Source of Article: NTU EMBA Alumni Club Website

As the Alumni Lecture series approaches its finale, we have shifted schedule to evening hours to allow more alumni member to join the lecture, and we do have received great response as it has been in the two previous lectures. In this lecture, which has Dear Guo Rui-xiang, of College of Management, NTU, as the keynote speaker, focuses on Taobao by first looking back on the historic story of the rise of Taobao, followed by discussion on its key factors of success that may inspire our alumni member.

At the beginning of the lecture, Dean Guo plays a video clip that Taobao has released as corporate image video before it went public earlier this year, and another video clip made during Taobao’s humble start and Ma Yun, CEO of Taobao, speaks briefly to boost morale among his team. Of course Taobao’s performance today is far greater than it could have hoped for, but the two video clips have revealed one thing in common: Ma Yun’s ambition doesn’t seem to diminish at all over the past 15 years. Obviously, a corporate’s innovative development has everything to do with its leader; the future path for a corporate is determined by its leader’s vision.

It is eBay, a US based company, that first enters e-commerce market in China C2C（Consumer-to-Consumer）, and Taobao doesn’t have the advantage of early market entry. However, along the way of development in the past 15 years Taobao must have done some things right that contribute to its success today, and today we are here to talk about Taobao’s key factors of success.

In the beginning, Ma Yun, then founder of Alibaba Group, with an idea that “there is no business that can’t be closed in this world”, applies the concept of traditional yellow page onto the internet in the form of B2B （Business-to-Business） e-commerce platform, to which he believes can solve information and resource exchange problem that small and medium businesses (SMBs) in Hangzhou area have had suffered for quite a while. It is until later that this platform turns to serve almost entirely individuals. Observation on the two business models of B2B and C2C reveals that the difference between the two is a matter of trust. Businesses engaging with each other under B2B earn trust relatively easier than individuals under C2C, and addressing to trust is the paramount task for Taobao to prevail in competition when Taobao is established in 2003.

In the process of trade, trust is established by effectively deliver authentic information and guaranteeing safety in cash transactions. Taobao has designed an instant messaging tool, the Aliwanwan to expedite effective communication between buyers and sellers, and the dialogue messages are kept by Alibaba for just-in-case scenario. Taobao has also introduced in 2004 the AliPay, a third party payment settlement platform. A buyer selects the merchandise and then make remittance to AliPay, which releases the payment to seller only after the buyer has confirmed receiving the said merchandise, and dispute about cash transaction between buyer and seller will not happen.

Other than trust, Taobao has another feature: localizing C2C to accommodate Chinese culture. For example, instead of straight forward webpage layout design, Taobao opts for a “bustling” look while offering rich and diversified information. Its exemption of shelf fee also helps to successful acquire traffic among consumers.

Not just Taobao itself, Dean Guo emphasizes that what is not to be overlooked in the business matrix developed （eco-system） by Alibaba, Other than the four major business silos of Taobao (C2C), Tmall (B2C),  Juhuasuan, and Allibaba (C2C), other services offered by Alibaba deserve close attention, and Aliyun is one of them. It is a cloud service that not only handles information flow for e-commerce platform, but itself is also an enormous digital database from which precious information can be harvested by data-mining.

A special guest is also presented in this lecture, Ms. Li Peng-jun, the former offshore market development director of Alibaba, to unveil stories known only to the inner circle in Alibaba. When the public look at the culture of Alibaba, they are impressed with Ma Yun’s aggressive but charming personality in his leadership, but in fact the culture of Alibaba is not as “wolf-like” as perceived by outsiders.  Li says: “Alibaba makes its decisions on recruiting according to its values, which include ‘customers first’, ‘composure’, ‘initiative’, and ‘professionalism’. Management candidates must have sharp eyes on talents and let the subordinates to have their own ways to get the jobs done.” Not known to many, Ma Yun is a fan of Jin Yung’s (金庸) novels. He nicknames employees with the names of the characters in Jin’s novels. He is such a Jin’s fan that he even refers to the place for high-ranking executives’ meetings as Guangmingding, a meeting place in Jin’s novels. Alibaba’s inversion culture is also quite interesting. It encourages employee to see this world from different aspects. Rumor says that the big idea that gives birth to Taobao is also the product of inverted thinking. At Alibaba, a colleague that finds a problem may, with permission from supervisor, directly proposes solutions to the concerned unit. It is not rare that a bunch of people pulling their heads together to have a problem solved before you even know there is a problem. This decision-making pattern makes possible the high efficiency at Alibaba. Alibaba seems to be, as Li inexplicitly implies, a place full of stamina, and perhaps a corporate culture like this is the root to Alibaba’s persistent growth.

 As frequent-flyer managers over the Taiwan Strait and EMBA alumni member number continues to grow, we are witnessing a business giant rises and prospers in the population-driven, mega economic-of-scale China market, and we have combed through the history and future prospect of Taobao; Professor Guo concludes in the end with a question for the alumni members: “So, with what we have learned here and now, what can we do for Taiwan?” The replies from the alumni members suggest that Taiwanese businesses should escalate their adaptation of consumer-centered policy and think less about corporate gains. Alternatively, developing a viable business model for exporting technologies, like Taiwan’s outstanding medical technology, is something that we can study further.

Dean Guo also comments: “A business model is about creating values; it is the core to Taiwan’s transformation. For Taiwan to emerge above competition, your smart brains are needed. We don’t need to be pessimistic, but we do need to carefully position ourselves to bring out the fullest of our advantages. One thing for sure is that it will not be the same model of the past.” Taiwanese industry’s idling is a big problem must be dealt with right now; this lecture offers our alumni members not only a chance to learn new knowledge, but also, hopefully inspires alumni members to think again about the ways to create a better future for Taiwan.