Alibaba Group Holding Limited is a Chinese company specialized in online commerce, retail, internet and technology. The company was founded on April 4, 1999 in Hangzhou, Zhejiang by Jack Ma.
The company provides customer-to-customer, business-to-customer, and business-to-business sales services through its websites, as well as electronic payment services, shopping search engines, and cloud data storage services.
At the closing time on the date of its Initial Public Offering, its value was 25,000 million dollars.
Alibaba market value
As of September 19, 2014, Alibaba’s market capitalization value was $ 231 billion. And as of December 2018, Alibaba’s market capitalization was $ 35.2280 million.
It is the 59th largest company in the world on the Global 2000 list. In January 2018, Alibaba became the second Asian company to break the record of $ 500 billion in valuation, after its competitor Tencent. In 2018, Alibaba was the ninth highest value brand in the world.
Alibaba is the world’s largest e-commerce and retail company, one of the world’s largest Internet and AI companies by market capitalization.
A real giant
The company has outsold all of the major North American retail giants (including Amazon, Walmart and eBay), with revenue that has increased by triple-digit percentages year over year. The company also holds the record for selling “The Singles’ Day,” the most successful online sales day of all dates, surpassing Black Friday and dates like Valentine’s Day and Christmas.
The company’s name comes from the character Ali Baba from the Middle Eastern folk tales from the One Thousand and One Nights collection, due to its universal appeal. The same Jack Ma, one of the founders of the company explain it as follows:
“One day I was in San Francisco at a coffee shop, and I was thinking that Alibaba was a good name. And then the waitress came over and I asked her:
‹Do you know what Alibaba is?› She said yes.
And then I said: ‹What do you know about him?›,
To which she said: ‘Open Sesame’.
And I said, “Yes, that’s the name.”
So I went out and met 30 people and asked them: ‹Do you know Alibaba?› People from Germany, India, Tokyo, China… they all knew about Ali Baba. Ali baba – open Sesame. Ali baba is a kind and smart business person, and he helped his people. It is also easy to pronounce, and is known worldwide. So Alibaba opens up a mountain for small and medium-sized businesses. So we also register the name “Alimama”, in case someone wants to imitate us. “
On April 4, 1999, Jack Ma and his team of 17 friends and students founded Alibaba.com in Ma’s apartment in Hangzhou, a China-based company with business services for businesses in a market.
In October 1999 Alibaba received an investment of $ 25 million from Goldman Sachs and SoftBank.
Alibaba.com hoped to improve online commerce domestically and perfect a platform for Chinese companies, especially small and medium-sized companies, to help them export Chinese goods to the global market as well as meet the challenges proposed by the World Trade Organization. (WTO).
In 2002 Alibaba.com became a profitable company within three years of its launch. Jack wanted to improve the global e-commerce system, so Alibaba launched Taobao MarketPlace, Alipay, Alimama.com, and Lynx.
When eBay announced its expansion into China in 2003, Ma saw the American company as a foreign competitor and rejected eBay’s purchase of its Taobao subsidiary. By applying existing technologies and gaining confidence in the local market, as well as expanding to dominate the market, even at the cost of initial losses before making the return to additional services, Alibaba and its subsidiaries managed to outperform eBay in the market in Chinese line. By claiming more and more customers in the Chinese market, Alibaba and Taobao succeeded in getting their competitor, eBay, out of the Chinese market.
In 2005 Yahoo! He invested in Alibaba through a variable interest entity structure, buying 40% of the company’s shares worth $ 1 billion. This would result in a $ 10 billion valuation for Yahoo!
According to Li Chuan, a senior Alibaba executive, the company was planning in 2013 to open physical retail stores in partnership with Chinese real estate company Wanda Group. Additionally, Alibaba bought 25% of shares in Hong Kong-listed Chinese department store chain Intime Retail in early 2014. In early 2017, Alibaba and Intime founder Shen Goujun agreed to pay HK $ 19.8 billion to fully acquire the private chain of stores. Alibaba shares rose sharply after the deal.
In April 2014, Alibaba, Coatue Management and Andreessen Horowitz led funding rounds worth $ 250 million in transportation company Lyft, bringing the total amount to a valuation of $ 332.5 million. On June 5, 2014, Alibaba purchased a 50% stake in Guangzhou Evergrade FC from Evergrande Real State Group Ltd. in a deal worth 1.2 billion yuan (US $ 192 million).
Alibaba has developed several businesses over time, among which are 1688.com, for business-to-business transactions, AliExpress.com, for retail, Taobao MarketPlace, offering a variety of services for retail, being the largest platform for customer-to-customer sales.
In April 2008, Taobao launched a subsidiary company called Taobao Mall, a retail platform that complements its customer-to-customer business offering.
In March 2010, Taobao launched the Juhuasuan shopping website, offering quick sales, with discounted products only for a very limited period of time. In October 2010, Taobao launched the eTao website to compare offers made on China’s e-commerce platforms.
On the arrival of the company’s 10th anniversary, Alibaba launches Alibaba Cloud in September 2009, aiming to create a platform for cloud services, including data mining for e-commerce, e-commerce data processing and personalization. of the information.
The group has research and development centers operating in Hangzhou, Beijing, Hong Kong, Singapore, Dubai, and Silicon Valley.
In July 2014 Alibaba Cloud entered into a partnership with Inspur. Alibaba Cloud is currently the largest cloud services company in China. In 2009, Alibaba acquired HiChina, China’s largest domain registration service, and incorporated it into the Alibaba Cloud. On July 28, 2011 Alibaba Cloud introduced AliOS (formerly known as Yun OS and Aliyun OS) a Lynux software service for mobile devices.
In 2017, at the HangZhoy computing conference, Alibaba launched AliGenie, a smart platform that works as a personal assistant, currently used in the smart talking advisor called Tmall Genie.
By July 2019 Alibaba revealed a processor called Xuan Tie 910, a 16-core processor with a speed of 2.5 Ghz and was designed by Alibaba’s subsidiary T-Head (Also known as Pingtouge). Alibaba points out that this processor is 40% faster than other processors on the market.
On September 25, 2019, Alibaba announced an Artificial Intelligence accelerator called Hanguang 800, which contains 17 billion transistors and was designed by T-Head and DAMO Academy (Alibaba’s research headquarters).
Among Alibaba’s multiple services is also AliPay, a payment platform without handling or payment fees, in which customers can rate how satisfied they are with the product received before releasing the money to the supplier companies.
AliPay has at least 300 million customers in China. In 2015, Alibaba announced that it would be introducing a payment system that would work through facial recognition of the platform’s customers.
Alibaba’s main co-founder, Jack Ma, was the CEO of the Alibaba Group from its inception until September 10, 2019.
The current CEO is Daniel Zhang, who succeeded Ma on September 10, 2019, and is also the CEO of Alibaba since 2015.
Joseph Tsai has been the conglomerate’s executive vice president since 2013.
J. Michael Evans is the president of Alibaba since 2015.
Alibaba’s board of directors includes in senior management Jack Ma, Joseph Tsai, Daniel Zhang and J. Michael Evans, directors Eric Jing and Masayoshi Son (founder and CEO of SoftBank), and independent directors such as Chee Hwa Tung, Walter Kwauk, Börje E. Ekholm and Wan Ling Martello, as well as Yahoo! co-founder and former CEO Jerry Yang.
In addition to Ma, Tsai, Zhang and Evans, senior management also includes Maggie Wu (CFO) Judy Tong (CPO), Jeff Zhang (CTO and President of Alibaba Cloud Intelligence), Sophie Wu (CCO), Tim Steinert (General Counsel) and Secretary), Jessie Zheng (CRO and CRGO / Platform Chief Government Officer), Angel Zhao (Head of Alibaba’s Globalization Leadership Group), Chris Tung (CMO), Trudy Dai (President of Wholesale Markets), Fan Jiang (President of Taobao.com) and Jet Jing (President of Tmall.com).
Previously, Jack Ma served as CEO of the Alibaba Group since its inception, but then resigned in 2013, choosing Jonathan Lu as his successor.
The Alibaba Group under Lu was doing well, although there were rumors that Ma was distrusting Lu’s ability to lead the company.
Daniel Zhang, who served as Alibaba’s COO under Lu, succeeded Lu as CEO in 2015.
On September 10, 2018, Ma chose Zhang to succeed him as CEO of Alibaba Group after his resignation, and this would take effect in 1 year, on September 10, 2019.
Since 2012, the Communist Party of China has established a Group Party Committee in the company and now has more than 2,000 party members as employees of Alibaba.
In 2019, the Chinese government began recruiting officials within major Chinese tech companies, including Alibaba.
Controversies surrounding Alibaba
Gold Provider Membership
Alibaba offers a paid gold supplier membership to try to ensure that every seller is genuine; The vendors’ gold supplier status and the number of years that status has been displayed are displayed.
The types of supplier verification and checks are listed on the Alibaba.com website, with stricter checks for sellers outside of China.
While most vendors are reported to be genuine, there have been many instances of sellers, some with Gold Vendor status, attempting to defraud unsuspecting buyers.
In February 2011, a controversy ensued when Alibaba’s corporate office admitted that it had awarded the integrity mark of its “China Gold Supplier” program to more than 2,000 distributors who had subsequently defrauded buyers; the company’s share price fell “abruptly” after the announcement.
A statement from the firm reported that Yan Limin, the CEO of Alibaba at the time, had been fired in March for “misconduct”; Phil Muncaster of The UK Register also reported that “28 other employees had been involved in unreliable deals.”
As The Economist noted, the company’s response has contradictory components: Alibaba’s enacted view that its corrective actions indicate its commitment to quality and integrity (where it contrasts with other Chinese business sectors associated with the scandal) was contrasted with visits. to the company, but the third parties could not attest that Alibaba’s statements were true.
The scandal was said to have placed the head of the Alibaba Group, Jack Ma, who was described as furious over the scandal, in a position to personally fight to regain public trust.
In May 2012, an American law enforcement officer posing as an American merchant representing people in Iran posted an advertisement on Alibaba.com to buy uranium.
In August 2013, Patrick Campbell from Sierra Leone was arrested at New York’s John F. Kennedy International Airport.
Samples of raw uranium ore were allegedly hidden in the soles of his shoes.
Campbell was accused of trying to organize the export of 1,000 tons of yellow cake from Sierra Leone to the Iranian port of Bandar Abbas, packed in drums and disguised as mineral chromite.
The samples were later determined to contain a negligible amount of uranium, and Campbell was acquitted at trial.
Counterfeit items and scams
Alibaba is frequently associated with the fraudulent importation of counterfeit items: In 2016, the Office of the United States Trade Representative added Taobao again to a list of notorious counterfeit platforms that includes sites like The Pirate Bay.
Alibaba denied wrongdoing and began a timid action against counterfeiters with only two lawsuits filed as of January 4, 2017, but brands suffering from counterfeit products continue to blame Alibaba for failing to do what is necessary to combat the problem.
Class Action in IPO (Initial Public Offering)
Alibaba and its IPO insurers were sued in California in a consolidated class action lawsuit.
The lawsuit was filed in San Mateo Superior Court in October 2015 on behalf of the investors who purchased the American Depository Shares from Alibaba, and alleged violations of the Securities Act.
Alibaba reached a settlement agreement in December 2018, subject to court approval, in which it agreed to pay $ 75 million to settle the lawsuit.
Alibaba and the largest fine in the history of Chinese companies until 2021
On April 10, 2021, the British network BBC News reported that the Chinese government had imposed a fine of 2.4 billion dollars on Alibaba, the highest fine imposed on any Chinese company to date.
The fine came at a time when the company’s majority shareholder, Jack Ma, had been out of the public spotlight for months in alleged tensions with China’s central government following critical remarks by Jack Ma about the Chinese government. The Beijing government also opposed the listing of one of Alibaba’s subsidiaries on the Hong Kong stock exchange, the Ant group. But it seems that tensions between Ma and the Chinese government are not the source of the cause of the fine, the Chinese government argues that the company has a dominant position in the market, which it has abused to prevent its users from using rival platforms to do business, a practice known as “commercial exclusivity.”
According to critics of the company, the implementation of this commercial exclusivity was what made the company a giant in the Chinese market and internationally.
Alibaba said for its part that the sanction would not have a major impact on its operations. Following the announcement by the company, the company’s shares rose considerably on the Hong Kong Stock Exchange.
Regarding the sanction and the causes of it, the company affirmed that it would carry out measures to reduce entry barriers and commercial costs for its partners, who use the platform to market their products around the world.
The move against the retail giant was the continuation of a series of tensions between the main shareholder, Jack Ma, and the Chinese government. In the past, Ma had said that overregulation by the government was stifling innovation. However, for this specific case, it must be said that it is precisely the regulations that allow Alibaba to not become alone as a dominant player in the industry and other platforms have fairer opportunities to compete in the market.
The sanction against Alibaba represents the largest antitrust action within China, which means that China has effectively established itself as an economic powerhouse in which major market failures can occur at a large level. Other tech giants have also been under suspicion by the Chinese government in the 2020-2021 period. Companies like Tencent, Baidu, Didi Chuxing, SoftBank and ByteDance had also received sanctions to date, but in any case the sanction issued against Alibaba was the largest in all of history up to that point.
Greater regulation of companies allows companies to adhere to best practices and gives other market players the opportunity to compete. The imposition of regulations by the Chinese government is directed towards the deepening of its mixed market economy model, with which consumers can have access to better options and much more competitive services.
Alibaba on the Stock Exchange
The company is listed on the New York Stock Exchange under the symbol BABA. At the time of writing this article, Alibaba’s stock traded on the stock market at $ 186 71 cents and with a market capitalization of $ 486 113 million according to Yahoo Finance. As of March 31, the company had 101,958 employees.
The company is headquartered in Yuhang District in Hangzhou, Zhejiang.
Sales: The company has worldwide sales of 51.9 billion dollars according to Forbes magazine and measured by this indicator it is the 59th largest company in the world.
The Founder of Alibaba
Jack Ma, the founder of the company, is the 21st person on the list of the richest people in the world with 25,000 million dollars according to the Forbes magazine report in 2019.