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Alibaba’s Jack Ma Predicts Hard Times Ahead

On July 23, Jack Ma, founder and chairman of the Alibaba Group, a leading Chinese ecommerce company, published an internal email to Alibaba employees. This email found its way to Sina (h/t to Bill Bishop) and I have translated it here.

The company is listed on the Hong Kong stock exchange under the 1688 symbol. In typical Chinese fashion, the numbers are propitious for making money and sound like 一路发发 The original email includes exclamation marks at the end of almost every sentence. In an attempt to be faithful to the original text, I have also kept the original exclamation marks. I have added some extra hyperlinks where I think it would be helpful to understanding.

Fellow Alibaba employees:

When it comes to the recent share price of Alibaba, I’m sure that you’re feelings are complicated! Today, I want to share with you my views on the current business and economic environment, I hope that they are helpful.

I’m sure that you remember in the February all-employees conference I said that winter was coming, and that we all needed to prepare for winter! When our company listed in Hong Kong, and our share price tripled in price, dark clouds were forming and the thunder was coming closer. When a share price goes up this quickly, the retreat will be just as surprising and quick! I don’t want you to have any misunderstandings about how the market behaves. When we listed, I said that we would continue doing business as we have before, and that our mission would not change because of our listing. In the future, I hope that you forget about our share price, a remember our long-term commitments to our customers, our society and our fellow partners, our shareholders and our families. When we meet our commitments, our share price will reflect the value the value of your commitments.

The world economy is now facing major structural problems, and it is very likely that in the coming years it will go through a period of major challenges. My view is that the world economy will go through a very challenging period, and the challenges will be much bigger than anyone has thought possible! This winter will be longer, colder and more complicated than any have predicted! We need to prepare for this winter!

So what do we need to do?

First, we need to be prepared and have confidence!

Winter is not frightening; not being prepared is frightening! Not knowing how long it will be, and how cold it will be is frightening! Opportunities come equally to everyone and tragedies come equally to everyone! The ones who prepare for the winter are the survivors! The guarantors of survival are a strong desire to survive, psychological preparation and storage of materials. Having gone through the first Internet bubble and the SARS crisis, we know what it takes to survive multiple crises. By going public last year, we were able to raise US$2 billion to prepare for the upcoming winter. At the beginning of this year, our group “dug deep holes, stored grain and prepared reserves while avoiding major projects”, and this thinking has been pushed out to all member companies of the group. For this terrible winter, all Alibaba employees think “If not now, when? If not me, who?” In 2001, we said “Be the last man standing!” Even if we were on our knees we would be the very last to keel over! With our resources today maybe we will not keel over, but today we have an even greater responsibility to our customers. Not only must we not fall over, but we have a responsibility to protect them, the tens of thousands of small and medium sized businesses all over the world who count on our services! We need to protect them so that they will prosper and not keel over! In the upcoming business environment, these companies will face major challenges to their survival; it is our mission to help them to survive – to make it easier for anyone to do business anywhere. Remember, if our customers fail, then we will not survive to see another day!

Second, do what you should do for winter preparation!

Great companies survive not because they can take advantage of multiple opportunities, but because they can survive challenges which wipe out other companies. In 2002-2003, during the first Internet winter, we focused on building our Alibaba culture, our company structure, and developing talent. Today, aside from being grateful for the opportunity we got by going public last year, we need to be able to show our gratitude for the opportunity globalization and the world economy has given us. Alibaba has grown from 18 people to more than 10,000 employees today. Our culture, organization and talent have grown and we have faced challenges. We have had opportunities in the past five years, including founding, starting Alipay, buying Yahoo! China, starting Alisoft, the Alimama ad network, all the way to going public. We need to time to rest and recuperate, and are grateful for this opportunity.

We have thought about this deeply, and based on our principles of “customer first, employees second and shareholders third” our goals now are:

  1. For Alibaba to become the world’s largest ecommerce company;
  2. For Alibaba to become the world’s best employer;

In order to achieve these goals we must grasp the opportunities this harsh winter presents us! Let us now return to our ecommerce roots and our founding principles of treating our customers first and to grasp the opportunities which come to us! The power of a great army is not shown when it is advancing; it shows when it is in an organized retreat. The power of a great company is shown when it can survive in a harsh environment, and have a positive attitude and can continue to learn and grow.

In this new globalized world, the Chinese economy will play an ever greater role. We are pleased to see that world leaders are learning to communicate and coordinate their activities better on major issues like the Asian tsunami, earthquakes, fighting diseases, and fighting global warming. These are all good signs of a brighter future for humanity. This will change the world from one which is solely reliant on the US dollar to something more multilateral! The Internet powered by ecommerce will play a revolutionary role in this change! “Push consumer spending and creating jobs” will be our major missions in the next stage of Internet development! The future of ecommerce is bright, and will help our small and medium sized customers to survive this crisis, and when we emerge in ten years, it will be a whole new world!

Fellow Alibaba partners, we will be messengers and witnesses to this whole new world!

Jack Ma

10 Responses to “Alibaba’s Jack Ma Predicts Hard Times Ahead”

  1. [...] for a cold winter. A translation of Alibaba founder Jack Ma’s letter to the troops. [China [...]

  2. [...] the Wall Street Journal’s China Journal, Paul Denlinger at China Vortex has translated an internal e-mail that Alibaba founder and CEO Jack Ma wrote and distributed to his staff recently. The e-mail [...]

  3. [...] the world at large! Sand Hill Road (home of the world’s VC)seems completely separate from the hard times that Alibaba’s Jack Ma talks about, or the mortgage [...]

  4. Doctor D says:

    Compliments to Mr. Jack.
    Your formula of “customer first, employees second and shareholders third” is the exact reverse of Milton Friedman’s formula (the purpose of a corporation is to maximize shareholders wealth).
    The only way to maximize something is to minimize everything else such as customers and employees wealth.
    To my knowledge, all US business schools have embraced Mr. Friedman’s formula as the basis of modern capitalism.
    This is the American business formula (with the notable exception of Walmart).
    Which formula is best?
    Mr Jack’s formula or the American formula?
    Over the next 1, 2, 3, 5, or 10 years, let’s compare the growth rate of the American companies whose total workforce is currently 10,000 people worldwide, with that of Alibaba.
    My bet is that Mr. Jack’s company will come out ahead by a 3x-5x margin. The Bank of China will not have to print money night and day to bail out Alibaba.
    Of course, I may be wrong.
    After all, I am not the all-knowing chairman of the Federal Reserve Bank. Time will tell…
    That you can be sure of…

  5. [...] annoncer en été 2008 qu’il fallait se serrer la ceinture pour passer l’hiver 2008 dans un mail qu’il avait envoyé à tous ses employés. L’hiver 2008 sera donc rude pour les sociétés du web chinois et pour certaines [...]

  6. [...] of the first to recognize the economic downturn in February last year, when he predicted “a though (economic) winter is coming, dark clouds are forming and the thunder is coming closer” during the annual Alibaba [...]

  7. [...] one of the first to recognize the economic downturn in February last year, when he predicted “a though (economic) winter is coming, dark clouds are forming and the thunder is coming closer” during the annual Alibaba all-employee [...]

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  9. I enjoyed reading your blog and I needed to tell you that I completely agree with you. It is difficult to find people that think alike these days. Keep it up