Amid SEC probe, Jack Ma says hard for US to understand Alibaba: media
Doing
their job: Alibaba Group's Executive Chairman Jack Ma (pic) said that
SEC's investigation into Alibaba does not mean Alibaba has problems but
that the SEC is just performing its duties. — Reuters
BEIJING: Alibaba Group Holding Ltd, whose
accounting practices are under investigation by US regulators, is a
difficult company for the United States to understand, Executive
Chairman Jack Ma said in an interview to Chinese media on June 3. The US Securities and Exchange
Commission (SEC) launched a probe earlier this year into the Chinese
e-commerce firm's accounting practices to determine whether they
violated federal laws. Questions about Alibaba's growth rate and its
relations with affiliated companies have dogged the firm for years. In the interview with China's official Securities Times, Ma said the investigation does not mean Alibaba has problems but that the SEC is just performing its duties. "Alibaba's business model does
not have any references in the US, so it's not just a matter of one or
two days for the US to understand Alibaba's business model," Ma was
quoted as saying.
The SEC focused on the accounting
for affiliated logistics firm Cainiao Network, accounting practices
applicable to related-party transactions in general, and operating data
from its annual "Singles' Day" sale, according to Alibaba's annual
report filed last week. It was not immediately clear what
prompted the SEC investigation. Alibaba said in May the SEC advised it
the investigation should not be seen as an indication the company had
violated federal securities laws. "We want to thank the SEC for giving us an opportunity to interact," Ma said in the June 3 interview. Ma said he did not know when the
results of the probe would come, but he hoped that afterwards the
regulator would be able to give Alibaba a clear explanation, and a
smoother system for communication could be established. An Alibaba spokeswoman declined to provide additional comment. Many US-listed Chinese companies have said that foreign regulators and investors do not understand their businesses. Financial results of Cainiao,
started jointly in 2013 by Alibaba, Yintai Holdings, Fosun Group, Forchn
Holdings and five major delivery companies, have in the past not been
part of Alibaba's financial statements, raising questions among some
investors and analysts. Alibaba said its latest annual
report disclosed for the first time Cainiao's revenue, net loss, assets
and liabilities. — Reuters
by Jethro Mullen @CNNTech May 17, 2016: 2:54 AM ET
The Chinese startup leading the drone industry
China has spawned some massive tech companies.
They have
benefited from the country's huge population, rapid economic growth and
in some cases government restrictions on foreign competitors.
Now, with slower growth at home, new global opportunities beckon. Here are four of the major players in key areas: Alibaba
Market cap: $196 billion. Annual revenue: $16 billion. What's the deal? The
dominant force in China's huge and fast-growing e-commerce market is
pursuing growth deeper in the Chinese countryside and also overseas.
Founded by former English teacher Jack Ma, the company has plunged into a
dizzying number of other online businesses like the recent deal to buy
China's YouTube-like service Youku Tudou. Big number: Alibaba's platforms generated a record-breaking $14 billion in sales on a single day in November (although that doesn't translate into the same amount of actual revenue for the company). Going global?Oh
yeah -- the company's AliExpress platform is already doing business in
markets like Brazil and Russia. And Alibaba splashed out $1 billion last
month to buy a Southeast Asian online retailer. Tencent
Tencent's messaging app WeChat has hundreds of millions of users. Market cap: $194 billion. Annual revenue: $16 billion. What's the deal?
The 16-year-old company has grown at light-speed to become one of the
biggest Internet businesses in the world. At heart of its success are
its hugely popular messaging platforms, but it also offers a vast array
of other online services, including mobile games, digital content,
search and e-commerce. Big number: Its WeChat messaging app had a whopping 697 million monthly active users at the end of last year. Going global?The
company has aggressively looked for opportunities to expand its mobile
gaming business into new markets. WeChat is competing against big
messaging rivals like WhatsApp and Line. Baidu
Market cap: $58 billion. Annual revenue: $10 billion. What's the deal? China's
top dog for Internet search gets more page views than any other website
in the country. The company also has fingers in a lot of other pies
like online maps, payments and video -- and also driverless cars. Its
paid search results have recently come under fire from Internet users and authorities in China, though. Big number: Baidu clocked up 663 million monthly active users for mobile search in March. Going global? The
search giant has tested the waters in foreign markets, including
Brazil. Google provides very stiff competition in its core business,
however. Huawei
Market cap: Not listed. Annual revenue: $61 billion. What's the deal?
The privately held firm competes with Apple and Samsung in making
phones, tablets and other gadgets for consumers. But it also has a huge
business selling the gear that mobile and fixed-line networks are made
of. Big number: Huawei filed 3,898 patent applications last year, more than any other company in the world. Going global? Huawei
is already global, with offices in 100 countries. It boasts that 45 of
the world's top 50 telecom operators use its technology. The
Shenzhen-based company still faces suspicion in some markets over
allegations of spying, which it has repeatedly denied.
CNNMoney (Hong Kong) First published May 17, 2016: 2:54 AM ET
Now that Alibaba has acquired the South
China Morning Post, what is your vision for the paper? What role do you
see the Post playing?
We are very excited that we can take part in the future development of the South China Morning Post. The Post
is a great media outlet – one of the best in Hong Kong. When Mr
[Robert] Kuok took over, it became one of the top media in Asia. What
Alibaba wants to do is to make it a global media outlet through our
technology and resources. Asia is changing and China is changing. The Post will have great opportunities. With its access to Alibaba’s resources, data and all the relationships in our ecosystem, the Post can report on Asia and China more accurately compared with other media that have no such access. If the Post can play the role of a connector between the West and the East, I have confidence in the paper’s future success.
Alibaba said the Post should offer
readers a narrative of China that is different from that offered by
other Western media. What narrative will this be?
I think first of all, it is important to be fair
to the reader. Readers have the right to know what’s happening in China
in a factual and objective way. I’m lucky that I have the opportunity
to travel around the world. The more I come to know about the outside
world’s perception of China, the more I feel there are all sorts of
misunderstandings and, to a certain extent, people do not get the full
picture from the media. A lot of foreigners have few opportunities to
visit China, and a lot of Chinese people do not have the chance to go to
Europe or to the West. There is an immediate opportunity for us to
bridge this gap as a responsible media outlet. What a publication can do
is to help people get a clearer picture without jumping to any rash
conclusion. I’m very happy that the Post can take the responsibility to report on China in a broader and deeper way. I believe the Post must be fair to our readers. We should let our readers see China from more angles and perspectives.
WATCH: Jack Ma of Alibaba says “we should be fair to our readers” when reporting on China
Some commentators reacted to the
statement by speculating that it means the Post’s China coverage will
become more positive or even gloss over some tough issues confronting
China. What would you say to these speculations?
I’m not a journalist. But I think if we come
with a predetermined angle in our coverage, be it positive or negative,
the final report will surely become one-sided. I don’t see it as an
issue of being “positive or negative”. It is about being impartial, not
one-sided. The paper’s China coverage should be objective, reasonable
and impartial. If people really want to understand China better, we need
to provide media [reports] that can be easily understood by readers in
both the East and the West. As I’ve said, we should offer a fair chance
to the readers, not only a fair chance to China and to us.
How do you think we can tell the
complicated, at times contradictory, China story to Western readers in a
more engaging and impartial way?
I believe the most important thing for the media
is to be objective, fair and balanced. We should not report something
with preconceptions or prejudice. Sometimes people look at things purely
from a Western or an Eastern perspective – that is one-sided. What the Post
can do is to understand the big “why” behind a story and its cultural
context. Western culture is scientific and tends to see things in black
and white. The Eastern approach is like taichi – everything is in transition. The Post
could help to explain this Eastern mentality to our readers better.
They may not agree with the other side, but at least they can understand
where the other side comes from.
[Alibaba executive vice-chairman and the Post's
chairman] Joe Tsai has said Alibaba will leave editorial policy in the
hands of the Post’s editors. Do you see yourself as a hands-on or
hands-off proprietor? What sort of input do you see yourself giving to
the editorial board?
I have neither the experience nor desire to
interfere with the newsroom operation. I will not take part in the
editorial decision-making. The media has its own professional rules and
standards. For me, maybe I will give input on the business side of the
operation and the future business model of the paper. I can also
participate as a reader and give feedback on how to improve readers’
experience. As I said to Joe [Tsai], “You are going to the Post as a representative of the Post’s
readers. You don’t have to represent shareholders. You speak for the
readers.” And we are ready to contribute resources, to beef up the
newsroom and the editorial team to strengthen its coverage. The best
return on our investment is seeing the Post as a respected publication.
As a key Chinese entrepreneur, what do
you think is happening to the economy’s slowing growth? Are supply-side
reforms and a looser monetary policy the way ahead or will that be paved
with risks that may further threaten the economy?
China has been growing at a high speed for more
than 30 years. There is no reason to expect an economy of such size to
maintain such a growth rate indefinitely, nor is it good for China to
continue to grow at such speed. It is not sustainable and will have a
harmful impact on China’s environment. We should be more worried if
China’s economy today continues to expand at double digits.
China is facing pressing issues such as a
deteriorating environment and a widening wealth gap. If we cannot change
our growth model, we could run into trouble. But only with a slower
growth rate can China’s economy change its course. It is easy for a
small boat to change its course. But as the world’s second-largest
economy, China is like an ocean liner. We have to choose either to not
slow down and overturn the ship, or slowing a bit to make the turn.
In the next three to five years, China’s economy
will face stiff challenges. After more than 30 years’ growth, taking a
few years to adjust its course is reasonable. The economy is growing at 7
per cent – some say the actual rate could be just 5 per cent. But even
at that rate, there is no other economy of such size growing at this
speed in today’s world.
We should not panic. A critical parameter is the
employment rate. If we can keep it stable, the economy will be fine.
The traditional industries are struggling, but we also see growth in
domestic consumption, the services industry and the hi-tech sector.
Young talents are flocking to these sectors, while the logistics and
delivery industries create plenty of jobs for low-skilled workers.
There will still be plenty of opportunities in
China for the next 15 to 20 years. It’s a country with 1.3 billion
people, of which 700 to 800 million are out of poverty and 200 to 300
million are middle class. By developing our internet technology, China
can drive tremendous growth in the consumer, services and IT industries.
I believe there will be some great enterprises arising from China. The
monetary policy and supply-side reforms are very important and can help
rejuvenate China’s economy. But to me, the most important thing is
entrepreneurship. If this can flourish in China, China will become
successful.
Within three decades, China evolved from
a net importer to an exporter of investment and technology. What is
your advice to those seeking business opportunities in China and vice
versa?
The economic slowdown has triggered panic in
many countries that supply raw materials and resources to China. This
panic has been amplified and become bigger than the real problem facing
China’s economy. Some foreign investors were spooked and fled China.
There is nothing we can do about that. The outflow of capital actually
presents an opportunity. To do business in China, you have to take the
long view. There are still plenty of opportunities in China. There are
immense opportunities in rural areas. China is also shifting focus to
services industries, the IT sector and domestic consumption. If you
stick to traditional industries like steel and oil, you have to be
selective.
Some people ask me why there are so few American
internet companies becoming successful in China. In fact, there are
only a handful of them doing business in China. Over the past 20 years,
China has had hundreds of thousands of internet start-ups and only a few
have survived. The really big ones are just Baidu, Alibaba and Tencent,
and there are 20 to 30 successful internet companies in China. To
succeed as an innovative company is difficult and this is the case
everywhere. Can you think of a Chinese or European company becoming
truly successful in the United States? Doing business in another culture
and another country is always difficult, particularly if you want to
become successful after just two or three years. You need to take the
long view in doing business, especially in China. You need to learn how
to understand and appreciate local culture. That is the key to success
in today’s globalised world.
Alibaba has managed to make its mark
globally. If you were to place bets on future Chinese companies or
sectors that will go global, what would these be and why?
Alibaba has yet to become a truly global
company. We have some brand awareness around the world but we cannot say
our globalisation effort is already successful. We are taking steps to
expand our footprint and the progress is encouraging. Today, Alibaba is
trying to build a platform that will enable every company and individual
to do business with people in other parts of the world. Alibaba’s
mission is not for itself to go global. It is to take other people’s
business to anywhere in the world.
Every company and every sector has the chance to become successful and go global.
We should judge if a company is truly
international by looking at whether its management has a global
perspective. If you have a factory overseas, you can’t call your
business global – you simply have a factory in another country. You have
to really serve the local community, add value to local culture and
provide unique services to local people, then that is a global business.
Since China’s opening up, the country has made epic progress but its soft power has not grown in tandem. Does this concern you?
China’s economy has achieved tremendous
development over the past three decades. It is hard to find another
country that has lifted so many people out of poverty in such a short
time. Yet it’s easier to build up hardware and infrastructure than to
cultivate soft power – that takes time and China’s soft power still lags
its infrastructure development . For eight centuries or more, China was
a world-leading civilisation with the largest gross domestic product.
Because of our isolation policy, we fell behind. China opened up again
over the last three to four decades, trying to change its system and
embrace the world. The country has made great strides in growing its
soft power and cultural influence.
Chinese people have never stopped learning from
the West. We always want to find out how things work in the US, but the
Americans aren’t as curious about China. I’m glad to see Chinese people
keep learning the best from the West. Today if you ask 100 young
Chinese, maybe 80 of them can speak some English. But if you do it in
the US, can you find 20 of them speaking some Chinese? I think that
would be difficult. It takes time for a civilisation to recover and
rejuvenate. It is easier to build a house in one or two years, but it
will take one or two decades to turn it into a home. I’m confident that
China’s soft power will improve, but we need to be patient.
You once said you are not strongly
religious but you are fascinated by religion. Buddhism and Taoism, just
like the teachings of Confucius, are part of the very DNA of Chinese
culture, but these religions have faced tremendous challenges brought by
the onslaught of modernity. Do you think their teachings are still
relevant to Chinese people today?
Western culture is more knowledge-focused. It is
inquisitive and acquisitive. Acquiring knowledge makes you smarter and
makes you more capable of creating and acquiring material goods. Eastern
culture is more wisdom-focused. The stress is on understanding what
your essence is and to unburden yourself from the non-essentials. The
key is to understand what is not crucial in life and what to give up.
With the rise of sophisticated artificial
intelligence like AlphaGo, we face a challenge: you can no longer
compete with machines over intelligence. But the fun part of the game Go
is to see your opponent making mistakes, in provoking him to be angry.
Winning or losing is secondary. AI cannot understand the concept of
“fun” and therefore it cannot enjoy the game. That is why I think in the
future, technology has to be fun. Alibaba has the 2H strategy for our
future: happiness and health. If the advent of technology cannot make
people happier and healthier, there is no point doing it.
What do you think of Hong Kong’s present predicament?
The problem of Hong Kong is not caused by
mainland China or Western countries; it is self-inflicted. Hong Kong has
become intolerant. The city has lost its can-do spirit. The big
businesses are less willing to take risks. I talked to some young people
in Hong Kong and they said they are lost. Young people indeed have
fewer opportunities than before, but is it true that there is no more
opportunity for them? No.
Hong Kong has some unique strengths. It has the
best location. It has “one country, two systems” that allows it to enjoy
the good things from China’s growth and the best things from the West.
Hong Kong has a great education system. The quality of Hong Kong’s
graduates can match the finest from any other city. Its services
industry is first class. Hong Kong people say Hong Kong needs to
preserve its uniqueness. I say Hong Kong’s uniqueness is in its
diversity, its tolerance of different cultures. Young people need to
understand that because Hong Kong is open to all, sometimes some bad
elements will also get in. China does not want to see Hong Kong in
decline. I have full confidence in Hong Kong’s future.
Guess what? This is exactly what major companies are paying me for. They need to know what their customer needs and wants. So large companies pay millions of dollars per month to the average person. In return, the average person, like myself, fills out surveys and gives them their opinion.
1 comment:
I make $20 for filling a 20 minute survey!
Guess what? This is exactly what major companies are paying me for. They need to know what their customer needs and wants. So large companies pay millions of dollars per month to the average person. In return, the average person, like myself, fills out surveys and gives them their opinion.
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