Alibaba honcho lists reasons why company is thriving

07 May '16

4 min read

He also highlighted Long-term Strategic Bets, claiming that Alibaba has an incredible track record of making long-term bets successful.

“Here, a bit of historical perspective is important. Take Taobao Marketplace as an example. We started Taobao in 2003 when online shopping in China was virtually non-existent. For five years we didn't generate any revenues; instead we focused on acquiring users and building an e-commerce ecosystem. Taobao didn't produce meaningful profits until 2010, seven years after its founding. Patience has paid off.”

“We are used to investing in long-term initiatives with long gestation periods. Five to seven years. Being able to do this is a competitive advantage.”

Tsai said Alibaba is prepared to continue investing in high potential businesses that are highly strategic to Alibaba, from digital entertainment to local services to international expansion. “These businesses contribute to losses in our current income statement. However, we invest in them so that they graduate to Emerging Traction, and then to Core Cash Flow,” he said.

The third of Alibaba's main reasons for success is the Internet which Tsai said is the future.

“China has 688 million internet users. Of this, 620 million users access the internet using a mobile device. Seventy-five percent of Chinese internet users are younger than 40 years old—the internet is the future because young people are on it,” Tsai concluded. (SH)

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