Alibaba CEO Ma Ready to Ride Web’s ‘3rd Wave’

One of Jack Ma’s companies has 27 million registered users, but the Alibaba.com chief executive officer can think only of the people not using his site.

“We want to show how big the China market is,” Ma said Saturday in an interview in Hangzhou, where Alibaba is headquartered. The group’s auction site, Taobao.com, claims 27 million registered users and about 70 percent of China’s consumer auction market. “I want the Taobao team to focus on getting more and more people and more and more transactions,” Ma said, adding that “110 million [Chinese Internet] users are not using the site.”

To encourage use, Ma announced in 2005 that Taobao would not charge for transactions or listings. “Last year we said three years. Maybe next year we’ll think about starting to charge,” he said. He also projected that the auction company will account for 30 percent of Alibaba’s revenue by 2010.

Alibaba’s Jack Ma

Ma, whose Chinese name is Ma Yun, said he still has no timetable for the company to go public. “It is a golden time for Alibaba to get ready for the next wave of e-commerce in China.” He sees that next wave as the large-scale adoption of e-commerce by small and midsize businesses (SMBs). SMBs will be “the engine for the next five to 10 years of the Chinese economy,” he said.

E-commerce is the Internet’s “third wave” in China, Ma said, having been preceded by revenue generated from short-message service, which provided a way for Web portals to collect subscription fees, and then from online and mobile gaming.

There is no rush for Alibaba to go public, Ma said. “We spent US$750 million to buy out all the small investors and let our longtime employees cash out. This is why it’s not urgent for us to go public,” he said, referring to money gained from a $1 billion investment in Alibaba last year by Yahoo, which took a 40 percent stake in the company and handed over control of its China unit as part of the deal.

Of Yahoo China’s first year under Alibaba management, he said, “We’re happy with the first-year results. Yahoo survived.” Head count doubled from 400 to 800, he said. “I want to lower expectations for Yahoo China,” Ma said, adding that he wants to do something “new and fresh” with it.

The site’s new search technology would be ready at the end of September or early October, with which Ma said “we can compete” with Baidu and Google’s sites. “Next year, we want to make Yahoo China healthy. Then the next year, we make it a top-tier company, top three [in China],” he said.

Yahoo shareholders are getting a good return on their investment, according to Ma. “Even if Alipay [Alibaba’s online payment company] is zero, Taobao is zero, and Yahoo is losing money, Alibaba.com is already profitable.” The group has more than US$250 million in the bank and is cash-flow positive, Ma said.

Speaking earlier in the day at the company’s Alifest company event in Hangshou, Yahoo cofounder Jerry Yang said, “We are extremely satisfied with our cooperation with Ma Yun.” He added that when Yahoo was re-examining its presence in China, “we looked for the most suitable partner, and we invested in Alibaba.”

-Steven Schwankert, IDG News Service (Beijing Bureau)

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