Alibaba Chairman Jack Ma Will Face His Biggest Challenge Ever In 2014


On December 12 the Financial Times named Jack Ma, founder and chairman of the Hangzhou-based Alibaba Group, person of the year. It’s hard for us to disagree. Ma controls the largest and fastest growing e-commerce platform in the world, whose 2012 sales, according to the FT, were larger than Amazon and EBay combined. He is arguably the most powerful person on the Internet in China.

When Ma founded Alibaba in 1999 as a platform to facilitate commerce between small businesses within China and internationally, no such website yet existed. Since then, Ma has expanded Alibaba Group to include a variety of online shopping platforms — including group shopping and consumer shopping (Taobao) platforms — as well as cloud computing, online payment, and most recently, financial products.

Ma now finds himself up against China’s gargantuan state-owned banking sector, notorious for excluding a large percentage of the population not deemed creditworthy (Ma reported this number at 80% over the summer) and for its negative real interest rates. According to the FT, Yu’E Bao, Alibaba’s investment platform, has racked up 30 million depositors since June, attracted by higher earnings on their savings. The shift of wealth into this product represents among the biggest signs of interest rate liberalization in China thus far. Baidu, China’s Google, and Tencent, the parent company of Chinese social media applications WeChat and QQ, have also launched similar online investment platforms.

Perhaps Ma’s biggest challenge heading into next year is the scramble to capture China’s mobile shopping market. An even more powerful Alibaba Group looms if it can parlay its preeminence on the Internet into mobile shopping. But as the Southern Weekend reported earlier this month (link in Chinese), that could be a tall order since Tencent, China’s dominant purveyor of mobile social apps in China, is better positioned to tap the shopping potential of its 500 million plus users.

Ma has bested rivals in the past — on its way up Alibaba pushed eBay out of China’s market and took over Yahoo’s China operations. But Tencent, a giant of comparable stature, doesn’t look like a pushover.