Can Jack Ma, Asia’s richest man, create 1m jobs in the US?

The founder of Alibaba, one of the world’s biggest online retailers, made the promise at a pre-inauguration meeting with Donald Trump

Jack Ma is working the White House, with a promise to reduce the number of unemployed workers by 14%.

Jack Ma was destined to live an ordinary life. He failed the Chinese university entrance exam several times before being accepted by the worst school in Hangzhou, and he was rejected from a dozen jobs – even selling chicken at KFC. Ma was ready to settle into a quiet life as an English teacher in eastern China, a position with few advancement prospects, when, during a trip to Seattle in 1995 working as a translator for a trade delegation, everything changed.

A friend showed Ma the internet. He placed a toe on to the information superhighway with a one-word search – “beer” – and, two decades later, Ma is the richest man in Asia, head of an e-commerce and finance empire that includes Alibaba, one of the largest retailers in the world.

Now Ma has once again set his sights on the US. In a high-profile meeting with Donald Trump before the inauguration, Ma promised to create 1m jobs in the US, and has wasted no time ingratiating himself into Trump’s inner circle. He has dined alone with Ivanka Trump, and last week commerce secretary Wilbur Ross sat next to Ma at a meeting of US and Chinese businessmen. Those political connections may benefit him as he seeks to acquire American companies in a country that is increasingly wary of big Chinese investment.

For Trump, the headlines of Ma’s job-creating scheme may be more important that any actual jobs created.

“As a merchant, it’s about knowing your customer, and Trump doesn’t care about anything that’s not huge,” says Duncan Clark, a longtime friend and author of Alibaba: The House That Jack Ma Built. “He figured a million is a good number to get Trump’s attention. “Realistically, without a major acquisition, I fail to see how that’s possible,” he adds. “In the US context, it’s a very big number.”

For years, Ma has been pushing his vision of US small businesses selling to Chinese shoppers through his online marketplaces. He is often called the “Jeff Bezos of China”, and there are clear similarities. Both built e-commerce empires and, like Bezos and the Washington Post, Ma even owns a an old established newspaper, in his case Hong Kong’s South China Morning Post.

But there’s a key difference: while Bezos’s Amazon sells products to consumers, maintaining massive warehouses and operating a sophisticated logistics network, Alibaba’s sites are simply a medium, connecting consumers with merchants who ship through independent couriers. This has led experts to say Alibaba’s business model is closer to Google’s than Amazon’s.

Alibaba’s strength has always been solving inefficiencies, creating a website that allowed a host of businesses to sell directly to consumers during the infancy of the internet in China and starting an online payment system when it was cumbersome to wire funds. The company’s flagship platforms, Taobao (similar to eBay) and Tmall (similar to Amazon), have created a one-stop shop for consumers, and Alibaba is exporting the model to emerging markets such as Russia and Brazil.

But the US presents a new challenge, and e-commerce is already a crowded space. Alibaba may not have what it takes to spur massive job creation in the US. “It’s an incredibly unlikely target for job creation in any plausible time frame,” said Christopher Balding, a professor of business and economics at Peking University’s HSBC business school. “If we’re talking 25 or 40 years, maybe Alibaba could create that many jobs.”

By comparison, WalMart, the largest private employer in the US, employs 1.5 million people. If Ma is able to deliver on his promise of 1m jobs, it would decrease the number of unemployed workers by a staggering 14%.

Ma was born in the scenic city of Hangzhou in 1964, two years before the start of the Cultural Revolution, a decade of political upheaval that saw his parents and grandfather persecuted by elements of the ruling Communist party. His father beat him, according to a 2013 biography, but Ma found his escape in teaching himself English. From the age of 12, Ma would cycle for 40 minutes to the city’s hotels to offer foreign tourists his services as a guide around the West Lake so that he could practise his English.

“The west was his lifeline in a land where he wasn’t on the elite track,” says Duncan Clark. “He struggled in school, he’s not an engineer, he’s not a technical guy, so he became an English teacher.” Ma’s ability to read an audience, though, is on a par with a standup comedian, Clark adds, and some have described his charisma as “Jack Magic”.

That charm is increasingly being directed at Trump administration officials. But beyond the million-jobs propaganda story, Ma is working to convince the US government that his intentions are innocuous as he makes a $1.2bn bid for MoneyGram, the second largest remittance firm in the US in a deal that has raised national-security concerns.

“His repeat performances with Trump and his administration show he is making significant inroads,” says Michael Wessel, head of the US-China Economic and Security Review Commission, a oversight body that reports to Congress. “Ma isn’t interested in America succeeding, he’s interested in Ma, Alibaba and China succeeding. As a skilled, global businessman, Ma is operating in his own interest which, at times, might also be the interests of the Chinese Communist party. That has to be considered whenever he acts.”

The MoneyGram deal has attracted significant opposition from lawmakers in Washington, hinging on the fact that a large number of military families use the company to transfer money. The purchase is yet to be approved by US regulators in a process that could see the matter decided by Trump.

Last year, Alibaba admitted that the US Securities and Exchange Commission was investigating the accounting practices of its logistics network and its huge Singles’ Day online shopping event – it’s like Black Friday but much, much bigger – a matter that has yet to be resolved.

At the World Economic Forum in Davos in January, Ma chastised the US, saying that while America benefited from globalisation, it was squandering trillions of dollars on foreign wars and neglecting the country’s infrastructure and its own citizens.

Back in China, Ma’s ties to the government have been invaluable. At a time when Chinese president Xi Jinping is signalling that companies should rein in overseas purchases, Ma’s continuing push in the US is a clear sign of his political clout. And in 2014, when China’s state administration for industry and commerce published findings showing that more than 70% of goods in a random sample on Taobao were fake, Ma met with the head of the agency, who subsequently claimed that the report was merely the minutes of a meeting and “had no legal effect”.

While Ma hopes to encourage American small businesses to sell on the company’s high-end marketplace, Tmall, in December 2016 the US government put its much larger sister site, Taobao, on a blacklist of “notorious marketplaces” known for the sale of counterfeit goods and violations of intellectual property rights .

The blacklisting was not the first setback for Alibaba. The company was burned on its first attempts to expand into the US when, shortly after founding the company, Ma was forced to shut down an office it opened just outside San Francisco after less than a year. Another venture – an online shopping site like Amazon called 11 main – was shuttered in 2015.

Despite these hurdles, Ma is pushing on with his dream for US businesses to sell to China through his websites. In June, Alibaba hosted a conference, Gateway, in Detroit, which was aimed at bringing more small firms into its ecosystem. One of the speakers, something of a poster child for Alibaba, was Sam Wolf, who turned his family’s vitamin store in suburban Philadelphia into an online giant selling 40,000 products around the world. His company, LuckyVitamin, started selling on Tmall in November and Wolf estimates he has hired about 20 employees since then, though only a fraction deal with China directly, with most working in inventory or accounting.

But when LuckyVitamin began selling in China, it already had the experience of expanding into more than 30 countries around the world, and Wolf warned that opening a shop on Tmall was the most challenging.

“Selling on Tmall is like starting a new business, as opposed to simply adding a new channel for sales,” Wolf says. “It’s not a light switch, it’s not a get-rich-quick opportunity where you can just double your business overnight by opening the door to China. It’s a marathon, not a sprint. Anybody who comes to Tmall with get-rich-quick aspirations is going to be disappointed.”

Along with LuckyVitamin, Ma has convinced a handful of other businesses to sell through his websites. To fulfil his promise of 1m jobs, he needs more than 50,000 companies to replicate Wolf’s success in the next few years.

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Source By https://www.theguardian.com

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