As of February 25, 2020, Alibaba’s market capitalization was US $ 551.595 billion. This number ranks among the top ten in the world and is the highest valued Chinese company. At the same time, the economic situation in China shrouded in a new coronavirus is not optimistic (Munster et al., 2020). Alibaba cooperated with the Chinese government to build a “digital epidemic prevention system.” This system has the functions of information collection, real-time dynamics of the epidemic situation, online intelligent consultation, and personnel inquiries on the same trip, etc., to realize digital epidemic prevention and control. Alibaba is the epitome of the development of Chinese Internet companies in the digital economy era.
In 20 years, Alibaba has grown from a small business into a huge Alibaba digital economy, with more than 110,000 employees. It spans fields such as business, finance, logistics, and cloud computing (Clark, 2018).
The rapid development of the Internet has enabled China’s digital economy to grow from scratch and grow from small to large. Research institutions estimate that the digital economy currently accounts for more than 30% of China’s GDP (Zhang and Chen, 2019). The digital economy is becoming a new driving force for economic development in China and the world, and it is also a core component of national competitiveness in the future.
Why did Alibaba go to this day? How can we take a path to the digital economy era? Can China see more Alibaba in the future? This is a question in many people’s hearts.
Start-up
On the fifth day of 1999, Alibaba held its first full-member conference, one of the most famous scenes in the history of Internet development in China. Ma Yun made a light-hearted speech for more than two hours, telling Alibaba’s mission, vision and the future of the Internet.
But soon, the burst of the U.S. Internet bubble quickly passed to China, and Alibaba, which had not yet found a profit model, was worried internally and externally, and the capital chain was on the verge of breaking.
Jack Ma then started Alibaba’s “Long March” road and carried out drastic strategies and organizational adjustments: closing overseas offices, shrinking business, achieving independence, and not relying on venture capital.
Retail platform
In 2003, Alibaba began preparations for the establishment of Taobao.com. Alibaba started as a B2B business, while Taobao is a C2C model. The biggest rival is eBay. At that time, eBay had occupied 90% of the Chinese C2C e-commerce market, and was later acquired by the US retail website giant eBay.
The media called the match “ant vs. elephant” (Chen, 2007). Different from eBay’s payment and commission model, the free Taobao network attracted a large number of merchants to flock to it, but it was the launch of the Alipay secured transaction that established the victory, which completely eliminated people’s online shopping inconvenience and trust doubts.
In just over a year, Taobao was on par with eBay. Until 2005, Alibaba acquired all of Yahoo’s business in China and acquired Yahoo China’s operating rights. Knowing that there was no chance, eBay quickly sold eBay and withdrew from the Chinese market.
E-commerce ecosystem
In September 2007, Alibaba held a strategy meeting in Ningbo. At that time, the group was chaotic and there were fierce conflicts between businesses. There was no consensus on which direction the company should go. It was at this meeting that Alibaba established a strategy for the next 10 years to “build an open, collaborative, and prosperous e-commerce ecosystem”, and the core of this system is data. Therefore, Alibaba Cloud, Cainiao Network, and Ant Financial were subsequently established (Tse, 2015).
On November 6, 2007, Alibaba ushered in the first highlight moment in the history of development, and the B2B business was successfully listed in Hong Kong.
Defining the Digital Age
But Alibaba is not in this way all the way, the era of the mobile Internet has come.
In 2011, WeChat was born, allowing Tencent to be the first to get a ticket for the mobile Internet (Schulte and Lee, 2019). In the Internet world where elephants may fall at any time, Alibaba is facing a thrilling moment.
In this rudder process, Alibaba raised the power of the entire group, “All in Wireless”, and focused on building mobile Taobao, achieving a successful transformation.
On September 20, 2014, Alibaba Group landed on the New York Stock Exchange, setting the world’s largest IPO record in history.
Development in the new era
Internet companies such as Ali, born in the era of the digital economy, will have a very different temperament from the big companies in the industrial era.
At the end of 2015, Alibaba Group announced the full launch of the “China-Taiwan Strategy.” The company integrates product technology and data capabilities to build the middle stage, so that the front-line business becomes small enough, and the middle stage becomes strong enough, so that the entire company has the ability to quickly innovate. Later stories, everyone has already seen (Fan et al., 2018). The rise of a series of innovative businesses, such as cost-effective, flying pigs, and word of mouth, are all closely related to the China-Taiwan strategy.
Statistics show that in 2018, Alibaba and Ant Financial Services paid a total of 51.6 billion yuan in taxes to the state, driving more than 250 billion yuan in taxes for upstream and downstream industries; creating 40.82 million jobs, including 15.58 million direct jobs and 25.24 million driven types of job opportunities; Alibaba’s China retail platform GMV has grown from zero to 5.7 trillion (Terada et al., 2019).
“Let the world have no difficult business” is not empty words. Through Internet technologies and methods, Alibaba is helping to solve many problems such as difficulties in trade for SMEs, high thresholds for entrepreneurship, high operating costs, high logistics costs, difficult financing, and expensive financing. Alibaba has formed a commercial operating system, and it is also a digital system. Alibaba’s commercial operating system is designed to empower merchants to make it easier and more efficient to do business in the digital economy era.
Alibaba and Digital Business
The big wave of the digital economy is accelerating and sweeping every corner of every industry, reshaping business and changing society. On the consumer side, the degree of digitalization of Chinese consumers can be said to be leading the world, but it is clear that the road to digital transformation for the future has just begun. Subversive changes are taking place in consumers and markets, and changes are being forced on the supply side as well.
What is revealed behind Alibaba’s growth history is that the 20 years of China ’s digital economy taking off is a history of solving social problems and creating value for China and the world. Alibaba’s practice of helping small and medium-sized businesses to run their businesses and allowing consumers to buy quality goods wherever they are, has created the world’s most prosperous e-commerce. Alibaba’s independent research and development of computing power has helped enterprises to cultivate digital internal skills and brought a vibrant cloud computing. Alibaba has improved the efficiency of social resource utilization and spawned a shared business model. The digital economy has spawned a large number of fast-growing emerging companies, and one-third of the world’s “unicorn” companies were born in China.
Source of pictures: Retrieved from http://www.vcg.com
Reference：
Clark, D. (2018). Alibaba: the house that Jack Ma built. HarperCollins Publishers.
Chen, H. (2007). Analysis of the Reasons for Ebay’s Defeat in China——Comparison with Taobao. Property Guide, 000 (005), 20-21.
Fan, J., Tang, L., Zhu, W., & Zou, B. (2018). The alibaba effect: Spatial consumption inequality and the welfare gains from e-commerce. Journal of International Economics, 114, 203-220.
Munster, V. J., Koopmans, M., van Doremalen, N., van Riel, D., & de Wit, E. (2020). A novel coronavirus emerging in China—key questions for impact assessment. New England Journal of Medicine, 382(8), 692-694.
Schulte, P., & Lee, D. K. C. (2019). Alibaba vs Tencent: The Great Race (pp. 163-194). World Scientific Publishing Co. Pte. Ltd..
Terada-Hagiwara, A., Gonzales, K., & Wang, J. (2019). Taxation Challenges in a Digital Economy—The Case of the People’s Republic of China.
Tse, E. (2015). China’s disruptors: How Alibaba, Xiaomi, Tencent, and other companies are changing the rules of business. Penguin.
Zhang, M. L., & Chen, M. S. (2019). China’s digital economy: Opportunities and risks. International Monetary Fund.
ewig 
Hello, Jingjing. I really appreciate your blog. It is a very clear review of the major digital changes that Alibaba has experienced since its birth. In just 20 years, Jack Ma has transformed Alibaba from a small unknown company into a world-renowned international company. Its most famous ‘products’ are Taobao and Alipay. With the popularity of mobile intelligence, these two products are no longer restricted by age, occupation, region, etc., and their promotion and application are second to none in China. Take Alipay, an independent third-party payment platform, as an example. In China, people not only use it to scan codes to pay for daily goods, but also to use it as a service platform for applications such as medical reimbursement, transportation, insurance, living expenses, and even educational resources. One app can meet the needs of ‘clothing, food, shelter, and transportation’. Such powerful functions have greatly promoted the development of e-commerce, and also made Alibaba’s status unshakable.
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Hi Jing,
I completely agree with you that Alibaba’s ecosystem has helped Chinese small and medium-size enterprises work in a more efficient way and improved life of Chinese. My father has operated a small company for more than 10 years. He has opened Taobao, Tmall, and AliExpress during these years, most of revenue are now from online orders because people tend to purchase online and AliExpress helps connect to foreign markets easily. From my experience, Alipay has greatly enhanced convenience of my life that we can make online payments and pay anywhere through smartphones. Online shopping platforms help us browse different products online without going out.
Alibaba has used data collected from consumers and leveraged augmented intelligence, analysing customers’ preferences and behaviour in order to provide personalised service. However, there are many fake products using Alibaba’s platforms which would damage Alibaba’s reputation. Meanwhile, Alibaba has raised people’s concerns related to customers’ privacy. For example, Ant Financial was critised by the potential security risks of dealing with sensitive consumer data. If you want to know relevant information, you can check https://www.siliconrepublic.com/enterprise/china-online-privacy-tencent-alibaba
All the best
Siying
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