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tv   Bloombergs Studio 1.0  Bloomberg  September 17, 2017 2:00am-2:30am EDT

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♪ stephen: welcome to china, birthplace and home place of juggernaut alibaba. i'm stephen engle, and what a past 18 years it has been, transformative for not only alibaba, but china as well, and the global internet economy as a whole. and we were here for the 18th birthday bash. [applause] stephen: packed in with 40,000 employees into an outdoor stadium. and we spoke exclusively with group executive chairman jack ma.
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>> of stocks, we will start. stephen: cofounder and group ceo daniel zhang. >> everybody has a big chance to go digital, but people need to change. stephen: three leaders driving "alibaba: the global disruptor." ♪ stephen: it was a humble beginning as they cofounded alibaba in 1999. few chinese were even connected to the world wide web, but enthusiasm bubbled abroad and alibaba wanted in. when the tech bubble burst, many plans were put on hold. when an alibaba employee was expected of contracting sars in 2003, senior executives were quarantined, and that gave birth to their best idea to date. it drove ebay out of china and
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led to the single day shopping extravaganza and the world meeting the new ipo in 2014 and the launch of many new businesses, including aunts financial. much like bloomberg's set up for the interviews, the rise of alibaba has been no small feat. >> good to see you again, jack. stephen: and its next steps may be even more demanding. >> i think the challenge is getting bigger. much bigger than the early days. the early days is like the fun part. when we competed with ebay, when we see the sars, there's a lot of things you can learn from the other guy, the other companies, but today, the things we are doing, there is nothing we can learn from. nobody. you have to think, everything we are the pioneer, we are the leader of this industry. what are the things driving you? the values, the mission? there's not a textbook you can read.
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stephen: i don't think anybody could have imagined the kind of scale we have reached today, but i think we are very lucky to have participated in the confluence of china's economic growth, and also the rise of technology. jack: actually, this november is the best reflection of the landscape change, the internet landscape change in china and the consumer lifestyle change in china. 500 million customers in china and today, even more. more and more overseas customers now join this event. >> when i started alibaba in 1999, the gdp per capita of china was $870. today it is over $8,000 -- it is a 10x increase. we had been very fortunate to be in this environment and ride that wave.
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>> we know where we are going. globalization. that is our direction, but on the way there, we have more more problems. today, if you look at the volume of the package, generally our platform is about 55 million a day. we strongly believe that this goes to one billion some years later. stephen: a day? jack: a day. > i'm telling my team it is just like when you are climbing the mountains. when you are only 1000 meters high, you enjoy it. it is fun. at 100 meters, everything is fine, but when you get to 4000 meters, you don't have enough air. you don't have a lot of people working together with you. you have no one to share your thoughts and worries with. now we are probably 6000 meters high.
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we get lonely without a strong mind and a mission, and ideas. it's difficult to continue to walk. stephen: have you faced resistance in china for what you are doing? i recently interviewed wahaha. we all know about his comments about the internet economy destroying manufacturing and driving things down. do you think there is an old guard in china that doesn't quite understand the new economy, that they will have to adapt? >> we are this kind of resistance in the past 18 years almost everyday. we see people like mr. zong a lot. but this is the revolution of the technology. people like the older tycoons in the old economy -- in their earlier days, they destroyed a lot of lower-level companies. we are helping manufacturing, right?
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we sold more than 500 billion u.s. dollars product last year, and 70% of them were helping selling the manufacturing. we don't produce. theout us, these 70% of -- the $500 went billion would never be able to reach the consumers. stephen: will you facilitate reform at the state owned enterprises from the outside, because the vested interests want to keep the status quo? jack: yeah, we are pushing that. this is why a lot of banks don't like us in china. we are not necessarily interested in buying the bank to change it. the china banks really act very quickly in the past three to five years. these banks changed their services so fast. they put so much resources on the technology and on serving the people better. you don't have to buy a bank and change one bank. when a tiger is following you,
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you can much run faster than you thought. stephen: you are asia's richest man, but are you still, in your mind, an entrepreneur? jack: i never think i am the richest man. i don't have time to spend money. people say jack, you can spend money better than the other guys, so how can you increase my own private set? much money you can spend in your life? stephen: coming up, alibaba broadens its scope, investing heavily in southeast asia and into brick and mortar under its new retail concoction, and jack ma sizes up one of his chief competitors, tencent. jack: i think tony did not have any experience in globalization. not like us. ♪
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stephen: having conquered e-commerce, alibaba is investing in areas like cloud computing, logistics, digital entertainment, and even brick and mortar retailing by marrying the online and off-line worlds through its supermarkets, as well as the cashless and cashier-less convenience stores. it begs the question, is alibaba moving away from its asset-light model? >> when you are young, tiny, light model is good.
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when you're strong, big, you need heavy things. but today's alibaba size, you should not leave the heavy model to the others. it is something you have to do, because the infrastructure's building up. you have to invest. >> we want to change the consumer experience, because you have this growing middle class in china, whose expectations and demands are being elevated. jack: on and off-line, we cannot separate. they need to do the transformation. all the great chinese motor -- mortar retail formats will be upgraded or even redefined. i think this one is just our baby. we want to incubate the successful model. we try to empower our off-line partner to operating business.
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the most important thing is to embrace the change. joe: what we can do is serve an in-store purchase. you can also walk in and eat right there, so it is like a food hall. then, if you don't feel like going in the streets, going into the store, you can stay at home and order everything on your mobile phone and it gets delivered to you in 30 minutes. everything that is done, in-store purchase, eating, or online purchase, starts from the same store location. obviously, alibaba also investing heavily into south to india, asia, and as well. can this new retail model be implemented, and will you implement that as you expand in southeast asia? >> i would say yes. i think new retail is not only applicable to china, it is applicable to all the markets globally. >> i think southeast asia, over the next five or 10 years, will be a game of penetration with e-commerce taking more share of
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overall retail. today, i think as a whole market, southeast asia is less than 3% e-commerce penetration, specifically indonesia. this year, they will have less than $15 billion of gmv for the whole country, so there is a lot of growth opportunities. >> well, always think about the future. with our site today, you have to think about what you can do in 10 years later. what are the key things? there is a competition. alipay has been running around for 10 years, no competitor, which is good for alipay, but not good for the mission we want to do. linkedin sent came in, at the sentning, i -- when 10 encent came in, t
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think alipay said wow, we have a competitor. but you ask today, they know we are somebody we can work together and influence more people, and make the market maker. this is the fun part. i think tencent pay is learning a lot from us, we are learning a lot from them. those two companies, if we keep working together, getting inside the whole society of cashless pay, the whole society of trust and credit, that will make the market much bigger. stephen: what is going to be the criteria for you, and as you compete against tencent and the likes, for your russian and -- rush into southeast asia? that is your new horizon. you've gone into indonesia, india, you are a lead investor there. i hear you are looking at big baskets. there seems to be a land grab in southeast asia. are you really going to get the penetration and the growth there through the payments infrastructure and alipay, or is it to get the e-commerce platforms, because the penetration of e-commerce is so low in southeast asia?
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: i have been saying again and again, internally -- the thing is, alibaba should -- going outside. it is not globalized alibaba. we are a globalized e-commerce infrastructure. we are not particularly interested in one market, going to malaysia or indonesia and getting some market share there and being the largest e-commerce company there. no, we are not interested in that. they need a payment system, they need a logistics system. they need the platform system so they can sell things globally. we are interested in across-the-board trading and e-commerce. i don't think tencent can do that. we have been doing that for 15 years. it would probably be good on the payment, especially good if you are we chat. the chinese people use a lot. when you go to india, indian
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people do not use wechat. probably cannot do a lot. i think they have no experience of globalization. not like us. stephen: are you afraid of all the data you are collecting by creating this ecosystem, and because of your partnerships with time now and best logistics, but you are all collecting data. you run the risk of, down the road, having a dispute over ownership of that data, much like there has been in the past. because you want to be a data company. that is your biggest asset, right? jack: i think data in the future -- there are two issues with data, security and privacy. for these two issues, there is always a problem ahead. you have to be very, very, very careful about security of the data and privacy of the data. based on that -- but you have to go forward. when you worry, -- you have to go. when you have a problem, solve the problem. go ahead, solve the problem. stephen: how valuable is that data? it must be extremely valuable.
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jack: this data is so new to everybody, and it takes time to educate. if the data does not flow, meaningless. so, i think today, it is good. everybody, every government starts to worry about data, starts paying attention to data, but how to operate the data in a proper way that can improve the society, improve people's life, that is something the next five or 10 years is going to be critical. at the beginning, nobody cared about data, now everybody cares. just like the last century, at the beginning, no one cared about the oil, now everyone loves the oil. and then the oil, they wanted war. stephen: up next, alibaba's new york-listed shares are on a tear, but does jack ma think we are headed for another popping
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of a tech bubble? jack: if you are not that greedy, if you are not that stupid or crazy, it is easy to survive today. ♪ stephen: alibaba was founded at
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the turn-of-the-century, amid a global rush into dot coms. alibaba even opened an office in california and was ready to ride the wave. jack ma, though, saw the frothiness of other business models and correctly predicted the dot com collapse in 2000. stephen: are we facing a similar kind of tech bubble right now with these billion-dollar unicorns and the inflated tech scene? are there any similarities? jack: no, not that much. i think the challenge at that
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time, a lot of people did not understand how powerful internet is. how to do internet, whether internet can sustain. people just jumping into it. i found a lot of people had crazy ideas, but do not know how to operate. today, everybody knows. internet is powerful, going to change human history. >> i look at it from a very long-term perspective. and if you take a step back and look at alibaba, we went public in 2014. our stock price at the ipo was $68 a share. today, it is at the current level about 2.5 times increase, but look at our revenues. during the same three-year period, our revenues have tripled. so, our stock price hasn't even caught up with our revenue growth yet. same thing, facebook. when they went public, i think they had about a billion users.
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now they have 2 billion users. so, if you look at the long-term perspective, these large-scale internet companies continue to grow, and there is no reason why they would stop growing. jack: i think the infrastructure of the internet, the infrastructure of technology, is much better than 10, 15 years ago. so, if you are not that greedy, if you are not that stupid and crazy, it is easy to survive today than yesterday, because the speed of the internet era oftentimes blurs the lines of regulation. jack: yes. stephen: and you push the boundary, push the boundary, and then regulators overreact or whatever. how have you stayed ahead of that and also not overstep your boundaries? jack: we always step ahead of the regulators. we have to, otherwise we go nowhere. but when you go ahead of the
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regulators, always there is a painful thing. because they say, hey, wait a minute. my job is to regulate. my job is not about innovation. my job is not to improve other people's life. that is your job. it is the painful process that alibaba is learning. stephen: how have you stayed close to the fire without being burned? jack: we are very careful. when we were young, it is ok. now we are big. we probably regulate ourself much more strictly, much more than the regulators. today, we have more than half a billion people using us. we have such huge transactions. anything wrong -- so, we have to discipline ourselves much more. stephen: are you concerned at all that the capital controls that are in place, work -- or the heightened capital controls, and also the deleverage campaign and the crackdown on irrational purchases, m and a overseas, in entertainment, in sports, in
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non-core businesses, is this going to be a deterrent for outbound investment? which many say is a good thing for china to diversify and go abroad. does it curb your ambitions? jack: not really. i think it depends how you do it, but alibaba -- our strategy, we never think we should dump money in the outside world. in the older days, when you go to some country, the most important is to dump the money. but we think we should share the technology. we should be inquisitive to the know-how. it needs a lot of thinking, and a lot of commitment, a lot of patience. so, we are so far ok. we are lucky we are a global company. we have a lot of capital outside. stephen: there is a little bit of anti-trade sentiment, but it is understandable when you see a fairly large trade deficit.
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to us, we look at it and it doesn't really affect us because the trade flow that we are talking about is selling american products into china. so, we are steadfast focused on that strategy, and in the other direction, i think some of the retailers, both traditional and online in the united states, will suffer first if there is a trade war based on trade tariffs. jack: we never changed our u.s. strategy. we want to help u.s. small to medium-size companies sell to china, sell to asia. this is what we think. we think we don't want to be the local u.s. e-commerce company. amazon, ebay, so many nice , interesting e-commerce companies all over the u.s. stephen: you don't want to take on amazon, doing what they are doing? jack: no. stephen: how about in entertainment, in hollywood?
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i know you had a partnership with amblin and steven spielberg. you have been the tortoise, not the hare. what is your strategy with partnership in hollywood through probably the best name in hollywood? jack: yeah. i think we -- first important is that our entertainment is part of our strategy. we ask ourselves, in the next 10 years, we know we will be very profitable, very good doing e-commerce and logistic, financing and data. but 10 years later, what is the new business alibaba should be focused on? happy and healthy, double h is our direction. no matter how rich, you want to be healthier, you want to be happier. and entertainment should be part of the business. we don't view digital entertainment as a separate business. we view acquisition costs as an investment to acquire and retain
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eco-system. our stephen: so, it is ok to continue to incur losses as long as it builds the customer base and the ecosystem? jack: yes. i think there are a lot of things china can learn from hollywood. they should partner with them. they should not think it is good, let's buy it. this is the strategy for 10 years. only three years -- don't worry, a lot of people criticize us. we have been criticized for 18 years, never stop. so, you know where you're going. stephen: where do you see alibaba, and what kind of company do you think alibaba will be 18 years from now? >> i will say alibaba today is not an info company, it is an economy and ecosystem to empower business to go digital and do the digital transformation.
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of course, i think we want to be bigger, but the most important thing is quality. >> i think the business mix will always change because we will follow what our customers want. but the important thing is alibaba, 5, 10, 20 years from now will still be the same company when it comes to our mission, to make it easy to do business anywhere. jack: i think 18 years is enough for us to improve globalization instead of killing globalization. antitrade -- i believe when trade stops, war starts. so, people start to trade -- we can never fight with fists. i think this is the mission. this is the responsibility for alibaba to improve globalization. stephen: thank you so much. jack: thank you. ♪
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♪ emily: she is one of the most recognizable women in the world. sheryl sandberg helped build google ads into a multibillion-dollar business, then did it again at facebook. she's into her 10th year as the social network's coo, having made a giant dent dent in the cultural zeitgeist with her book, "lean in." then, the unthinkable happened. sandberg's husband, ceo of surveymonkey, died suddenly after a heart incident.

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