The Crocodile of the Yangtze

Taobao has eight million online stores, nearly one billion products for sale, and has come to revolutionise traditional Chinese commerce. It’s a giant universe where a kilo of tomatoes, a box of chocolates, a car or even new boyfriend can be just a click away. Taobao is just one of the businesses in the Alibaba Group, the empire founded by Jack Ma, a former English teacher, now better known as the ‘Crocodile of the Yangtze’.

 

 

This is how it starts: Mai Shizhi, 35 years of age, single, 1.71cm, 62 kilos, a seller in Chengdu city, Sichuan province, likes music, shopping online, jewellery and jewellery exhibitions. Mai continues: ‘I offer my services as a boyfriend over the Chinese New Year period. Those interested should be aged between 18 and 45’. 

 

May Shizhi’s ad is just one among many of its kind on Taobao, a Chinese e-commerce page. On the left, a photograph of the candidate, with a long face, thin lips, and a slightly hooked nose. 

 

And here are Mai’s conditions: 518 RMB per day, the rest is extra – and the rest could be holding hands, or a hug, or a kiss, or other services, Mai doesn’t want to go into detail. During shopping trips, Mai will carry bags up to ten kilos, more than that is also extra.

 

“In China, people feel pressure from their parents to get married and I want to help”, the seller from Chengdu explains. Money is also part of the equation. “Yes, of course it is, having money says a lot about a person.” 

 

‘Can you lower the price?’ ‘Do you have a car?’ the twenty women who have already shown interest ask, one by one. No, Mai does not have a car, and that doesn’t help his case, because others do.

 

New to this online world, what Mai also lacks is a review of services as a boyfriend. And here on Taobao, consumer appraisal creates confidence; it’s a guarantee of the efficiency of a service and the quality of a product.

 

 

Jack Ma used to teach English in Hangzhou. Alibaba.com, a platform for electronic commerce between businesses, was created in this former teacher’s house in 1999. Since then, the business has not stopped growing.

 

Taobao, one of the Alibaba Group services, was founded in 2003. 

 

“The idea behind this platform was that anyone could sell a product to anyone else”, e-commerce expert André Villares Silva explains. “Taobao has grown, and many of the vendors are now large warehouses or factories.”

 

Other online shopping services have started appearing in China over the last decade. Traditional shopping methods have undergone great change and Chinese people have begun to look at the Internet in a different way. The volume of domestic production, the cheap labour, the speed and delivery costs are, according to Villares Silva, determining factors behind the growth of the industry in China. Also an emerging middle class, more moneyed and better connected to the Internet, has helped contribute to the growth of electronic commerce.

 

Taobao has earned itself a place on the list of the most popular websites in the world. The platform had nearly a billion products for sale and 500 million registered users in 2013, according to company statistics. Around 48,000 products are sold every minute.

 

“On Taobao you can buy anything: tomatoes, wine, feta cheese, a car, a plane or cinema ticket,” says Andrew Joseph, a Hotel Management student in Beijing.

 

“And you can even send a curse to put on someone,” says Andrew’s boyfriend, with a cigarette in one hand and a glass of red wine in the other.

Andrew tries on a pair of grey plaid trousers which cost 128 RMB. They are very tight and Andrew can’t even sit down in them. He opens the Taobao page on his iPad. The seller is online.

 

‘The trousers are too small’.

 

‘Do you want to change them?’ comes the question from the other end, in Zhejiang province.

 

‘Yes, one size up’.

 

Andrew writes down the address. In less than one week, the size 34 trousers will be in the students’ hands.

 

“I can buy a pair of leopard print shoes here. But if I went to Zara today I would not find them,” Andrew, who always follows fashion, and is always on Taobao, notes.

 

Online commerce is nothing new to the student from Antigua and Barbuda.

 

“I bought a lot on Ebay but, as it’s an American company, the products were slow to reach the Caribbean. In China, you buy something on Taobao and it arrives the next day, and if it comes from another province it only takes three days”. 

 

“Ebay may be a shark in the ocean, but I’m a crocodile in the Yangtze River. And if we fight in the ocean, I lose, but if we fight in the river, I win.”

In China everyone knows these words. They belong to Jack Ma.

 

 

In the west of Beijing, a 20-minute walk from Changchunqiao metro station is Gotwin, a communications and design consultancy. Inside the space there is a small room, a little world that has nothing to do with consulting or the company’s registered activity. There are shelves with children’s clothes, pearl-coated hangers draped in shocking pink dresses with frills, which will be sold on the Internet for 50 RMB each.

 

“Parallel businesses are very common in China”, says Shasha Lu, Gotwin’s customer manager and Miyababy seller, the online children’s clothing store founded by six of the consultancy’s employees.

 

The Miyababy clothing is bought from a factory in Guangzhou, photographed at the home of a family in Shanghai, and only then comes to this office in Beijing.

 

Registration on Taobao is mandatory, and costs the company 1000 RMB.  It is a way to ensure the seriousness of those who enter the game. 

“If necessary, we also accept product returns within seven days”, says the entrepreneur, who believes that communication is one way to overcome consumer mistrust. 

 

“We always have someone available on chat to talk to the buyer. In addition, the client can always check reviews from customers who have purchased from this store before.”

 

Taobao is a giant universe and difficult to monitor, and with fraud schemes going on in the system, one of the risks is losing confidence in the vendors. To ensure trustworthiness, Alibaba’s administration has created a system of product and service evaluations – ‘reviews’. Depending on the points received, the buyer makes their choice. The seller works in a way to ensure positive reviews.

 

“The consumer must be responsible for the choices they make”, notes Silvia Muller, director of marketing for aliexpress.com Brazil, another platform of the Alibaba Group. “For us, it is difficult to make the consumer understand their responsibility when choosing a buyer.”

 

It’s evening time after school and Chengqian and five roommates are sitting on the small dormitory bunks in Beijing University of Technology. They are on Taobao. 

 

“I’m not a compulsive visitor, but I have friends who spend the day shopping”, Chengqian says. “They buy products online and then sell it at fairs here at the university.”

 

For the Industrial Design student, an online transfer is as natural a process as paying at the check-out counter of a supermarket. 

 

“If a product costs 20 RMB at the market and five on Taobao, then you’re not going to think twice. There are people who go to the shops first to compare prices.”

 

Part of Chengqian’s shopping list in recent months: a cotton candy making machine for 135 RMB, 700 grams of Suzhou chocolate for RMB 39, 14 amethyst stones for 340 RMB. 

 

“If you went to Panjiayuan market, each of these stones would cost at least 100 yuan. Now I’m going to resell them,” says Chengqian. “I once bought a silver bracelet, and in the end it was not silver. I then took a course in material and precious stone identification.”

 

In China fake goods are common offline, and also online. Everyday dozens of virtual stores shut down, and every day new illegal businesses open. The sale of counterfeit products has become a concern for the Alibaba Group who, at the end of 2013, signed an agreement with Louis Vuitton to protect intellectual property rights. 

 

E-commerce specialist, André Villares Silva, says that early on the company wanted to distance itself from piracy. 

 

“Alibaba probably makes more money selling toilet paper on Tmall and Taobao than it does by selling Louis Vuitton bags”, he says.

 

 

 

“In some countries we don’t need to do marketing because they practically find us”, says Silvia Muller, director of marketing for aliexpress.com Brazil. Aliexpress was created in 2010 and is a platform that allows small businesses to sell small quantities to some 220 countries and regions, including Portugal. At the moment, the database, also in Portuguese, has about four million products divided into 40 categories. 

 

“Clothes, electronics and beauty products are perhaps the most requested”, says the representative, adding that, from 2012 to 2013, sales to Brazil rose between five to six times.

 

Brazil is among the five largest markets, alongside countries such as Russia and the United States, Muller confirms. 

 

But Aliexpress has a long road ahead. Hiring foreign workers in the area of ​​electronic commerce is one of the difficulties. In the case of the Portuguese language department, people are required to master Portuguese and Chinese, and to have experience in this area. 

 

And convincing the outside world to engage on this platform? 

“Price is an important factor in Brazil, because import taxes are high and the products in stores are expensive. If Brazilians find competitive prices, then they will shop.”

 

 

 

 

In May 2013, Jack Ma resigned as chief executive of the Alibaba Group, staying on the company board however. With successor Jonathan Lu at the helm of the project, the company will this year launch an Initial Public Offering in the United States. In 15 years, the group has created more than 20 business units including:

 

 

Global Marketplace e-commerce B2B (business to business)

 

overseas online trade platform

 

virtual payment system

 

 `cloud computing’ and data management

 

search engine for shopping

 

C2C online shopping platform (consumer to consumer)

 

platform for online shopping B2C (business to consumer)

 

collective purchasing platform

 

domestic platform for small suppliers