After graduation from Shanghai international Studies University with a bachelor’s degree in international business management in 1993, David worked for 7 years in the financial sector. Then from 2000 to 2002, he served as CFO of B&Q, a subsidiary of Kingfisher Plc and a leading home improvement retailer in China. From 2002 to 2006, he was promoted as CEO of B&Q, dubbed as the youngest CEO among Fortune 500’s China regional heads.

 

 

According to an article on Telegraph, David first met Jack Ma at a Harvard Business School conference in 2000, and at that time Jack Ma invited David to join as a co-founder. But David was initially unimpressed by the company's prospects since few Chinese people were on the net at that time and the network speed was terrible. Moreover, personally David prefers something concrete, instead of the virtual world.

 

 

Five years later, in 2005 the two people met again. At that time David Wei just created annual sales of $1bn for B&Q and was proud of it. Jack Ma tried to hire David again and asked David Wei how long it would take him to build another billion of sales. David said it would probably “take four or five years, with another half billion dollars of investment and an extra 10,000 staff”. But Jack Ma said he needed “only five servers, 10 more people and several weeks". And he did it in six weeks. This changed David’s mind about joining him.

 

A year later, Alibaba announced that David Wei joined Alibaba as executive vice president of the Alibaba Group and president of Alibaba.com.

 

 

 

 

 

 

After 10 years development, the Alibaba Group now consists of Alibaba.com and Alibaba.com.cn, the B2B portals; Taobao.com, China’s largest consumer e-commerce website and strong competitor to eBay; Alipay, a third-party payment company similar to PayPal; and Alisoft, an e-commerce software firm. This portfolio of firms blends neatly into one entity which not only complements each other but has the potential to change the way business is conducted worldwide.

 

 

 

 

 

Alibaba.com provides an efficient, trusted platform connecting small and medium buyers and suppliers from around the world. It operates two marketplaces: one international platform (www.alibaba.com) focusing on global importers and exporters and the other China platform (www.alibaba.com.cn) focusing on suppliers and buyers trading domestically in China. While suppliers can join Alibaba for free, many more services are available to suppliers who pay to become Gold Suppliers.

 

 

Till November 2009, over 45 million small and medium-sized companies have registered on Alibaba's overseas platform, among them more than 10.5 million users coming from outside of China.

 

 

 

 

David said that because Alibaba.com can track the volume of inquiries to Chinese factories from overseas, the company was able to see the crisis coming as early as February 2008. It takes probably three to six months to convert inquiries into orders, so Alibaba can predict what will happen three to six months ahead, he said. Now the company has been mandated to make a quarterly report on the state of China's export market to the government.

 

 

 

 

 

 

Alibaba focuses on small- and medium-sized suppliers as its target market. One reason is most companies in China doing exporting are not big companies, and there are untold numbers of them, while China has virtually no printed directories or electronic databases that allow companies to describe their products and help buyers and sellers find one another. Another reason is big companies often have their own web-based systems for dealing with suppliers, and other big companies.

 

 

 

 

In a boys and girls party, only boys pay to enter, at an affordable price. So did Alibaba.com, which only charges suppliers instead of international buyers. This business model attracts many interested buyers, and therefore the largest number of registered suppliers, thereby more interested buyers. This market leadership position creates a strong network effect that grows the business.

 

 

 

 

Generally, access to Alibaba's portals comes free of charge. But users also can sign up as Gold Suppliers and pay a fixed annual membership fee in exchange for more services, such as providing more details about the products they offer, obtaining personalized web pages, authorized payments, preferential positioning on the portal. Since the fee is not based on transaction, businesses will move more and more of their products online, and be reluctant to change for another portal website. So the customer suppliers are easily retained and contract renewed. It’s like a buffet, since the entrance fee is fixed, people will spend more time there.

 

 

 

 

In a buffet, there will always be some delicacies people will scramble for. The best way to land them is to stand close to the kitchen, said David Wei. At the world’s biggest online trading platform, Alibaba adopts the competitive keyword bidding model that Baidu and Google use. If a supplier paid more, it will be listed in the first several pages of certain keyword searches.

 

 

 

 

“We don’t invent new models for ourselves. We look at working models and think about how we can tailor them to the China market,” said David Wei at an interview with China International Business. Take Taobao.com for example. When Taobao was launched in 2003, eBay held about 90 percent of China’s online retailing market. But by 2008, Taobao grabbed 80% of the market share, while eBay held about 8%.

 

 

To beat eBay, Taobao did everything different. eBay is an auction site for secondhand goods, but Taotao is actually functioning as a B2C site, since Chinese people don’t want to buy secondhand goods. eBay charges a listing fee, so Taobao adopts a “free of charge” strategy. Unlike eBay, Taobao charges no fee for completed transactions. While eBay has no instant message system, Taobao provides such a service.

 

 

 

 

 

 

 

David explains that the business is not technologically driven, like Google, but customer-driven. Whatever technology they developed is to ensure the least tech-minded user can easily navigate their website and services, which entails truly hi-tech inside. And David said further that this may be one of the factors for why many of the bigger Internet giants have failed in China. They have focused too much on technology and ignored whether Chinese customers can use their site.

 

 

 

 

David said in Alibaba’s priority list, they put customers first, employees second, and shareholders number three. He explained that the global financial crisis arose out of this belief in maximising shareholder value. The misinterpretation of this belief is that you need to maximise profit. Once Jack Ma said at a shareholders’ meeting that if shareholders are not satisfied with his customer first strategy, they can "go invest in other companies that put shareholders first." That means shareholders will need patience, as the company is not looking at the next quarter but five years down the line, said David, who asked for "shareholders" not "share traders." The secret sauce is if customers are happy, shareholders’ long-term profit is guaranteed.

 

 

 

 

Though in some sectors Alibaba has competitors, but in more sectors what they do is brand-new ( at least locally) and without competitors. As Jack Ma put it, even if with telescopes they can’t find competitors. So they need to focus all their energy on customers, to find and foretell what they need, then develop and offer more products and services to solve customers’ problems.

 

 

 

 

During the just past recession, the majority of companies tightened their budgets, cut jobs and avoided investments. But as David Wei said, recession is the best time for expansion. Alibaba just bought a controlling stake in HiChina, a leading provider of Internet infrastructure services in China, including domain name services, web and server hosting services, email hosting services and website design and development services. Alibaba said at the beginning of year 2009 that 2009 was "year of investment". The company boosted spending on additional staff, research and development, and new marketing, such as a $30 million advertising campaign in the U.S. and other foreign markets to advertise its international site. During recession, everything is cheaper, said David.

 

 

 

 

Alibaba began to expand in the opposite direction by creating Export to China, a system which allows non-Chinese firms to establish Chinese language storefronts to export their products to China, said David Wei.

 

 

 

 

Alibaba also started expanding its global footprint since 2009, said David Wei. The company is in talks with an Indian reseller about forming a joint venture in India, where Alibaba.com recently surpassed 1 million registered members.

 

 

 

 

David believes that Alibaba.com's cheaper prices, coupled with the financial crisis, will help more and more people make the switch from traditional trading to using the internet. In five years time, e-commerce will become such a necessity in business world that no body will ever talk about it any more, said David Wei.