Alibaba: The House That Jack Ma Built pdfdrive com

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UnionPay’s red, blue, and green logo is today a common sight in shop windows
and on ATMs around the world. UnionPay solved a major headache for
merchants in China, both offline and online, in making sure they could accept a
customer’s card no matter which domestic bank had issued it. The process didn’t
happen overnight, though, and for years EachNet encouraged its most active
customers to apply for credit cards from one of the big four commercial banks to
ensure that they could complete their purchases online.
As Bo had pointed out, China’s legal system offered few protections for
merchants, who worried that customers wouldn’t pay for goods already shipped,
nor for customers, who were worried that the goods they purchased might never
arrive. To address this, EachNet set up its own escrow service, where it would
collect funds from customers and release them only after delivery had been
confirmed, charging a 3 percent commission as a service fee. Few customers
signed up, however, and with an eye on the success of PayPal in the United
States, EachNet drew up plans for its own local equivalent.
Product quality issues were also tricky to overcome. In the States, eBay had
pioneered a system that allowed consumers to rate vendors, but in China
unscrupulous vendors quickly figured out they could game the system by using
masses of fake accounts to drive up their positive ratings, or dilute their
negatives. EachNet tried to limit the number of ratings one user could post, and
set up a team to investigate consumer complaints of fraud. But both efforts were
rapidly overwhelmed. A key challenge was how to identify the buyers and
sellers on its platform, never mind implementing any sanctions.
EachNet clearly was in for a long haul, not projecting any profits until
2005. EachNet’s prospects of raising new venture capital investment dimmed
further. Bo and his investors realized that their best shot at making EachNet the
eBay of China was to sell out to eBay itself.

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