Alibaba is an e-commerce company from China that has garnered international attention in recent times. The purpose of this sample essay is to discuss the history of this company. The main picture that will emerge is one of a thriving company with a lot of potential, and which could potentially have a major impact on the Chinese and global economies if it continues along its current trajectory of growth and development. This sample essay provides an example of the advanced writer options available at Ultius.
Overview of the Alibaba
The primary purpose of the company was to leverage the Internet as a medium for economic exchange in a way that had not yet been achieved within the nation of China. According to the Alibaba Group itself, the company “
was founded in 1999 by 18 people led by Jack Ma, a former English teacher from Hangzhou, China. From the outset, the company’s founders shared a belief that the Internet would level the playing field by enabling small enterprises to leverage innovation and technology to grow and compete more effectively in the domestic and global economies” (paragraph 1).
In the West, this concept would likely be familiar to most people through companies that employ technology and eCommerce such as eBay and Amazon. In China, though, the endeavor undertaken by Alibaba was unique at its time, and the founders of the company were self-consciously attempting to fulfill what they perceived to be a relatively vacant economic niche.
Perusing the history of Alibaba, one gets the picture of a highly competent business whose 15 years of existence has been characterized by expansions in the capital and strategic acquisitions and partnerships. For example, in 2005, Alibaba entered into a partnership with Yahoo, which included Alibaba taking over Yahoo’s operations in China. Likewise, in 2009, Alibaba acquired HiChina, the most important Internet infrastructure provider in China. The company has also launched educational programs on e-commerce for both marketers and buyers.
Essentially, Alibaba has displayed a high level of awareness regarding the fact that in order to succeed in China, it will have to ensure that the right kinds of infrastructure (both technical and conceptual) are in place for large numbers of people to meaningfully begin engaging with the Internet as a medium of commerce. The history of Alibaba thus far could at least partly be read as a history of the company’s efforts to achieve this.
Alibaba’s recent activities
One of the most important events in the recent history of Alibaba’s business and marketing strategies is the company’s decision to make an initial public offering on the New York Stock Exchange. This occurred on September 19th, and the act met with what could only be called magnificent success. The stock began at $68.00 and ended at $93.89, causing Alibaba to set new records within its category in the stock exchange. As Jacobs and Gough have pointed out, “
the reception suggested that Alibaba has convinced investors, in 100 meetings over two weeks, tat it could give them exposure to the growth of Chinese consumption and internet use, while assuaging their concerns about governance, corruption and state interference” (paragraph 3).
The performance of Alibaba led it to outrank several American giants, including Amazon and Facebook. Clearly, this bodes well for Alibaba’s future as a publicly traded company.
It is worth reflecting more closely on the implications of Alibaba’s initial public offering for its investors. As Jacobs and Gough have written:
“Alibaba has followed the model of Microsoft, Google, and other American technology companies, generously handing out stock to all levels of workers, from senior executives to receptionists. It has created a wealth diaspora rarely seen in China” (paragraph 3).
As the company grows, this “diaspora” in China’s current economy can only be expected to expand. More than promising prosperity for Alibaba as a whole, then, becoming a publicly traded company will likely continue to expand the wealth of all shareholders of the company, predominant among whom are the employees of the company itself.
This is impressive in its own right, within any context whatsoever; but it is especially impressive—even revolutionary—within the Chinese context. At this point in the discussion, then, it may be appropriate for the present essay to turn to a consideration of the special consideration of the significance of Alibaba within the specifically Chinese context.
Significance in the Chinese market
In order to appreciate the significance of this statement, it must be borne in mind that China is still formally a Communist nation, in which most of the important business enterprises within the nation are owned by the state. It has been noted in the news that
“the rise of Alibaba and its founder, Jack Ma, has proved instructive for a generation of young Chinese—not just as a road map to riches, but as a lesson in entrepreneurial individualism. Today, thousands of young people across China are creating start-ups of their own, driven by visions of what they might do if they, too, strike it big” (Jacobs and Gough, paragraph 6).
In this context, what is really being suggested is that Alibaba is serving as a beacon of capitalism within China and that its success is an inspiration for the younger generation in China to begin adopting the ethos of entrepreneurial individualism. In other words, Alibaba is potentially having an enormous effect not only on the Chinese manufacturing industry but also on Chinese culture.
This obviously implies that the relationship between Alibaba and the Chinese government could eventually evolve into a tense one. In fact, this direction would seem to already be foreshadowed by the fact that Alibaba’s founder Jack Ma has begun a new business focusing on financial services, which is
“going head-to-head with some of the world’s most profitable banks, operating in highly regulated markets and standing against competitors largely owned by the Chinese government. It is a precarious position. Although Beijing has pledged more financial liberalization, Mr. Ma risks government displeasure if his company moves in ways that run counter to powerful state firms or regulators” (Gough, paragraphs 4-5).
This would be one instance of the broader inevitable conflict between the staunchly capital ethos of Alibaba and the predominantly Communist ethos of the Chinese government. Clearly, Alibaba is forging new economic roads within the nation of China; and how far it can go remains to be seen.
In this context, Alibaba’s initial public offering on the New York Stock Exchange perhaps takes on additional significance. This is because insofar as Alibaba has shareholders across the world in general and within the United States in particular, it is far more likely to have the political clout that it will need in order to resist potential pressures from the Chinese government and other Chinese stakeholders to curb its operations in the name of Communist ideology.
As Alibaba was a privately owned company within China alone, its fate would have largely been only a concern within China itself. Now, however, the fate of Alibaba has become a concern for people all over the globe. This means that any governmental efforts against Alibaba will draw international attention, which means that such efforts are considerably less likely to emerge in the first place.
Alibaba’s prospects for the future
One of the main objectives of Alibaba as it moves into the future is to develop a more integrated delivery infrastructure within China. As Wang and Mozur have indicated, Chinese land reform has made the infrastructure underdeveloped, which naturally makes it difficult to guarantee the prompt and effective delivery of products purchased through e-commerce platforms.
Alibaba, however, has taken efforts and pledged money to help bring together various third-party stakeholders into a coordinated network that can then be utilized in order to improve the quality of the company’s delivery operations.
In essence, then, Alibaba is beginning to play a leading role in the development of infrastructure within China, for the simple reason that such infrastructure is needed in order for the company to continue to prosper. Ironically, then, a capitalist enterprise is helping to fulfill a function within a Communist nation which is generally taken care of by the government even in capitalist nations.
eCommerce and outreach into rural areas
According to Chiang and Lin, the two “engines” that will propel Alibaba into the future are mobile e-commerce and rural outreach. It would seem that in China, mobile phone coverage is widely available even in rural areas and that people often use mobile phones (as opposed to the Internet) when engaging in e-commerce. One of the key objectives for the future of Alibaba would thus be to optimize the ways in which it engages with this model of e-commerce.
Regarding rural outreach, this refers both to involving the people of rural China in e-commerce as well as developing avenues through which rural people can make their products available through Alibaba’s e-commerce platform. For example, a single village may have a specialized product that could sell extremely well across the nation, assuming that the product could make it online in the first place (and also assuming that adequate delivery infrastructure exists). Tapping into such markets would clearly expand the potential bases of stakeholders in the operations of Alibaba.
Ultimately, one of the main threats faced by Alibaba surely consists of the ways in which it could come into conflict with the Communist Chinese government as it continues to grow and develop. Thus far, though, the company would seem to be doing everything right in order to ensure long-term prosperity. As Krantz has pointed out, Alibaba’s revenues
“shot up 52% during Alibaba’s latest fiscal year”; its profit margin is enormous, and its stocks are attractive priced, and not to mention highly desirable, as the company’s initial public offering showed (paragraph 9).
When these factors are considered in light of the fact that Alibaba now has international shareholders, it would seem safe to conclude that at least in the near future, the company should be able to avoid pressures from the Chinese government and continue both with performing effectively as a business and serving as a beacon of the entrepreneurial spirit in the contemporary world.
In summary, this essay has discussed the history of the Chinese company Alibaba. The company successfully took advantage of the advances in technology following the U.S. and European financial crisis. It began with an overview of the company’s origins and development, proceeded to discuss recent activities, went on to consider the significance of the company within the Chinese context, and finally reflected on the prospects of the company for the future.
Essentially, from its inception in 1999 to its initial public offering in 2014, Alibaba has pursued a highly effective strategic plan of becoming a pioneering e-commerce company within China and a major player in the global economy. After the initial public offering, it would seem that Alibaba is in an excellent position to continue its tradition of expansion and high-level performance.
Alibaba Group. “History and Milestones.” 2013. Web. 10 Jan. 2015. http://www.alibabagroup.com/en/about/history.
Bullock, Nicole, Eric Platt, and Sarah Mishkin. “Alibaba Closes at $93.89 in NYSE Debut. “Financial Times. 20 Sep. 2014. Web. 10 Jan. 2015. http://www.ft.com/intl/cms/s/0/8150f416-4002-11e4-a381-00144feabdc0.html#slide0.
Chiang, Jeongwen, and Chen Lin. “Mobile and Rural: Dual Engines For Alibaba’s Future.” Forbes. 10 Nov. 2014. Web. 11 Jan. 2015. http://www.forbes.com/sites/ceibs/2014/11/10/mobile-and-rural-dual-engines-for-alibabas-future/.
Gough, Neil. “Tops in E-Commerce, Alibaba Is Now Taking On China’s Banks.” New York Times. 18 Sep. 2014. Web. 10 Jan. 2015. ://dealbook.nytimes.com/2014/09/18/tops-in-e-commerce-alibaba-is-now-taking-on-chinas-banks/.
Jacobs, Andrew, and Neil Gough. “Alibaba with Its I.P.O., Mints Millionaires and Risk-Takers. New York Times. 18 Sep. 2014. Web. 10 Jan. 2015. http://dealbook.nytimes.com/2014/09/18/alibaba-with-its-i-p-o-mints-millionaires-and-risk-takers/.
Krantz, Michael. “Analysis: Why Alibaba Is So Likable.” USA Today. 17 Sep. 2014. Web. 10 Jan. 2015. http://americasmarkets.usatoday.com/2014/09/17/analysis-why-alibaba-is-so-likeable/.
Wang, Shanshan, and Paul Mozur. “Alibaba and Others Push to Improve Delivery, on Singles’ Day in China.” New York Times. 11 Nov. 2014. Web. 10 Jan. 2015. http://www.nytimes.com/2014/11/12/technology/on-singles-day-in-china-a-push-to-improve-online-shoppings-slow-delivery.html?_r=0,