Alibaba: The House That Jack Ma Built pdfdrive com

Financial Times
journalist James Kynge traveled to the
city in 2005 to research the problem of fake goods, only to find out that even
hotels there were fake: He passed by not the Hyatt but the “Hiyat.”
Yiwu attracts traders from all four corners of the world. The town is a
favorite of traders from the Middle East, making Yiwu home to the fastest-
growing Muslim community in China. With an estimated 35,000 Muslims in the
city at any time—Chinese, South Asian, and Arab—Yiwu features dozens of
Muslim restaurants and an ornate $4 million mosque featuring marble imported
from Iran.
Since 2014, Yiwu is the start of the longest freight railroad line in the
world. Taking twenty-one days to traverse end to end, the 8,111-mile line links
Yiwu with Madrid.
What makes Yiwu such an essential node is its role marketing the goods of
the countless industrial clusters of Zhejiang and other parts of the Yangtze River
delta. These single-product towns can represent 80 percent or more of the
production of individual commodities—not just in China but worldwide.
Shaoxing is “textile city” and Yongkang is “hardware city,” churning out 30,000
steel doors and 150,000 motor scooters every day. Taizhou is known as “sewing
machine city” and Shenzhou as “necktie city.” Haining calls itself “leather city.”
There is even a “toothbrush city”—in case nervous entrepreneurs get a summons
from their local government official—in Hangji.
Yiwu itself claims to be China’s “sock city,” producing annually more than
three billion pairs of socks for companies like Walmart and Disney, although
Datang, near Hangzhou, also claims to be “sock city,” producing more than eight
billion pairs each year.
By the mid-1990s, when Jack was starting his own business career,
Zhejiang was already an entrepreneurial powerhouse. But the province’s
companies were highly labor-intensive and their average size small. From hardly
any entrepreneurs at the beginning of the 1980s, by 1994 Zhejiang arguably had
too many. In a population of 44 million people, the province was home to an
estimated 10 million economic entities.
Many manufacturers struggled to find enough customers to make a profit.
Unlike the factories in southern China set up by wealthy overseas Chinese in
Hong Kong and Taiwan, the small factories in Zhejiang had to hustle to find
customers and finance.
6
 China’s state-owned banks denied them any credit. This
chronic lack of funding created innovations in private finance, such as the
Wenzhou model, and led to the rise of industrial clusters that bound together
debtors and creditors, who could dole out capital based on the profit they

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believed would be generated by a specific contract. By 2004, of the top hundred
largest domestic private firms in China, half came from Zhejiang Province.
Jack recognized early on both the region’s strengths and its shortcomings,
and is a proud advocate for the province. Since October 2015, he serves as the
inaugural chairman of the General Association of Zhejiang Entrepreneurs. In his
inaugural speech, Jack talked about the six million Zhejiang entrepreneurs in
China and the two million Zhejiang entrepreneurs around the world: “The total
number of over eight million Zhejiang entrepreneurs might be the largest
business association in the world. They have created another economic entity in
addition to the local economy in Zhejiang.” Their successes weren’t won easily
though. In an earlier speech to the Zhejiang Chamber of Commerce, Jack
summed up the dynamism of his home province: “As entrepreneurs from
Zhejiang, our greatest advantages are that we are hardworking, courageous, and
good at seizing opportunities. We have these excellent qualities because we were
given nothing. We are not like other provinces which have resources of coal and
ore. We Zhejiang entrepreneurs have markets. . . . As long as we are in places
where there are people, we are always able to find opportunities. It will be the
same in the future.”
Yet Jack’s first effort to tap into Zhejiang’s entrepreneurial fizz was not a
success. In 1994, his Hope Translation venture had gotten off to a troubled start.
While his monthly office rent was almost $300, his first month’s income was
just over $20. Hope may spring eternal, but cash is king. Jack was facing a
crunch. To support his venture, Jack started peddling goods on the streets of
Hangzhou, including some he sourced from Yiwu. His translation company also
became a trading company. Hope Translation Agency started to sell gifts,
flowers, books, and even plastic carpet, a range of items that foreshadows
Taobao. Jack recalled, “We did everything. This income supported the
translation agency for three years until we started to make ends meet. We
believed that as long as we kept doing it, we would definitely have a future.”
But it was becoming clear to Jack that translation services alone were not
going to sate his entrepreneurial ambitions. Soon an unexpected journey, which
looked at first like a disaster, was about to give Jack a lucky break.
With his reputation as an expert English speaker growing from his popular
evening classes and his Hope Translation venture, Jack was asked by the
government of Tonglu County—some fifty miles to the southwest of Hangzhou
and later home to the Tonglu Gang of logistic companies—to assist as an
interpreter in helping resolve a dispute with an American company over the
construction of a new highway.
In 1994, the company had proposed to invest in a new highway to be built

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from Hangzhou to Tonglu. After a year of negotiations, no agreement had been
reached, and the initial funding promised by the partner in the United States had
not materialized. Jack was tapped to find out what was going on, and hopefully
end the deadlock.
First Jack traveled to Hong Kong, where he was told that the company’s
funds were held in the United States, so Jack embarked on his first trip there. He
would stay for a month. His mission for the Tonglu government was a failure.
But the trip would give him his first exposure to the Internet, and he would
return to China a changed man.

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