From Internet Godfather to "Elephant Turn": The Rise and Fall of Jack Ma and Alibaba

From Internet Godfather to "Elephant Turn": The Rise and Fall of Jack Ma and AlibabaPrefaceJack Ma, a household name, led Alibaba to write a legend in China's internet history. From a small apartment in Hangzhou, to becoming a global e-commerce giant, Jack Ma's success story inspired a generation

From Internet Godfather to "Elephant Turn": The Rise and Fall of Jack Ma and Alibaba

Preface

Jack Ma, a household name, led Alibaba to write a legend in China's internet history. From a small apartment in Hangzhou, to becoming a global e-commerce giant, Jack Ma's success story inspired a generation. However, this man once hailed as the "Internet God," ultimately could not escape the tide of time and fell from grace.

From Startup to E-commerce Empire

In 1999, in a humble apartment in Hangzhou, Jack Ma and 18 like-minded partners co-founded Alibaba. The name was inspired by the Arabian fairy tale "Ali Baba and the Forty Thieves," symbolizing the opening of opportunities for Chinese small and medium-sized enterprises to access the global market.

In the early days, China's internet market was in its infancy, and the concept of e-commerce was unfamiliar to most people. Jack Ma and his team faced enormous challenges. They constantly explained their business model to potential customers and investors, advocating for the limitless possibilities brought by the internet.

Jack Ma's persistence and vision eventually paid off. In 2003, the launch of Taobao.com marked Alibaba's official foray into the C2C market, and it quickly became China's largest e-commerce platform, laying a solid foundation for its rapid future growth.

As Alibaba grew, Jack Ma's influence also gradually increased. He frequently attended international conferences such as the World Economic Forum, exchanging ideas with global leaders and business figures, becoming a spokesperson for China's internet industry and being hailed as the embodiment of the "Chinese internet spirit."

In 2014, Alibaba went public on the New York Stock Exchange, setting a record for the largest IPO in the world at the time, making Jack Ma one of China's richest men. This series of successes made Alibaba the leader in China's internet industry and Jack Ma a symbol of China's internet.

The Collapse of the "Financial Dream": The Tragedy of Ant Group's IPO

In 2014, Ant Group emerged, rapidly becoming a leader in China's fintech industry. Its birth marked Jack Ma's ambitious foray into finance, aiming to build a new financial ecosystem.

Ant Group's rapid development was inseparable from Alipay's massive user base. Leveraging Alipay's platform advantage, Ant Group quickly launched a series of innovative products, including Yu'e Bao, Huabei, and Jiebei. These products, with their ease and efficiency, quickly gained popularity among users and profoundly changed people's consumption and payment habits.

Especially the launch of Yu'e Bao, triggered a huge shock in the traditional banking industry, becoming a landmark event in internet finance disrupting traditional finance.

However, behind Ant Group's rapid growth, there were hidden risks. The company operated with an extremely high leverage model, using relatively small capital to leverage financial businesses several times its size. Reports suggest that Ant Group used only 20 billion yuan in capital to leverage over 2 trillion yuan in loans. This high leverage model, while bringing amazing growth, also exposed the company to enormous potential risks.

More importantly, Ant Group transferred most of the risks to cooperating commercial banks and the entire financial system. The company utilized its technological and data advantages to conduct credit assessments and risk pricing for users, but the actual funding source primarily relied on traditional financial institutions. This model raised questions about Ant Group's risk control capabilities and sowed seeds of concern for its future development.

In 2020, Ant Group planned to go public simultaneously in Shanghai and Hong Kong, causing a stir in the global financial markets. It was estimated that Ant Group's valuation could reach trillions of yuan, potentially creating the world's largest IPO.

However, on the eve of the IPO, an unexpected regulatory storm disrupted Ant Group's plans. Regulatory authorities suddenly announced a suspension of Ant Group's listing and raised a series of questions about the company's business model.

Regulatory concerns focused on the following aspects:

• Ant Group's high leverage model could pose a threat to the stability of the financial system.

• The company's role in credit business was unclear, potentially circumventing regulatory requirements that traditional financial institutions must comply with.

• The company had loopholes in data privacy protection and consumer rights protection.

For Jack Ma and Ant Group, this setback in the IPO was undoubtedly a major blow. It also marked a significant setback for Jack Ma's "financial dream."

The Awkward "Elephant Turn": Alibaba's Expansion Path

To seek new directions for development, Alibaba began its "elephant turn," venturing into offline retail, catering, and other areas.

In 2017, Alibaba acquired a 74% stake in Yintai Commercial for about 20 billion yuan, officially entering the offline retail sector. Subsequently, Alibaba invested in traditional retail giants such as RT-Mart and Suning.com, and launched its own offline new retail brand, "Hema Fresh."

In 2018, Alibaba spent $9.5 billion to acquire all of Ele.me's shares, further strengthening its foothold in the food delivery market.

At the end of 2020, Alibaba set its sights on the community group buying market and quickly established a presence in this emerging market with its strong financial resources and technological advantages.

Alibaba's expansion strategy, while expanding its business footprint to encompass everything from e-commerce, payments, logistics, and catering, has also sparked controversy and challenges.

One of the most controversial aspects is the so-called "choose one" policy. To solidify its market position, Alibaba requires merchants on its platform to not open stores on other competing platforms, otherwise, they face penalties such as traffic restrictions. This practice has not only caused consumer dissatisfaction but also drawn the attention of regulatory authorities.

Furthermore, Alibaba has been accused of using big data and algorithm advantages to implement price discrimination, the so-called "big data killing." This practice has also sparked consumer dissatisfaction and attracted regulatory attention.

In December 2020, the State Administration for Market Regulation launched an antitrust investigation into Alibaba. The investigation results were unexpected. In addition to fines, Alibaba was required to make comprehensive reforms, including stopping "choose one" and other monopolistic practices, safeguarding the rights of merchants on the platform, and submitting annual compliance reports to regulatory authorities.

Jack Ma's Fall: The Destiny of the Times or Personal Choice?

The story of Jack Ma and Alibaba is like a mirror, reflecting the ups and downs of China's internet industry over the past two decades. Jack Ma created history, but he ultimately could not escape the tide of time.

Jack Ma's fall is both the destiny of the times and the inevitable result of personal choices.

• Times of Great Change: The rapid development of the internet industry has brought unprecedented opportunities, but also unprecedented challenges. Continuous adjustments to regulatory policies, changing user needs, have all led to higher expectations and stricter demands on the actions of internet giants.

• Flaws in Business Model: Alibaba's "choose one" policy and Ant Group's high leverage model have exposed flaws in their business models, ultimately leading to regulatory intervention.

• Personal Character Deficiencies: After achieving success, Jack Ma gradually revealed some character flaws, such as overconfidence and a desire for quick success, which ultimately led to his current situation.

People have different opinions on Jack Ma's fall. Some believe he was a trendsetter of his time, and his successes and failures are both worth learning from and reflecting on. Others believe that he was an ambitious businessman whose actions had a negative impact on society.

Conclusion

The story of Jack Ma and Alibaba tells us that even the greatest of companies cannot escape the tide of time. Only by adapting to the changing tide of times can one achieve lasting success.

Jack Ma's fall also reminds us that even the most successful people need to remain humble and cautious, avoiding losing themselves due to success.

The story of Jack Ma is an important chapter in the history of internet development and a microcosm of China's economic transformation and upgrading. His fall may be the inevitable outcome of the internet age, or it may be a new beginning. Let's wait and see.

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