Alibaba and the Golden Year of e-commerce

“Most companies fail during the five first years of their life. Those who survive, won’t last, if they don’t get ill at least once. I believe now is the time, when Alipay begins confronting its problems.” These were the words of Jack Ma (马云), the charismatic founder and CEO of the Alibaba Group (阿里巴巴集团) at Alipay (支付宝)’s annual meeting  earlier this January. Alipay is “China’s leading third-party online payment platform”. Founded in December 2004, it plays a key role in Alibaba’s activities as a provider of online trade and retail solutions.

During the same meeting, Jack Ma also exhorted Alipay employees to be less conservative and criticized the company’s consumer experience: “ If we don’t pay attention to our consumer’s experience, Alipay will slowly die away.” Right now Alipay doesn’t look moribund at all. It is clearly the market leader in China, as is Taobao (淘宝), Alibaba’s online retail website. But Jack Ma knows that e-commerce is developing very rapidly in China. Some have already predicted that 2010 will be the Golden Year (黄金年) of e-commerce.

Under these circumstances, resting on its laurels is definitely not the right strategy, if  the pioneer doesn’t want to be overtaken by new entrants. On the online payment front, Alipay is competing with Chinapay (银联电子支付) a service by China UnionPay (中国银联), the Chinese bankcard association.

The development of e-commerce in China is fuelled by the increasing number of internet users (384 million in 2009), the trend towards a more mobile web, and the fact that companies like Alibaba succeeded in gaining the trust of the consumers.

An example for the high expectations surrounding e-commerce is the recent investment by Legend Capital (联想投资) into 21cake.com. The venture capital subsidiary of Legend Holdings (联想控股), which is also the parent company of Lenovo (联想) invested ten million Yuan into a website, that sells European style pastries online.

Chinese sources: 马云:支付宝很多问题太过保守 要勇于承担责任; 2010是中国网络购物“黄金年”; 传马云批评支付宝用户体验