Book – Alibaba’s World

bookVery insightful book – the author describes the creation of now major Chinese brand and growth of eCommerce in the country. Ups and downs of the economy and internal struggles and triumphs of the company is a treasure for ideas and examples.

Interesting perspective on the Chinese and American management style: Chinese style is compared with water, flowing through the most reasonable route, and American style described as rocks firmly taking their place.  Just one mention of Taoism, what probably influenced this management approach.

Though learning about a major player of global market is interesting in itself, a few points were particularly insightful:

  • Yahoo was the firs company to enter Chinese market – and the first company to realize that translation of its content were insufficient for success in the country.  Something else was needed, and global managers did not seem to be able to understand it.  Yahoo partnered with Alibaba, which was expected to run Yahoo China portal better.
  • eBay had a strong position in China, working with a local partner.  At one point, the international management expanded Western site to China, hoping that tried and tested approach would be successful.  The new minimalistic design common for Western sites and removal of localized features were perceived as “cold” by local customers, who promptly migrated to the local equivalent.   (Hm…  I was not understanding why my Chinese colleagues were saying “we like it busy” about their localized sites…  now it makes sense 🙂 )
  • AlibabaAlibaba (b-to-b original site) did not have any business model in the beginning, hoping that providing the platform where users can be successful in their business will eventually lead to a discovery of the best approach to make money.  The break-through was unexpected: as a merchant started to have success on the site, he or she immediately faced new competitors entering the category.  The merchants were asking for premium advertisement to differentiate their postings.  Another method, specific for local audience, was paid verification of the merchants.  As the trust was low, verified merchants had an advantage.
  • Another localized approach was adding chat functionality to Chinese equivalent of the eBay – as trust was low, individuals and small merchants could connect personally to discuss the transaction.
  • Alibaba used a unique method of payment to overcome cumbersome local banking system (and lack of trust) – the buyer sent the money to a financial institution, which would not pass the money to the seller until arrival of the product was verified.  This system was invented by eBay for Korean market, but previously abandoned.
  • Alibaba – and eCommerce platform – was founded and run not by an engineer, but by an English teacher.  For consumer websites, this approach might have an advantage.  If the founder could not understand a new feature suggested by the engineering team, the feature would probably not be helpful for an average user.

Interesting approach to management: Alibaba tried an all-star management team brought together with fantastic resumes.  This approach did not work, as the team could not actually work together. The all-start team was dismantled, and local team had to be brought back as people on the team could actually cooperate.  Managers who knew Chinese and understood the culture were more successful in the company compared to industry specialists.

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