Can This Chinese E-Commerce Site Take Over the World?

What's to come?
Nov. 18 2013 4:09 PM

Who’s Afraid of the Big Bad Alibaba?

The Chinese e-commerce site wants to take over the world, but there’s one big problem.

(Continued from Page 1)

I was one such employee, having started at the Yahoo China unit, which Alibaba acquired in 2005. Jack found it challenging to turn us into a top-notch search engine and transform Yahoo China’s culture into the Alibaba mold. A new president was assigned and a new strategy was designed at the top and then announced solemnly at an all-hands meeting. The problem was very few Yahoo China employees bought into that strategy, despite a rallying speech from Jack that made everyone laugh.

So meetings at various levels were convened at Yahoo China to “solicit feedback.” The meetings’ purpose, it soon turned out, was to convince the opposition that they were wrong, that they were on the wrong side of the next wave of Internet revolution, and that they should “embrace change” as dictated by the Alibaba culture. It reminded me of Mao’s rectification campaigns to weed out those unwilling to bend to his vision of what China should be.

Gradually naysayers shut up and reluctantly joined the revolution. A year later and after much repeated fanfare, the revolution fizzled out. Two more revolutions later, Yahoo China was dead. (It was shut down by Alibaba earlier this year.)

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Experienced professionals, feeling culturally alienated and professionally sidelined, started leaving. Many of those left behind were asked to relocate to the Alibaba HQ and were further indoctrinated, with, for example, pilgrimages to the townhouse where Alibaba first started, not unlike pilgrimages to the founding sites of the Communist Party.

In the end, I left, too, for another opportunity that promised more career freedom and growth. Still, having witnessed the dramatic failures of Yahoo, eBay, and Google in China, I often wonder whether the Alibaba way is the only way to win there. To this day, Alibaba’s culture, training, and performance evaluation have remained the same as the group has grown to more than 20,000 employees worldwide. Proving naysayers wrong, it has become the largest Internet company in China and is quickly expanding further into cloud computing, logistics, and online finance. And Jack, having won his revolution with his ragtag army, is now undeniably the godfather of China’s homegrown entrepreneurialism.

Americans, too, are familiar with tales of visionary, overbearing dotcom titans like Jobs and Jeff Bezos. But these are more the exception than the norm. In China, while Jack’s charisma may be unique, his emphasis on culture and values as management tools is not. Businesses large and small in China enjoy controlling their employees, expecting unflinching loyalty and obedience. Confucians advocated such a model for societal organization for thousands of years, and Mao successfully incorporated it into the communist rule. And it endures: Today, in Beijing, military-style drills of restaurant employees are a frequent sight on the street.

As China’s society and economy become increasingly complex, it is hard to fathom either the country or its corporate sector thriving in the future with such fanatical adherence to control. Already, Alibaba is finding newer crops of hired grads—more individualistic and more vocal about their opinions—far harder to manage. And young revolutionaries have grown older and tired, eagerly awaiting the windfall from the upcoming IPO of the entire Alibaba Group.

To me, that’s the crack in the legendary Alibaba armor—culture can’t remain static. Both Alibaba and China have benefited tremendously from the hard work of the population and the vast market opportunities opened up by Deng Xiaoping’s reform. But China’s current growth model is running out of steam. The government knows it needs more innovation from its people to ensure growth and stability, yet it is not willing to let go of control. Neither, it appears, is Alibaba of its employees.

So Western consumer brands can rest a little easier for now. Until and unless the next Jack Ma comes along to infuse a sense of individual creativity and freedom in China Inc., Chinese brands like Alibaba will likely have a hard time taking on the world.

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