Jack Ma: China's visionary entrepreneur

If Correspondent

Chinese billionaire Jack Ma has experienced failures throughout his life. The 57-year-old tech business magnet once admitted, "I failed at strange stuff like a vital primary school test twice. First, I failed the middle school exam three times in a row. Later, I attempted and failed for three years of university. When KFC opened in China, I applied. 23 out of 24 applicants for the job were selected. The only person who didn't was me. Harvard denied my application ten times."

The situation reached a breaking point in November 2022 when officials abruptly stopped Ant Group's first public offering (IPO), valued at over $200 billion

Jack Ma used these constant rejections to forge a stronger foundation for Alibaba Group Holding, which he co-founded in 1999. Additionally, it gave him the desire to think strategically and unconventionally, enabling him to transform Alibaba into a Chinese tech conglomerate with a market capitalization of $284.35 billion as of January 2023.

Market observers were not surprised by Jack Ma's announcement that he would relinquish control of Ant Group, a unit of Alibaba. This action will appease Chinese authorities, who have been increasing their pressure on the corporation to reorganize its intricate organizational structure as per the requirements of the People's Bank of China.

The business claimed it was changing its ownership structure to guarantee that "no shareholder, alone or jointly with other parties, will have control over Ant Group." To "further enhance the stability of our corporate structure and sustainability of our long-term development," the statement stated Jack Ma will now only control 6.2% of the voting rights.

After dealing with opposition from Chinese regulatory officials for over two years, the billionaire had debated separating the fintech from Alibaba for some time.

The situation reached a breaking point in November 2022 when officials abruptly stopped Ant Group's first public offering (IPO), valued at over $200 billion. This was put on hold after China's financial watchdogs cracked down on Chinese stocks listed on US exchanges.

So how did China's most well-known and flamboyant corporate icon lose favour and end up on the government's bad books?

A tale of rags to riches

Jack Ma, born in 1964 in Zhejiang, China, was an inquisitive child from an early age. However, when he was a teenager and eager to study English, he worked as a tour guide for foreign tourists to improve his command of the language since he believed this was a more effective method than memorizing words from a book.

Later, he attempted to enrol at Hangzhou Teachers College by taking the entrance exam but failed twice. However, Jack Ma didn't give up, and in 1984 he was accepted into the college. He received his English degree four years later, and from then, he taught English at Hangzhou Dianzi University until 1993.

It is nearly impossible to hold a self-starter down for an extended time. So by starting Haibo Translation Agency in 1994, Jack Ma used his English proficiency to offer translation and interpreting services.

A year later, while on an official trip to the US on behalf of the city of Hangzhou, he observed Americans using the internet to fulfil most of their demands, including communication, shopping, informational needs, and entertainment.

Jack Ma came home and established China Pages in 1995, an online directory for local businesses looking for international clients, after being astounded by how technology could change lives, livelihoods, lifestyles, and the economy.

Many referred to it as China's first indigenous Internet start-up. He, however, departed it after only two years and went on to lead a government-backed Internet business until 1999.

He created Alibaba Group Holding in 1999 as a B2B website to aid in transactions between small firms when the impulse to go it alone won out. Jack Ma upset Applecart business by charging users a small cost to become verified as trustworthy vendors on the network and an additional fee for selling to consumers overseas.

When he once visited a bank, the employees refused to process an online transaction because they claimed it was a financial product. This caused the former teacher to become a technocrat, and he subsequently stated in a lecture, "If a Chinese company didn't go into payments, some overseas company would come to do it, and we'd end up the victims. So I went to hear Clinton speak about the importance of leadership when I was at Davos. That meant doing something brave that you believe in, which won't harm your country or your consumers. Then I had my realization, and decided to give it my all.”

As a result, Alipay began operating as a third party in online transactions in 2003. With 1.3 billion users as of 2013, it had eclipsed Paypal's 377 million users to take the top spot among mobile payment platforms worldwide, ahead of Apple Pay's 507 million users and Google Pay's 421 million.

Contrary to trend

Jack Ma focused on the 2003-launched consumer-focused platform Taobao after seeing the success of Alibaba's B2B website. Severe Acute Respiratory Syndrome (SARS) broke out in China that year, almost decimating the nation’s economy, as the government had to put lockdown to stop the spread of the disease. His never-say-die attitude showed itself once more. Despite challenges faced by China, he and a core group of techies launched the site after finishing its development at his apartment. This decision turned the company's fortunes around.

As more Chinese people shifted to online purchasing due to the self-imposed quarantine, Taobao established a solid foothold in the e-commerce industry. By 2006, it had surpassed eBay as the most popular e-commerce site in the nation, and by 2020, it was generating $56 billion in yearly revenue from over 600 million members.

Investors stream in

The expansion of Alibaba was not unnoticed. The year 2005 saw Yahoo investing $1 billion in the business, acquiring a 40% interest, while Softbank acquired another 30% interest. This gave the two firms a place at the table of the internet behemoth that was now well-known throughout China. Jack Ma had finally made it to the big leagues, thanks to this coalition, earning him the title of "China's New Internet King" in the New York Times.

With the help of these favourable conditions, the e-commerce business raised $1.5 billion when it went public in 2007 on the Hong Kong stock exchange. However, the Chinese central bank published new third-party Internet payment provider regulations in 2010. It stated that these entities needed to apply for and obtain licenses from the People's Bank of China to continue operating.

Jack Ma kept a 46% share in the financial services company and split off Alipay into a separate company. This led to a protracted dispute with Yahoo, which asserted that his decision to divide the company without informing it beforehand resulted in a sharp decline in the value of Yahoo's stock.

Despite these developments, visionary entrepreneur-backed Alibaba applied for a $25 billion IPO in the US in 2014. However, there needed to be more clarity regarding the connection between Alibaba and Alipay, and concerns surfaced on how the parent firm would profit from the public offering.

Later, the Chinese conglomerate clarified in its revised draft prospectus that Alibaba no longer had "an ownership interest in or control over Alipay or its current parent company." In addition, it acknowledged that Jack Ma still owned 46% of Small and Micro Financial Services firm (SMFSC), the parent firm of Alipay.

Alibaba Revenue & Advertising Statistics

The Ant continues to march Jack Ma gained recognition over time as the person who built a tech behemoth and the best brand representative for contemporary China. From former German Chancellor Angela Merkel to twice-elected American President Barack Obama, he embodied the nation's significant technological advancements and economic prosperity.

The administration at home, though, was keeping a close eye on his expanding political views. Jack Ma attended the Bund Summit in October 2020, and things started going awry for him. In his address, he attacked the Chinese regulatory market, saying, "Good innovation is not afraid of regulation, but is afraid of being subjected to yesterday's way to regulate."

• In 2021, Alibaba spent $7.73 Billion on advertising

• Alibaba’s year-on-year growth is estimated at 29%

• Alibaba’s revenue increased by 22.91% between 2021 and 2022

• In 2022, Alibaba’s revenue is expected to reach $134.567 Billion

• In 2021, Alibaba made 87% of its revenue from eCommerce sales

• In 2021, Alibaba made $473.68 Billion from retail eCommerce in China

• In 2021, Alibaba earned $9.8 Billion in GMV from its Chinese marketplaces

• Alibaba’s revenue from subscriptions grew by 60.4% between 2018 and 2020

Source: thrivemyway.com of the ongoing geopolitical verbal battle between China and the US, which has been more heated after COVID's breakout, as US officials began closely scrutinizing Chinese businesses' listings on their bourses.

The man, the prophet Jack Ma continues to be a visionary in the business realm, and players in the industry and politicians hold him in high regard despite his blunders in the political sphere.

He talked more about wanting to do more than manage a business as he met more fellow thinkers from diverse streams. He had a strong love for philanthropy and innovation, focusing on education in rural China as a nod to his earlier career as a teacher.

"In the future, there will be a competition for creativity, imagination, learning, and independent thought rather than for information. If you think like a machine, trouble will eventually arise," Jack Ma said.

The Chinese billionaire may have been attempting to be humorous when he compared the nation to a "pawn market" and accused it of adhering to outdated business practices. But the dictatorial government was anything but amused.

Jack Ma's comments were an outright rebuke of Chinese President Xi Jinping's determination to end monopolistic activities to "prevent the disorderly expansion of capital."

To reach investors in mainland China for Ant Group's initial public offering (IPO), the e-commerce giant said it would add a primary listing in Hong Kong to its New York presence. This came after the e-commerce behemoth paid a massive $2.8 billion fine due to regulatory scrutiny in China.

He also stated in one of his talks that after 20 years of making people more like machines, robots will resemble people in the next 20 years.

Jack Ma formally resigned from his position as Alibaba's executive chairman in 2019. In an open statement announcing his departure, he said, "I still have many goals to pursue. Those who know me well understand that I dislike being idle. As I am still young and the world is vast, I want to experience new things.”

In retaliation, the Chinese antitrust authorities investigated Alibaba's practice of pressuring vendors to sell exclusively through its platform. Ant Group representatives were called in for a meeting to discuss consumer rights and competition. Additionally, Alibaba found itself in the crossfire editor@ifinancemag.com

Jack Ma stayed out of the spotlight after the reaction from the administration and disappeared for a while. Then, according to Reuters, the Chinese financial authorities cautiously approved Ant Group's request to resume its dual public listing in July 2022.

His decision to relinquish control of Ant Group is just another step in his departure from the vast empire he has created, leaving behind a lasting legacy.

Having an understanding of the consumers of a business allows for the development of products/services that match the consumers’ needs, wants, and/or preferences

Omar H. Fares is a Lecturer at the Ted Rogers School of Retail Management. Omar Fares earned his Bachelor of Commerce and Master of Science in Management from Toronto Metropolitan University. His main research interest is in the consumer behaviour area, particularly focusing on consumers' interaction with novel digital innovations and the impact of digital innovations on retailers.

Omar Fares published his research in different impactful journals, such as Computers in Human Behavior, the Journal of Financial Services Marketing, and the Journal of Global Scholars of Marketing Science. His professional background combines expertise in sales, market research and planning, corporate strategizing, and leadership & training in the banking and retail sectors. Omar Fares worked for many leading institutions such as Walmart, CIBC, and Fairstone Bank (Previously Duo Bank).

In his interview with the International Finance Magazine, Omar Fares shares his insights about consumer behaviour, marketing strategies, Retail Sales Management, the importance of digital marketing, and much more.

IF: Why is studying consumer behaviour important for a business?

Omar H. Fares : The study of consumer behaviour is critical for the success/survivability of businesses. Having an understanding of the consumers of a business allows for the development of products/services that match the consumers’ needs, wants, and/or preferences.

For instance, in the past, businesses would develop products/services and then try to find the right customer (based on different variables) that would likely engage with their offering. However, with the evolution of the study of consumer behaviour, businesses now engage their customers first (surveys/ focus groups/ experiments) and work backwards on product/ service development and design. Such an approach helps businesses avoid losses that can otherwise be critical for the businesses' success/survivability.

More importantly, the study of consumer behaviour helps reduce the guesswork for businesses and allows for data-driven strategic decisions which may benefit businesses in the following ways: save money, save time, enhance brand image, and deliver the right product/service to the right customer.

It is also important to note that the study of consumer behaviour is as important to consumers as it is to businesses. The study of consumer behaviour may benefit customers in the following ways: more products/services that satisfy their needs/wants/ preferences and manage their own behaviour, by understanding the motives and drivers of an individual’s decisions one can work to manage their behavioural actions for optimal results. This may equate to extra savings of time and money.

As each consumer is different, how can a company master the art of predicting the customers' demands?

With the growing complexity of consumer behaviour (i.e., consumers are getting smarter, have access to more data, and are able to share information on a wider scale), predicting consumer demand is more and more complex. One of the key ways businesses can predict and understand consumer demands is through market segmentation. Market segmentation refers to the process of dividing consumers into groups with similar characteristics and traits. While appreciating that each individual is different, the process of market segmentation helps in narrowing the gap between guesswork and likelihood estimations that is driven by data. Based on this, the question becomes how consumers differ and how can a business segment its consumers.

Consumers can be segmented/divided/grouped based on four characteristics:

Demographic characteristics: Refer to the process of dividing the market based on characteristics such as age, gender, income, level of education, occupation, etc.

Geographical characteristics: Refers to the process of dividing the market based on location.

Behavioural characteristics: Refers to the process of dividing the market based on actual behaviour such as usage rate, loyalty, purchase occasion, etc.

Psychographic characteristics: Refers to the process of dividing the market based on consumers' personalities, values, and attitudes.

The process of segmenting may allow businesses to better predict consumer demand and deliver offerings at the right time and place. One of the key challenges businesses face however is the lack of statistical skills to effectively segment their consumers. While data availability became less of a concern for businesses, the main issue may be around how to effectively use the data to segment consumers and therefore target and position products/services more effectively.

It is important to note that such segmentation approaches are best utilized in combination (e.g., the use of demographic data only to base strategic decisions may lead to a significant loss of opportunity and thus fall into the trap of painting consumers' behaviour with the same brush). For instance, recent research of mine that we are working on publishing is related to the drivers of banking technology usage, and while many banking professionals assume age (i.e., demographic variable) is a key driver of digital adoption and thus base decisions based on this factor, we found that other psychographic variables can paint a fuller picture in the process of digital banking adoption.

How does the dynamics of consumer behaviour impact organizations?

The dynamic of consumer behaviour impacts organizations in multiple ways including the development of products/services/ enhancement of marketing strategies, understanding competition, and driving bottom-line profits.

Development of products/services: By understanding consumer needs/wants/preferences, businesses can develop and design products/ services that match consumer needs. In recent years, businesses have relied on consumer surveys, focus groups, and pre-market experiments to gain an understanding of the market before spending resources on product development. This is also evident in consumer experience, where the field of UX (user experience) has taken a common practice of conducting consumer research before and as businesses work on the development of websites and applications.

Enhancement of marketing strategies: Having an understanding of the complex consumer dynamics may aid businesses in developing strategic plans that tailor to their target market and develop tactical approaches based on the understanding of what motivates customers to take certain actions.

Understanding competition: Understanding how consumers perceive and interact with competitors may help organizations develop clear points of differentiation and address consumers' pain points proactively.

Driving bottom-line profits: Ultimately organizations look to drive profit and increase acquisition while reducing customer churn. Understanding consumer behaviour may help increase sales and reduce costs by examining the behavioural drivers of consumers, developing products/services efficiently, and having the right product/service to the right customer at the right place.

What factors influence behavioural changes in a customer?

As human beings are very complex, there are a wealth of variables that influence behavioural changes. While the following is by no means a comprehensive list, it is however a starting point of much of what we know.

Demographic variables: This includes age, gender, income, occupation, level of education, etc.

Psychological variables: Internal psychological factors such as perceptions, memory, learning, and motivations are all factors that may influence behavioural actions.

Social variables: The environment of an individual plays a critical role in determining how one might behave in different scenarios. For example, influence on reference groups such as family, friends, and colleagues has been shown to be a likely driver of behavioural action. On the other hand, the need to dissociate from certain groups may also play a key role in behavioural action.

Situational variables: Consumers may behave differently in certain situations, for instance, one's behaviour can be different if they are busier or if the weather is bad.

Marketing variables: Different variables such as promotions, advertisements, or discounts may influence consumer behavioural actions. The study of such influence is of key interest to consumer behaviour researchers as such variables can be controlled to a higher extent compared to other variables.

How can a company influence consumer behaviour through marketing strategies?

Companies may influence consumer behaviour in several ways including effective branding, strategic advertising, behavioural nudges, product/service promotions, efficient targeting and positioning, and personalization of offerings.

Effective branding: Companies with strong brands and brand image may influence consumers to interact with their product/service by enhancing trust and managing expectations. For instance, purchasing a laptop from an established brand comes with the expectations that have been developed by previous user experience, trust in the post-purchase process, and a level of comfort in knowing what the brand stands for. On the other hand, making such a purchase from an unknown brand leaves customers with a lack of trust in the product and what it can and is expected to deliver. Therefore, building a brand image is key to helping customers make decisions and influence their behaviour.

Strategic Advertising: When done right, advertising can be a powerful tool to help customers move from one stage to another in the customer purchase journey. Some of the key considerations should be around what message is the company trying to deliver to the customer? What is the goal of the advertisement (i.e., informative, persuasive, reminder)? Who is the ideal customer? How to best reach the ideal customer? Many companies fall into the trap of pushing out advertisements before strategically aligning on some of the main areas of consideration which may result in a harmful impact on the brand and cost companies a wealth of resources.

Behavioural Nudges: These nudges can be referred to as subtle prompts designed to influence behaviour in a positive way. For instance, a product stored at eye level in a retail store may influence customers to purchase the product vs products that are harder to see at eye level. There are many examples of the usefulness of behavioural nudges to influence behaviour, however, some of the key ones include choice architecture (i.e., the process of designing the way choices are presented to customers), social proofs (i.e., the process of using social influence/norms to impact one's decisions), default (i.e., the process of setting an aspired action

Digital marketing helps businesses to reach a highly targeted wider audience compared to traditional channels. Companies can specifically reach customers based on their behavioural, psychographic, demographic, and geographic traits with more effectiveness as the default option), and feedback (i.e., the process of showcasing customer behaviour to customers to influence future actions).

Product/service promotions: The process of including discounts, free trials, and offers may entice customers to take certain behavioural actions. Such an area has been of key interest to researchers and practitioners. Promotion of a product/service that may entice an initial behavioural action works well with the familiarity principle. The familiarity principle is the tendency of individuals to prefer things the more they become familiar with them. Thus, having a promotion or free trial may enhance one's level of familiarity which may lead to enhanced positive behavioural action.

Efficient targeting and positioning: Companies that are able to segment their customers effectively may be better positioned to effectively reach their ideal customers at the right time and place. Reaching customers at the right time and place can play a significant role in behavioural action, therefore, leading to increased sales and bottom-line profits.

Personalization: The process of designing products/services that fit the customers' needs/wants, through data and analytics, may result in customers feeling a sense of relevance and connection to the brand. Thus, personalization of offerings may influence behavioural action leading to positive business outcomes and increased customer satisfaction.

Why is digital marketing important for a business to be successful?

In the modern landscape, digital presence is no longer optimal for most businesses, but rather a necessity. Customers enquire, connect, interact, and purchase from certain brands online. Digital marketing helps businesses to reach a highly targeted wider audience compared to traditional channels. Companies can specifically reach customers based on their behavioural, psychographic, demographic, and geographic traits with more effectiveness and reduced costs compared to traditional modes of marketing. Additionally, businesses can work within their own budget to create effective campaigns that may be significantly cheaper than other channels. Most importantly, businesses can measure consumer behaviour with a high level of precision and may quickly adapt and change their approaches based on real-time feedback.

How different is 'Inbound Marketing' when compared to 'Digital Marketing'? Which one should companies prefer?

The ultimate answer depends on the company's goals and resources. However, both approaches provide value in a unique way. Inbound marketing provides customers with value through valuable content such as informative videos, blog posts, and expert research. The idea is customers will be attracted to engage with the business through helpful information presented which in turn may result in increased brand trust. On the other hand, digital marketing refers to an all-encompassing approach where a business may work to develop strong inbound strategies and also proactively reach customers wherever they are. This may include targeted advertisements and content. Companies need to examine their goals, motives, and resources before selecting an approach.

Does digital marketing yield results for all businesses? What is your take?

A clear no. While digital marketing is a necessity in the modern landscape, if done inappropriately, it may cost businesses significant losses. Some of the common reasons why digital marketing efforts may fail include: poor segmentation, targeting and positioning, lack of clarity on objectives, bad product/service, no clear value proposition, ineffective message, minimal testing and optimization, and budget constraints. Therefore, it is important to critically examine all the factors involved in building an effective digital strategy before going to market.

What role will artificial intelligence play in the coming days in transforming the marketing sector?

Artificial Intelligence will play a critical role in reshaping the marketing field. A few key takeaways I present here are businesses with no proper marketing plan before integrating AI technologies will still be a business with a poor plan after integration and AI technologies will effectively need active human monitoring and management to avoid reputational and different sorts of risks.

Also, there will be other scenarios, where AI will help automate (and are already helping) repetitive tasks, thus leaving marketers to focus on high-impact tasks. Content creation may be enhanced by using AI, however, with a careful note on avoiding complete reliance on existing tools, this will be one of the top areas of possibility and challenges for marketers (It will be important to maintain the human element to existing processes to maintain relevancy and connection with consumers).

Customer service can be enhanced through the use of chatbots that are trained on vast amounts of data and are able to support customers 24/7 in different languages. Also, Internal marketing tasks will likely become more efficient with the integration of AI tools such as pipeline management software. Last but not the least, customer research can be enhanced by using AI through effective thematic analysis that can be done in minutes (otherwise may take weeks or more). Marketers will be able to collect, analyze, and adjust in real time creating key opportunities in the field.

You have worked for leading institutions such as Walmart, CIBC, and Fairstone Financial. According to you, what does it take to become successful in Retail Sales Management?

Some of the key skills that I believe are necessary include data analytics, technical competency in one's particular subject matter, relationship management, research competencies, ability to write and present work effectively, and work-ethic/commitment.

While there is no clear formula for success, there are certain steps one can take to further enhance and develop. In the field of Retail Management, data analytics (the ability to work with a large set of data

Customer service can be enhanced through the use of chatbots that are trained on vast amounts of data and are able to support customers 24/7 in different languages and give meaning to it) is a key to standing out as a strategic leader and decision-maker.

Following, I suggest developing a high-level of technical competency in one's subject matter, this can be done through active studying and working towards relevant certifications in one's field.

I also urge working on the soft skills side, just like subject matter expertise can be acquired, soft skills need continuous development and work. This will lead to effective working relationships with colleagues and customers alike.

Moreover, one of the usually overlooked skills is the ability to research in a scientific manner. I suggest that future business leaders take research methods courses and familiarize themselves with the scientific research process as it will pay dividends in the form of strategic decisions in the long run.

I also recommend that individuals practice business writing and presenting at all given opportunities (valuable information that can't be communicated effectively may cost one and business significant losses).

Finally and most importantly, one can teach all of the above, however, work-ethic/commitment is very hard to teach. I argue that the main criterion for success is work-ethic/commitment where all the other areas can be reached with the right focus and strategic planning.