From the February 2015 issue of the Socialist Standard
On most accounts Bill Gates is the richest person in the world but, according to Bloomberg Markets, it is a rather less well-known individual who saw the biggest increase in his wealth in 2014. This was Jack Ma, founder and Chief Executive Officer of Alibaba, a Chinese e-commerce business. His fortune is just short of $26bn, up over $22bn in a year. You might wonder how anyone could earn that much in just twelve months through their own labour, but of course Ma did not make this money through his own abilities; he cannot even write computer programs.
In September, Alibaba Group Holding sold shares to outsiders for the first time in its initial public offering (IPO) on the New York Stock Exchange, raising a record $25bn. Ma owns a good chunk of the shares, and it was this that led to his fabulous increase in wealth, making him the richest person in China. The company is attractive to other members of the mega-rich super-elite too, and Alisher Usmanov, the richest man in Russia, has a substantial stake in it. Usmanov (who also owns a large part of Arsenal Football Club) is pretty secretive about his financial affairs and does not disclose how many shares he owns, but he has apparently sold his stake in Facebook in order to invest in technology companies, especially in India and China.
Now, Alibaba Group Holding is not quite the same as Alibaba in China. Ma and another executive, Simon Xie, own most of the Chinese assets, and Alibaba Group Holding is a Cayman Islands shell which has contractual rights to the profits of the Chinese company. It is what is called a variable interest entity structure (VIE), a way to get around restrictions in China on foreign investment in certain industries (dealbook.nytimes.com/2014/05/06/i-p-o-revives-debate-over-a-chinese-structure/). There are arguments as to whether such arrangements are strictly legal under Chinese law, and anyone buying at the IPO is taking a fair amount of risk. Yahoo, which owns around a fifth of Alibaba's shares, complained previously that the VIE was a way of moving assets to put them under Ma's control.
So what does Alibaba actually do? It is a striking example of the extent of globalisation, since its customers are not just in China, and in a sense it combines the functions of eBay, Amazon and PayPal, as it incorporates a number of businesses that do slightly different things. Tmail.com is a platform for businesses to sell to the public, while Alibaba.com is for business-to-business sales (described on its website as ‘the leading platform for global wholesale trade’). There are financial subsidiaries that deal with lending and other financial services, and a telecom company too. The company has also bought a sizeable chunk of other firms, including the Chinese equivalents of Twitter and YouTube, and the Guangzhou Evergrande Football Club.
It has even managed to market its own version of Black Friday, known as Singles Day, on 11 November. On this day in 2014 it sold well over $9bn worth of discounted goods to online shoppers in China and abroad (an increase of over a half compared to 2013). It has copyrighted the term ‘Double 11’, though many think this is unlikely to become a major shopping day in Europe as it coincides with Armistice Day. But who can really be sure that commercial considerations will not outweigh commemoration of the war dead?
Alibaba has around 26,000 employees at its ‘campus’ in Hangzhou. But in addition China has a number of ‘Taobao Villages’ (Taobao.com being the customer-to-customer part of Alibaba). People in these have set up online shops to buy and sell almost anything via Taobao. This is related to the fact that, outside the big cities, most people in China live a very long way from a major retail centre and so are less able to shop in person. Many such online shops now have a split between owners and employees too, so are not purely for sales between individuals.
In a recent letter to his workers, Ma wrote of ‘unparalleled ruthlessness and pressure ahead’ (Beijing Review 9 October). No doubt the ruthlessness will be his and the pressure will be on those who labour to produce his profits.
Paul Bennett
No comments:
Post a Comment