $19.5bn, making him the richest individual in China and placing him at 36th on the global rich list. And unlike many on that list, Ma started out with almost nothing.

Executive Chairman of the Alibaba Group Jack Ma

Ma Yun was born in the city of Hangzhou in 1964, a few years before Chairman Mao turned the country upside down with his barbaric Cultural Revolution. Ma’s family suffered. His parents were practitioners of a local musical performance art called pingtan, which, along with most other traditional art forms, was banned in those years of intolerance and brutality.

A friend from those years recalls that Ma was passionate about cricket fighting, developing an expert ear for the sounds made by various species of the insect. Ma did not do well at school. He failed the national college entrance exams twice. But he persevered with learning English, eventually entering a teacher training college in Hangzhou.

He practised his communication skills on the Western tourists who were beginning to trickle into the country after Mao’s death in 1976. After taking a low-paid job teaching English, Ma set up his own a translation agency, which is what took him to Malibu.

In a Chinese business environment dominated by buttoned-down bureaucrats, “crazy” Jack Ma stands out. Like Richard Branson, Ma loves outrageous publicity stunts, particularly when they involve dressing up. At Alibaba’s 10th anniversary celebrations he serenaded employees at a stadium dressed in a vast Mohawk wig, his lips smeared with black lipstick. And Ma is loved by the Chinese public for it, with the media following his every appearance and books about his life and success selling by the millions.

Ma’s family life is relatively sedate. He is married to Zhang Ying, whom he met at college back in Hangzhou. She used to work at Alibaba until they had their two children. “Ma Yun is not a handsome man, but I fell for him because he can do a lot of things handsome men cannot do,” Zhang once said in an interview. They have a son who is studying in California.

For all the populist publicity stunts, Ma conforms when necessary. He has avoided doing anything that could be considered a challenge to China’s ruling Communist Party. When he acquired the China arm of the US search engine Yahoo! in 2005, Ma said his company would happily hand over any information on domestic dissidents to the Beijing authorities. “We create value for the shareholders and the shareholders don’t want us to oppose the government and go bankrupt” was his justification. Asked recently about the Hong Kong democracy protests, Ma expressed sympathy for the students, but added that they “should not push too much”.

But to characterise Ma as a lackey of the party would also be wrong. Rather, he has a subtle understanding of how to operate in an environment where business and politics are often intertwined. He knows what he can get away with and what he can’t. He has recalled that many people advised him not to get into the internet industry because he would eventually be crushed by politically connected players. “Never worry too much about the government” is the lesson he has drawn from that bad advice.

Ma has been ruthlessly effective in building his own empire. In 2003, eBay enjoyed an 80 per cent share of China’s e-commerce. But Ma was confident of overhauling the American giant. “eBay is a shark in the ocean,” he said. “We are a crocodile in the Yangtze River. If we fight in the ocean, we will lose. But if we fight in the river, we will win.” And so it proved. Alibaba’s Taobao division slashed its fees for local firms using the service, losing serious money in the process. But the high-risk price war worked. Alibaba steadily grabbed eBay’s market share, and three years later the Americans threw in the towel in China.

It is unclear whether Ma’s appetite for such corporate battles has waned over the years. He was at the forefront of the share float sales pitch to investors, but he stepped down as Alibaba’s chief executive last year. And he often talks about other interests, such as sport and making films. The environment is a particular pre-occupation. “Our water has become undrinkable, our food inedible, our milk poisonous and worst of all the air in our cities is so polluted we often cannot see the sun,” Ma wrote in a passionate essay last year. It is a sentiment that resounds through Chinese society, where frustrations over the damaging side effects of rapid economic growth are boiling over.

If Ma – with his charisma, wealth and desire to improve society for the better – were American, a run for political office would surely be a natural next step. Such things don’t happen in the authoritarian China, of course. But if anyone can break the mould one suspects it’s Crazy Jack Ma.

A life in brief

Born: 15 October 1964, Hangzhou, China.

Family: His parents were performance artists. He and his wife Zhang Ying have a daughter and a son.

Education: Hangzhou Teachers College, then Cheung Kong Graduate School of Business, graduating in 2006.

Career: An English teacher and translator. In 1995, he created China’s Yellow Pages, said to be the country’s first web-based company. Formed Alibaba in 1999, went public in September. Has estimated fortune of $19.5bn.

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