Jack Ma: China's ecommerce CEO

23:54So at this point Jack Ma is a millionaire but Alibaba is on the verge of going bust so to take that company from near bankruptcy to one of the biggest companies in the world the first thing Jack does is that he doesn't panic No, he set up Alibaba as a company that would last for 80 years so he sets about learning from his mistakes and he does two things He says that one mistake was limiting how high his partners could rise in the company. So he changes that. Yeah. So instead of saying the highest you'll ever reach as a manager, I'm the ultimate boss. He says that they can rise higher in the ranks of the company.

24:27He actually says, the lessons I learned from the dark days at Alibaba are that you've got to make your team have value, innovation and vision. So they've got to be able to see where they can get to. Yeah. And the other big thing he does is once again to look outside China's borders to the US. He develops a product that enables China's exporters to trade with US buyers online. And it's an immediate success. By the end of 2002, Alibaba has made a$1 million profit. Now, this is truly lift off for the company, because with Alibaba now in profit, Jack Ma starts expanding his operations. Yeah. And I think you can see some parallels here between Jack Ma and Jeff Bezos at Amazon.

25:06It took Amazon a long, long time to actually turn a profit. Any money they made, they ploughed back into the business. I think the first 15 years of Amazon's existence, it only made a profit in one year. And Jeff Bezos said that was an accounting mistake. But Alibaba actually went into profit quicker than Amazon did. And when Jack started making money, he reinvested into new areas of the business. He set up a customer to customer market, which is a little bit like eBay. It's called Taopao, which translates to searching for treasure. Unlike eBay, it earned money from advertising and selling additional services rather than sale commission fees.

25:39And then he sets up Alipay, the online payment system, which is now another enormous part of his business. For instance, it's now got over a billion customers in China and it's expanding. So this year in 2024, it was a major sponsor of the European Championships soccer tournament in Europe, which then ups its European profile. In fact, on the way to this studio this morning, I passed a bus which was plastered from top to toe in AliExpress with the Euro 2024 livery on it. So later on, he'll also add cloud computing, which is a bit like Amazon Cloud, a site offering discounts by buying in bulk, which is a bit like a Chinese Groupon, a video platform, which is a bit like YouTube.

26:18A bit like this, a bit like that. He's basically chopping and changing and taking bits that are working here and there and making them the number one kind of platform in China. He's even got a grocery delivery app and an end-to-end delivery system that aims to get packages anywhere in China in 24 hours and anywhere in the world in 72 hours. Sounds a bit like Jeff Bezos' company Amazon, right? And over the next decade, Alibaba cements itself as a dominant force in e-commerce in China. And Jack funds all this growth with some massive investments. In 2005, his old friend Masayoshi Son had invited Jack to an entrepreneur event in California.

26:55And it was there that Jack bumped into Jerry Yang. Remind us of who he is. He's one of the founders of Yahoo. So one of the OG internet bosses, I would say. They reportedly had a conversation that lasted just 10 minutes. And within that 10 minutes, whatever Jack said clearly convinces Jerry to invest$1 billion in Alibaba for a 40 % stake in the company. Wow. So it's growing fast. This is the perfect time to do something we've discussed a lot in these podcasts, which is to go public, to have a sale of shares, an IPO. In 2007, Alibaba had its first IPO on the Hong Kong Stock Exchange. It raised another$1.7 billion, with Jack's share putting him on the verge of billionaire status.

27:39And that was confirmed when finance magazine Forbes Asia list him as worth$1.3 billion in 2009. So Jack is officially a billionaire, but he isn't about to slow down.

28:03So on Goodbye Billionaire, we often talk about the jump from a million to a billion being huge. And the jump from one to two billion is the same amount. It's another billion, but I would say it's arguably a little bit easier. But the point is, is that we've got lots of people who hit the billion dollar mark. There are 3 ,000 of them in the world. To go higher up the tree, it gets rarified the higher up that mountain you climb. There are only 200 worth 10 billion. And there's only 25 in the world who have 60 billion, which is what Jack Ma was worth at his peak. So he's top of the tree. I mean, when you think about going from a million to a billion, we've talked a lot about the work that goes into it.

28:43But to get to the point where you are one in a group of only 25 people, I mean, you would all fit probably onto a single bus. Yeah, not even half a bus. A van. Yeah, a big van. To scale those heights, you've got to be the right person with the right business at the right time. And Jack Ma's Alibaba, I think, ticks all of those boxes. Yeah, it's one of those spectacular success stories I think don't come around very often. Yeah. I mean, the Internet has spawned many of the billionaires we've talked about. But this combines also, as I say, the sort of huge economic expansion in China and its reach out into the rest of the commercial world.

29:22Right. And this huge boom in Chinese consumerism, right? People wanted to buy stuff coming out of the communist era. People were kind of exposed to the marketplace. They were exposed to foreign goods for the first time. Alibaba was perfectly placed to take advantage of that. You're taking hundreds of millions of people from what you described as an almost agrarian economy into a consumer economy in a couple of decades. It's incredible. And, you know, the incredible success of Alibaba was confirmed when they had that IPO, first in Hong Kong. And then in 2014, they had another IPO on the New York Stock Exchange.

29:53The biggest IPO in history, which to this day has only been surpassed once. And that was by Saudi Arabia's national oil company, which was worth, I think, like$2 trillion. So that IPO raised$21 billion for Alibaba. It gave the company a market share of$168 billion. It was the highest value in IPO history for an internet company. That's incredible because that includes Facebook, remember. So, you know, it's huge. So when you think about these big names like Bezar, Zuckerberg, really Jack Ma is right up there. Right up there. Right up there at the top of the tree. And it sees him become the richest man in China.

30:31He's become a celebrity in his homeland. His success is venerated. The public nicknamed him Ma Baba or Daddy Mark. Yeah, his regular appearances around the world often go very viral. He even at one point visited then US President Donald Trump in the White House in 2017. Which is quite something when you give the rhetoric that the Trump White House was talking about China at that time. Exactly. He makes regular appearances in Time magazine's list, the world's hundred most influential people. And he even becomes a judge on a TV show called Africa's Business Heroes, which is a TV contest for budding African entrepreneurs.

31:06It's a little bit like Shark Tank in the US or Dragons Den in the UK. The show is actually funded by his philanthropic foundation. By 2020, his wealth has grown to$61 billion. He's the richest man in the whole of Asia and he's planning an IPO for Ant Group. Now, that's the holding company of Alipay and others, which is set to be even bigger than the Alibaba IPO. But then something happens. He gives a speech in Shanghai where he makes critical remarks about China's financial regulatory system. This is a huge moment in this story. Absolutely massive. Because his success has always relied on having a reasonable relationship with the Chinese state.

31:46It was even reported that he's a member of the Chinese Communist Party. But this time it looks like he's crossed the line. And the line he crossed was that he criticised China's financial regulatory system, calling it outdated and suggested it stifled innovation. He also compared Chinese banks to pawn shops. That, it seems, was enough to bring about a rapid change in his fortunes. It's so interesting because those comments to someone based over in Western Europe or America probably doesn't even register as being anything other than mildly critical. But I imagine if your relationship with the state has to remain uniformly positive so your businesses can function, otherwise you will face a crackdown.

32:26That kind of thing is like lobbing a grenade. Yeah. And who knows? I mean, it may have been that they wanted to take a bit of a more interventionist approach on this kind of massive global success he was having. And we're looking for the slightest opportunity in which to do it. We just don't know the answer to that. Right. It's still a pretty opaque business as to what happened. because after making those comments, he mysteriously disappeared from public view. He suddenly dropped as a judge on Africa's Business Heroes. A spokesperson for Alibaba at the time said due to a scheduled conflict, Mr Ma could no longer be part of the final judge panel.

32:57And most significantly, the Ant Group IPO is blocked by the Chinese government. That is a big moment because that was going to be a huge IPO. And Jack Ma reportedly loses$12 billion of his fortune in just a few months. An Alibaba group faces a Chinese antitrust investigation which focuses on allegations of monopolistic practices. That investigation concluded with a fine of nearly a billion dollars in 2023. So oddly, while Alibaba groups' annual revenues are higher than they've ever been, in total, the combined loss of value to Ant and Alibaba of the state crackdown reported by CNN is$877 billion.

33:39That's nearly a trillion bucks Yeah, that is a lot of money to lose It makes me kind of break out in a sweat thinking about that And actually in 2024, Jack's own wealth is down to about 24 billion Still a lot of money, but he's lost a significant chunk of that More than half, yeah But then comes a period of a few years where everyone's on the lookout for him There are some shadowy traces of him There's a couple of unconfirmed sightings of him doing things like playing golf Being on his super yacht so they begin these rumours of a comeback. They do seem to be slightly premature though. The main thing that Jack has returned to is his first love, teaching.

34:15So he's actually now an honorary professor at Hong Kong University and a visiting professor at universities in Japan, Rwanda and Israel. But he's certainly not the figure on the international stage he once was. He's not the Jack Ma who used to be this kind of huge presence on the international stage. It seems he's gone into semi-retirement but he's still with us and it's time now for us to judge him. Is he good, bad or just another billionaire?

34:44So on our first category, we judge our billionaires on wealth. Just how rich are they? And on this one, he's got to score pretty highly. The richest person in Asia at one point, at its peak, he had a fortune of$61 billion. That puts him, I think, in the top 10 easily. Now he's worth just over a third of that, 24 billion. He's about 80th on the world's rich list, seventh on China's rich list still. Still, I mean,$61 billion is not to be sniffed at. Yeah, I think having been China's richest man at a time when vast fortunes were being amassed as China economy expanded so rapidly, the internet expanded rapidly, I think it puts him really high on the list.

35:26And also remember, we do save a little bit of this category about how he spends it. He's got the Gulfstream jet. He's got the super yacht. He's got the vineyards. He's got that with his own wine. Yeah. I'm going to give him a good nine on this one. Oh, yeah. Well, I was going to go for an eight, but then I remember the vineyards. And what was it? The trout stream. The maple syrup. Yeah. OK. It's a nine out of ten. OK. So nine out of ten. Very high score there. We have another category, Rags to Riches. How far have they come from where they started to where they got to? And this one, again, he's got a score pretty high.

35:58Yeah. I would give him maybe even an 8 out of 10 for this. Yeah, because if you go back to him, his parents were storytelling musicians in Mao's China, not the best profession to have during the Cultural Revolution. No, exactly. They really suffered as a result of that. He went to, by his own admission, a terrible university. He kind of languished doing teaching for a bit. Yeah, OK, I'm going to give him a 9 out of 10. So 8 from me, 9 from you. 9 from me. Villainy. Now, there has been some criticism, And this is not just of Jack Ma, but generally, but of the 996 working schedules at some companies like Alibaba.

36:34That means working from 9am to 9pm, six days a week, high pressure environments, demanding performance targets, lack of job security. You know, it's a pretty attritional kind of environment, I would say. Yeah. Having said that, Alibaba has responded to some of these criticisms. They've implemented some measures to improve work-life balance, like having flexible working. They've promoted employee well-being programs. But there are concerns about the vast collections of data. Big tech companies accrue. That's not, again, this is not an Alibaba specific kind of concern. But in China, you know, it's really hard to go about your daily life without even interacting with an Alibaba app once.

37:14You know, just Alipay alone. So there are always questions in China, at least, about what data is being passed on to the Chinese authorities. Yeah, and that's a debate that continues to go on as we speak. There's also been reports of people getting to lots of debt via Alipay and the safety measures that need to be put in place. But you could say that about lots of apps. So apart from a brutal working environment, which I think is common of China generally, I don't see any massive villainy on Jack Ma's part. No, it doesn't seem like he's screwed anyone over in his race to get to a billion, which is actually quite unusual for quite a lot of our billionaires.

37:53There's always someone. Yeah, that's true. Also worth remembering on the relationship with the state, going back to that quote that you gave us earlier about on the relationship with the Chinese government, be in love with them but don't marry them. Yeah. Was that the right one? Yes. It basically translates to get into bed with them but don't put a ring on it. That's probably the like simpler explanation from what he said. Okay. All right. So villainy, I don't know. I don't see anything particularly villainous here. I may be being naive about this, but I'm going to give it a four. Yeah, I would give him a four.

38:25It doesn't really seem like he's been personally villainous. I mean, obviously the buck stops with him because he was the boss of Alibaba. But a lot of these things that we've just discussed are actually quite common to tech companies. I would say that what AliExpress and Alibaba do is that they create probably what is so much product and so much waste, which they're then shipping all around the world. So the environmental impact of something like that, I think, is probably huge. You could level the same thing and a number of other companies. Alibaba did set out some ambitious environment goals in 2021, including achieving carbon neutrality in their own operations by 2030 and enabling and engaging the platform ecosystem to reduce emissions by 1.5 gigatons over 15 years.

39:09In 2023, they announced they'd reduced their own CO2 emissions by 13%. So some progress. But does that mitigate the damage? Yeah, I would give it a 4 out of 10 because, and I know plenty of people who buy things on AliExpress. And the main reason you buy things is because they are dirt cheap. And that encourages you to spend a lot of money, you know, maybe not as much as you would spend if you went into a shop in the UK and bought it on the high street. But you're buying a lot of stuff that you probably don't need, which probably contributes quite a lot to the environmental impact of something like Alibaba.

39:44Yeah, encourages you to buy stuff, throw it away, buy again, blah, blah, blah, blah, blah. Exactly. Okay. Okay, foreach on that one. Philanthropy is another one of the categories. What have they given away of their vast wealth? So in 2006, Alibaba launched its first organised philanthropy to help underprivileged mothers in China. By 2020, some 20 ,000 mums have been given free training and funding to become online entrepreneurs. In 2010, Alibaba started to earmark 0.3 % of its revenues, not profits, revenues, which is a big difference to philanthropy. The Alibaba Foundation was set up to manage that philanthropic effort with 56 billion in revenues for 2019.

40:240.3 % is$168 million, although Alibaba hasn't disclosed the actual figure they put into the foundation. In 2014, Jack set up the Jack Ma Foundation and he put aside shares in Alibaba before that record-breaking IPO that we talked about. And in 2019, it was reported that the foundation's shares were worth$4.6 billion and it had paid out over$300 million, which is less than a tenth of what's in there. So causes have included 14 million to protect wetlands in Hangzhou, a joint pledge with the Ali Pei Foundation and Zhou Tsai Foundation, an$143 million pledge to support the development of women's soccer in China, causes in Africa, Australia and the Middle East.

41:05So quite a global, if slightly China-centric kind of approach to philanthropy. Yeah, well, that's nothing wrong with a China-centric if you're a Chinese billionaire. I mean, I imagine there's quite a US-centric bent to lots of US billionaires' charitable efforts. So there's a few hundred million there. There's a few billion apparently in the foundation. It's not clear how much they've distributed, but those shares in the foundation are a pretty big chunk of his overall wealth. So I'm going to say I'm going to give him a five and hope that I would upgrade that five when I see more evidence of what's been paid out.

41:40Yeah, I think it's quite unusual to have someone put aside shares to give to their foundation. I've not heard of it before with any of our billionaires. I think, well, the Bill and Melinda Gates Foundation definitely have Microsoft stock in there. That's the foundation of Bill and Melinda Gates' foundation's vast fortune. Well, their vast fortune and also the foundation's fortune. That's where most of that comes from. So it's kind of similar in that regard. Maybe I'll be more generous and give him a six out of ten. OK. It does seem like he's given away more than you would expect. Okay. All right.

42:10We'll keep our eye on that one. And then power. One of our tests that we always use is could this person pick up the phone and talk to a head of state? And I would say this is a definite yes. Yeah. So he actually met with a lot of heads of state and business leaders when he was at Alibaba Group. So they discussed trade, investment, innovation, social development. So he's out and about. Yeah, and he's one of those interesting people which is highly anglicised, if you like, in his business approach and his business network of contacts. And yet, if some theories that we believe have very close ties or some ties with the Communist Party and what have you, so he's an interesting figure as an interlocutor in some ways between governments, between Western governments and Chinese governments.

42:56And actually, according to the Financial Times in 2021, Jack reportedly sits on UN committees with a Rolodex including kings, queens, presidents and prime ministers. So I would say he ranks quite highly with power. Yeah, I don't think he's as powerful as Zuckerberg and Murdoch, who I think we gave nines or tens to. But I'm going to give him an eight on power. I think he's a very powerful figure. He's someone who can move quite easily between Washington and Beijing. And I think that makes him a very powerful figure. I'm going to give him an eight. Yeah, I'll give him an eight out of ten. Yeah, and he's definitely a really interesting personality.

43:28Yeah. And then legacy is our last category. Have they left something behind that will, you know, endure? Again, one of the tests we apply to this is that if he hadn't done it, would someone else have done it? And I think the answer to that is definitely yes. Oh, yeah. Some other Chinese entrepreneur would have come up with something like Alibaba. Yeah. But there was something about his charm, his energy, the fact he spoke flawless English, which allowed him to become the personification, if you like, of Chinese commerce beyond Chinese borders. But, you know, but then he sailed a bit too close to the wind and was slapped down when he was critical of the Chinese system.

44:06So maybe that is a salutary lesson. So he's got a legacy in that respect. I also think maybe his legacy is yet to be determined because you can obviously see, you know, we've talked about the huge amounts of advertising Alibaba have spent on the Euros this year. You know, I've seen Alibaba adverts for the first time, like in the last few years in the UK. I think if they managed to nail the Western expansion, it could be an even huger story. Yeah. And I think that is very much in the works. OK, so legacy eight. I would give it a seven because I think, you know, you could add on more points, like depending on how it goes in Western Europe and America.

44:48it could maybe even surpass Amazon if they play their cards right. I'm sure Jeff Bezos is losing sleep over it. And also, the reason I'm getting an eight also is because of his place in Chinese culture as this kind of folk hero. I mean, I think that, you know, like Richard Branson was a well-known entrepreneur in the UK and people wanted to be rich like Richard Branson. I'm imagining that Jack Ma is a very similar character in China. And therefore, he is a lightning rod for Chinese entrepreneurialism, which has clearly been a world changing phenomenon. So eight out of 10 from you. An eight out of 10 from me.

45:25Did I manage to talk you up? Yeah, I think that's the first time I've ever done that. That's OK. It's a victory for me. Eight out of 10. A good, bad billionaire first. And then we've got then the ultimate decision. Is he good, bad or just another billionaire? I think he's just another billionaire. Right. I think he's probably one of the easiest cases for me to decide ever because his story is really interesting, but he hasn't done other than his philanthropy, which, you know, is quite impressive, but not... Par for the course. Par for the course, yeah. But he isn't bad either. Yeah. So, yeah, he's just a clearest cut case of just another billionaire for me, albeit in a very rich one.

46:03Yeah. I'm going to agree with you. I think he's just another billionaire. You know, having met him, he seems like a really nice guy. He doesn't seem like he's out to conquer the world with evil intent. If you think that the Amazonification or the Alibabafication of retail in the world is a bad thing, then you may think that he is bad. But if he hadn't done it, somebody else would. So Jack Ma, you are just another billionaire. A rich one. A very rich one. But you were even richer at one point. So who have we got next episode? So we've got South Africa's first black billionaire. In fact, he remains the country's only black billionaire.

46:39He's also part of a power couple. His wife is considered one of South Africa's most glamorous women and is an entrepreneur in her own right. And his sister is the current first lady of South Africa, making him probably the most well-connected businessman in the country. He is Patrice Motsepe, a byword for black wealth and success in post-apartheid South Africa. Good Bad Berliner is a BBC World Service podcast produced by Mark Ward with additional production by Emma Betteridge James Cook is the editor and it's a BBC Studios production for BBC World Service For the BBC World Service, the senior podcast producer is Cat Collins and the podcast commissioning editor is John Manel If you enjoyed this podcast, then please rate and review us and why not tell people about your favourite episode on social media It helps us to keep telling you these incredible stories

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