China's B2B transaction volume up 25.5% in 2007, survey finds

Business-to-business (B2B) transactions hit 1,250 billion yuan (168.9 billion U.S. dollars) in China last year, up 25.5 percent from 2006, according to a survey released on Tuesday.

The "Netguide 2008" survey, which provides a wrap-up of 2007, polled more than 300 web sites and about 200 enterprises, with 50,786 interviewees around the country.

The survey, conducted by the Data Center of the China Internet (DCCI), reported that the newly-listed Alibaba.com was first in the e-commerce marketplace and accounted for about 70 percent of market share.

Alibaba.com is one of China's fastest-growing Internet companies. Its registered members soared to 24.6 million in 2007 from 6 million in 2004.Paying members increased to 255,000 by June 2007 from 77,000 in 2004.

Alibaba.com, which reportedly has the world's biggest base of online suppliers, raised 1.5 billion U.S dollars in its initial public offering (IPO) last November -- the second-largest Internet offering in history after Google's IPO in 2004.

Other e-biz dotcoms on the top list are netsun.com, globalsources.com, cn.made-in-china.com and hc360.com, according to the survey.
The Netguide 2008 also forecasts that China's B2B trade volume will exceed 1,620 billion yuan (218.9 billion U.S. dollars) in 2008 and 2,130 billion yuan (287.8 billion U.S. dollars) in 2009.

Alibaba - A B2B Trade Company Overview

Corporate Overview

Alibaba Group is a global e-commerce leader and the largest e-commerce company in China. Since it was founded in 1999, the Alibaba Group has grown to include six core member companies:

Alibaba.com - Alibaba.com (1688.HK) is the Alibaba Group's flagship company and the leading B2B e-commerce company in China, serving small and medium sized enterprises in China and around the world

Taobao - A leading online shopping marketplace for consumers in China

Alipay - China's leading online payment service

Yahoo! China - A search engine and lifestyle portal, acquired from Yahoo! Inc. in October 2005

Alisoft - An Internet-based business management software company targeting SMEs in China

Alimama - An online advertising exchange for web publishers and advertisers to trade online advertising inventory in China

History & Milestones

1999

Alibaba Group officially established, led by Jack Ma and Alibaba's 18 founders working out of a Hangzhou apartment

1999-2000

Alibaba raises US$25 million from Softbank, Goldman Sachs, Fidelity, and other institutions

2003

May: Consumer e-commerce site Taobao is founded, again in Jack Ma's apartment

2004

Online payment system Alipay is launched

2005

October: Alibaba.com forms a strategic partnership with Yahoo! Inc. and takes over the operation of Yahoo! China

2007

January: Business software services company Alisoft is launchedNovember 6: Alibaba.com Limited lists on the Hong Kong Stock ExchangeNovember 20: Alibaba Group launches Alimama, an online advertising exchange company

Alibaba.com (1688.HK) is the leading B2B e-commerce company in China. We provide an efficient, trusted platform connecting small and medium-sized buyers and suppliers from China and around the world. Our international marketplace (www.alibaba.com) focuses on global importers and exporters and our China marketplace (www.alibaba.com.cn) focuses on suppliers and buyers trading domestically in China. Together our marketplaces form a community of more than 24 million members from over 200 countries and regions, as of June 30, 2007.

Founded in 1999, Alibaba.com is the flagship business of the Alibaba Group and one of the world's premier e-commerce brands. Our operational headquarters is based in Hangzhou in eastern China. We have field sales and marketing offices in more than 30 cities in China, Hong Kong, Switzerland and the United States. The company had more than 4,400 full-time employees as of June 30, 2007.

Taobao operates an online shopping marketplace for consumers in China under the names "Taobao" and "淘宝" ("Taobao" in Chinese). With a registered user base of approximately 39.9 million as of June 30, 2007, Taobao facilitates transactions between individual consumers and a wide range of sellers including individuals and retailers. Sellers may post new and used goods for sale on the Taobao marketplace either through a fixed price or negotiated sale or by auction. Consumers may search, shop and transact with sellers on the Taobao marketplace. Alibaba Group founded Taobao, headquartered in Hangzhou, in 2003.

Alipay is an online payment services provider operating under the names "Alipay" and"支付宝" ("Alipay" in Chinese). Alipay's service enables individuals and businesses to execute payments online in a safe and secure manner. Alipay's users are primarily buyers and sellers engaging in e-commerce transactions. With a registered user base of approximately 43.5 million as of June 30, 2007, Alipay is an accepted online payment method for many online retail websites and other online goods and service providers in China as well as the designated online payment service provider on our China marketplace and on Taobao. Alipay partners with domestic PRC banks to provide an escrow service for payments, which reduces the settlement risks faced by Alipay's customers in their e-commerce transactions. Alibaba Group founded Alipay, headquartered in Hangzhou, in 2004.

Yahoo! China's website operates Chinese language portal services, such as email and the provision of finance, sports, lifestyle and entertainment information, as well as a web search service that crawls and indexes web pages generally available on the Internet targeted at individual Internet users in China. Yahoo! China's paying customers primarily consist of advertisers that purchase fixed price banner advertisements, text-links or auction-based pay-for-performance marketing services on Yahoo! China's website. In October 2005, Alibaba Group acquired Yahoo! China in a transaction whereby Yahoo! became a substantial shareholder of Alibaba Group. In connection with this transaction, Yahoo! agreed to grant to Alibaba Group the exclusive rights to use in China the "Yahoo!" name and certain technologies owned by Yahoo!, as well as the right to sub-license these rights to other members of Alibaba Group. Yahoo! China is headquartered in Beijing.

Alisoft develops, markets and delivers Internet-based business management software targeting SMEs in China. Alisoft's software provides its customers with various tools, including enterprise management tools, such as email, customer inquiries and information management, and basic financial management tools, such as invoicing and bookkeeping. Alisoft owns the copyright and other proprietary software rights of the "阿里旺旺" ("Aliwangwang" in Chinese) instant messaging communication tool, which is the designated instant messaging communication tool for Taobao and which we offer to our users as TradeManager on our international marketplace and as 贸易通 (TradeManager in Chinese) on our China marketplace. Alibaba Group founded Alisoft, with operations in Hangzhou and Shanghai, in January 2007.

Alimama is China's leading online advertising exchange, which allows web publishers and advertisers to trade online advertising inventory. A wholly owned subsidiary of Alibaba Group, Alimama is designed to serve the more than one million small- and medium- sized websites in China which generate an estimated 80% of China's website traffic. Alimama helps connects these web publishers to advertisers, allowing them to monetize their website traffic while offering advertisers an affordable way to reach highly targeted audience groups.

Rumor: China Yahoo To Name New President

Alibaba vice president Jin Jianhang will be promoted to China Yahoo president next week, reports qq.com quoting a China Yahoo employee. The employee said Jin will announce China Yahoo's new strategy along with the end of inner-company personnel changes next week. According to the report, former China Yahoo president Zeng Ming will move to Alibaba Group as chief of staff. China Yahoo spokesman Tao Ran said yesterday that the company plans to focus on e-commence. Alibaba Group decided to set up new search and sales centers along with members of China Yahoo staff on January 23.

Taobao Fights Off Tricky Impersonators

Alibaba's consumer-to-consumer (C2C) e-commerce site Taobao.com has established a thirty-person safety team to handle customer complaints regarding fake Taobao sites and phony prize information sent via Taobao instant messaging tool Ali Wang Wang, reports National Business Daily quoting a Taobao executive. The team intends to block sites and report them to the government, said the report. Several Taobao users recently received fake prize notification SMS from Taobao impostor taobao.gegecn.com.cn asking the users to send in RMB1,000 to redeem prizes they had "won".

Yahoo China Rumored to Cuts Jobs, Restructures Business

According to local media, Yahoo China today initiated a company-wide job cut. These job cuts resulted in internal restructuring including the possible closure of Yahoo China’s new media units. On the other hand, Yahoo China’s main investor Alibaba yesterday announced the formation of its search engine and pay-for-performance advertising team.

What's wrong with Yahoo's efforts in those areas? Yahoo China is not a Yahoo subsidiary; Yahoo swapped its Chinese unit for a stake in Alibaba. These cutbacks seem unrelated to Yahoo's pending layoffs -- but it's telling that Alibaba thinks it's better off with homegrown efforts than the businesses it inherited from Yahoo.

TaoBao 07 GMV Hit CNY43.31bn

SHANGHAI, Jan 23, 2008 (SinoCast via COMTEX) - TaoBao.com, a consumer-to-consumer (C2C) business platform established by Alibaba.com Corporation, released that its gross merchandise value (GMV) exceeded CNY 43.31 billion in 2007, soaring 156.3% year on year.

The figure is close to the CNY 53.3 billion combined sales of Wal-Mart Stores Inc. (NYSE: WMT), Carrefour Group and Lotus Supermarket Chain Store Co., Ltd., three global retailer giants, in the Chinese market in the year. The shining performance made TaoBao.com the No. 2 integrated mart in China, after Bailian Group Co., Ltd. that recorded a CNY 77.1 billion GMV.

The user number of TaoBao.com totaled 53 million in 2007, rising 76.7% from the 30 million in 2006. Meanwhile, the number of its online goods and unique visitors per day reached 116 million and 9 million, respectively.

Total turnover of the Chinese online shopping market amounted to CNY 59.4 billion in 2007, rising 90.4% from the CNY 31.2 billion a year earlier, according to data. And the figure is expected to hit CNY 1 trillion in 2012 at the latest, accounting for 5% to 8% of the total retail sales of consumer goods.

CHINA: Taobao Records 156% Sales Jump

Alibaba.com has claimed that its Taobao website’s users sold 43.3bn yuan ($5.98bn) of merchandise last year, outpacing Carrefour’s revenue in China. Sales from Taobao's Web site surged 156% year-on-year. The number of people who bought and sold goods on Taobao's site rose to 53 million from 30 million. The average user spent 817 yuan, up 45% year-on-yeare.

China Yahoo said to be cutting staff

CHINA Yahoo, a subsidiary under the nation's largest e-commerce firm Alibaba.com Corp, is trimming its workforce and sending staff back to the parent company, sources close to the company said.

"Dozens of people," including mid level managers and directors, are returning to Alibaba while others are asked to leave with compensation for their service, they said, asking for anonymity.

Tao Ran, a spokesman for Hangzhou-based Alibaba, refused to comment yesterday.

Alibaba took over Yahoo China - which was later changed to China Yahoo - in 2005 and was paid an additional US$1 billion from Yahoo Inc, which in return gained a 35-percent stake in Alibaba.

Since the deal, a revamp of the acquired business has been going on as Jack Ma, founder of Alibaba, is trying to integrate it into their e-commerce platform, with ideas like launching shopping search functions. The business was renamed China Yahoo last year.

China Yahoo had about 800 staff as of September 2006. It was still recruiting sales and marketing staff in October and November. The latest figure on its employee number was not known.

Alibaba to offer CCB loans to online sellers

E-commerce firm Alibaba.com Corp has joined hands with China Construction Bank to offer loans to individual sellers on its auction site to spur trading and expand its share in China's consumer-to-consumer market.

Vendors on its subsidiary Taobao.com, who often find it hard to gain bank loans, can get up to 100,000 yuan (US$13,698) in short-term loans if they have a good credit history, Alibaba said yesterday.

But applicants will have to pay higher interest rates of 8.21 percent a year for the bank to make a profit margin and to offset the risks. Sellers can apply for the loans when they have closed a deal but not yet received the money.

They must also be users of the Alipay system, which holds buyers' money in trust and won't send it to the sellers' bank accounts until buyers confirm they have received the goods and are satisfied with the quality.

About 40,000 to 50,000 sellers on Taobao are qualified for the program, judging by their business scale and credibility, according to Alipay.com, Alibaba's online payment subsidiary and the program operator.

"It's a good idea for us to develop small-loan business and meet the demand, especially in the booming e-commerce area," said CCB in a joint statement with Alipay.

The loan size cannot exceed the value of the deal, and the bank will recover the loan and interest directly through Alipay once the payment goes through.

The 8.21-percent interest rate compares to the basic six-month lending rate of 6.57 percent set by the central bank.

Shao Xiaofeng, Alipay's president, said it won't make a profit from the service, as the aim is just to "develop the size of China's Internet businessmen with a value-added service."

Most sellers on Taobao, China's most popular C2C platform, are self-employed and more than 80 percent of their investment comes from their personal income, according to Alipay.

China auction site Taobao saw transactions double in 2007

SHANGHAI, Jan 22 (Reuters) - Alibaba's online consumer auction firm, Taobao, saw its transaction volume more than double last year, amid rapid growth in China's e-commerce market. Taobao's customer base also soared, reaching 53 million in 2007, up nearly 77 percent compared with the previous year, the company said in a statement late on Monday.

Its transaction volume grew to more than 43.3 billion yuan ($5.99 billion) last year, up 156.3 percent, and putting Taobao at second place behind China's top retailer Bailian Group and in front of China Resources Vanguard, the statement added.

China had 210 million Internet users at the end of 2007, slightly behind the United States, Xinhua news agency reported last week. It cited industry sources who predicted China would have the world's largest online population early this year.

China's e-commerce market hit 59.4 billion yuan in 2007, up over 90 percent from the previous year, Taobao said, citing third-party research.

Alibaba.com (1688.HK: Quote, Profile, Research), which was founded in 1999 by Jack Ma in the eastern Chinese city of Hangzhou, saw its shares rise 122 percent in their trading debut in Hong Kong last November.

Alibaba dominates the business-to-business segment in China. Its unlisted consumer arm includes Taobao, as well as online payments unit Alipay and Yahoo China. ($1=7.234 Yuan) (Reporting by Sophie Taylor, editing by Ken Wills)

Citi Downgrades Baidu.com (BIDU) to Hold

Citi downgrades Baidu.com (Nasdaq: BIDU) from Buy to Hold. Price target dropped from $425 to $350.

Citi analyst says, "Increasing competition from the Alibaba Group might trim rev. growth by year end. Another concern is the magnitude and timing of possible capex for Baidu to enter China's C2C market, as well as its spending for the Japan ramp-up. Despite a recent pullback in the shares and our expectations for a solid 4Q07, we will be more comfortable with the risk/reward when we get greater clarity on these issues."
Baidu.com, Inc. (Baidu) is a Chinese-language Internet search provider. The Company conducts its operations principally through Baidu Online, its wholly owned subsidiary in Beijing, the People’s Republic of China.

Latest Yahoo Job Cut Figure: 700

Madness? THIS IS YAHOO! Oh sorry, wrong number

Though other reports claim Yahoo plans to shed as many as 2,500 jobs, the current swirl of rumors whispers of a 700 position cut.
Seven consecutive quarters of profit drops have Yahoo nervous and investors itching for action on CEO Jerry Yang's part. Rumored Yahoo job cuts had been hinted at being from 1,500 to 2,500 in number, possibly among poor performing Yahoo Europe operations.

However, a Bloomberg report, citing a person with knowledge of Yahoo's job-cutting plans, claimed the number would be far less. Only 700 jobs face the executioner's axe.

Yahoo isn't talking yet, and probably won't before the company announces earnings on January 29th. A cut of only 700 jobs likely won't satisfy investors, according to Eric Savitz:

But I suspect the Street will find the news disappointing. Bernstein Research analyst Jeffrey Lindsay, for instance, has been saying for months now that the company ought to cut its headcount by as much as 25%. Meanwhile, Yahoo shares could come under pressure on Tuesday from big drops in Asian trading by shares of both Alibaba.com and Yahoo Japan; Yahoo holds big stakes in both companies.In trading today, Yahoo had fallen 26 cents to $20.52 at press time. Much of the tech marker has followed the overall downward trend since the Fed cut interest rates by three-quarters of a point.

Alibaba Releasing APIs & Revenue-Sharing Initiative

Alibaba Group, the parent company of Alibaba announced recently that they will be making Alibaba’s software platform open-source through the form of APIs that are available for applications and services. The API will be based on the concept of SaaS (Software as a Service). Alibaba has about 40 million users and they hope to build a bigger market share within the industry. Alibaba started in the SaaS market last year.

Alibaba plans to allow their free APIs capture the interest of independent software vendors to promote and sell Alibaba’s services, while being compensated through a revenue-sharing model. Other Alibaba Group companies that are participating in open-source SaaS initiatives are Taobao and Alimama. Alibaba partners include Microsoft, Oracle, Cisco Systems, Sun, Dell, IBM, and China Unicom.

Alibaba is known in the web world as being the “eBay of China.” Yahoo! acquired 40% of the company in 2005. And most recently, Alibaba has had one of the most successful IPOs since Google. The API announcement was made official on Alisoft.com. There is some additional coverage at China Web 2.0 Review.

Alipay Launches Seller Credit Service With China Construction Bank

Chinese Internet auction users have a new service to help protect them from fraud as Alipay, China's largest independent and third-party payment platform, has announced the launch of a seller credit program in cooperation with China Construction Bank.

Alipay seller credit service is based on the credit of Taobao.com's users and their interactions with the Alipay service. CCB is the loan lending party, but all procedures of loan applications and returns will be done within a user's Alipay account.

With this service, qualified sellers of Taobao.com will also get up to RMB100,000 individual small sum loans to solve their funding shortages.

AliPay is a division of Alibaba.com and enables individuals and businesses to securely and conveniently send and receive payments online. AliPay is a service tailored to meet the local needs of China, building on the existing financial infrastructure of bank accounts and credit cards, and utilizing proprietary fraud prevention systems to create a safe payment solution.

China Construction Bank is a state-owned commercial bank with business focusing on medium- and long-term lending. Headquartered in Beijing, CCB conducts operations across China as well as in major international financial centers.

Alibaba To Launch SaaS MarketPlace

Alibaba announced its SaaS platform in Alisoft.com last week with the aim to build it into a marketplace for Saas.

Alisoft is a new comer to China’s SaaS market in 2007, but it has been a key player in the market. According to a report by Analysys International, in 2007 Q3, the total number of enterprise clients of all SaaS service providers amounted to 2.67 million, and based on number of users, Alisoft has taken the 63.7% market share due to its aggressive free strategy to acquire users.

Now, Alisoft plans to take advantage of its broad user base to build a SaaS marketplace to serve its users. The Alisoft SaaS platform is an open platform for all kinds of ISVs to join, promote and sell services, and share revenue with Alisoft. Microsoft, Cisco and Oracle have been the partners of Alisoft.

It is another marketplace launched by Alibaba, after Taobao and Alimama, we haven’t know whether Alisoft will develop a unified user authorization system for SaaS system listed on the platform. Leveraging on accrued extensive business users of Alibaba and Taobao, and online payment system Alipay, Alisoft seems to be a good platform for SaaS promotion and sales. It might also accelerate the wide adoption of SaaS model among SMEs.

Lenovo Online: Dipping a Toe in the Water

Beginning January 9, Lenovo (0992.HK) has begun making a group-purchase model available to small- and mid-range enterprise Alibaba members. The program is available in 14 cities including Beijing, Shanghai, and Guangdong.

The move has once again aroused speculation as to Lenovo’s strategy for B2B and B2C online sales, but a source at the company says that the group-purchase program is a limited-time offer that will end January 31. “Lenovo is not currently seeking online distributors,” the source said.

Lenovo, the top brand in China’s PC market, doesn’t really need an online distributor. Theirs is a strong brand name and is known to just about everyone in China that has considered, looked at, or even used a computer in China. Alibaba has a much-coveted list of small and medium (SMB or SME) companies in China, but that’s not what interests Lenovo. Alibaba has built an online sales infrastructure that Lenovo lacks. With a limited sales program via Alibaba Lenovo can assess the utlity of online sales without building an online store.

Whenever Lenovo is ready to sell online, they can just do it themselves.

Alibaba Unit Launches Web Site Selling Business Software

BEIJING -(Dow Jones)- Chinese Internet company Alibaba Group said Wednesday its software unit is launching a Web site to sell business software developed by various companies.

Alibaba Group, in which Yahoo Inc. (YHOO) holds a stake of around 40%, started Alisoft Co. in January last year to target small- and medium-sized businesses in China.

Alibaba Group said the Alisoft.com Web site will sell software from industry heavyweights, such as Microsoft Corp. (MSFT) and Cisco Systems Inc. (CSCO), and from thousands of independent vendors.

Alisoft said in April it will offer software, including programs to manage inventory and customer relations, and develop Web-based applications such as email, word processing and spreadsheets using Microsoft technology.

AliBaba (1688.HK) was voted the favourite initial public offering

Alibaba.com (1688.HK: Quote, Profile, Research) was voted the favourite initial public offering last year by retail investors in a poll organised by Taifook brokerages.

Alibaba.com brings Open Sesame to India

Alibaba.com, the world’s leading online marketplace for international trade, hosted its first Open Sesame event in India at the Grand Hyatt, Mumbai.

Held on the sidelines of The 5th China Products Exhibition on 14th December, the event attracted over 100 folks from the small business segment from across the country. The event was also an opportunity for Alibaba.com’s Indian members to get together and share their experiences in international trade and e-commerce.

Speaking on the occasion, Brian Wong, Senior Director of International Business Development and Marketing, Alibaba.com, said, “India is a priority market for Alibaba.com in 2008 and beyond. With about 300,000 registered users, India is one of Alibaba.com’s most important markets worldwide and the biggest in Asia for its international marketplace.”

Alibaba.com is focused on helping small and medium suppliers and exporters from India promote their products to the world. It will also help Indian SMBs become more competitive by making their import and export business easier in a growing global economy.

It recently launched a new Indian channel, www.alibaba.com/countrysearch/IN/India.html, which provides a platform for international buyers to source goods and services from India. “We want to become the leading online marketplace for international trade to and from India. We plan to double our Indian membership base in 2008 and are actively looking for local partners in India to help us reach more local small and medium enterprises,” added Wong.

Meanwhile, this is the first time Alibaba.com has launched a country-specific channel on its international marketplace, highlighting the importance of Indian products in today’s global trade landscape.

Alibaba Plans on Offering Software Services

Tao Wang, the CEO of Alibaba’s software division told local media yesterday that the company is currently forming partnerships with more than 20 independent software developers to offer its business clients online management software. The software will be delivered online and Alibaba will share revenues with its developers. Unlike packaged software, software as a service or SaaS does not require a heavy initial investment and clients can pay based on the level of usage. Pearl Research believes since Alibaba’s core B2B business has already accrued a large number of small- to medium- sized businesses, the company will be able to leverage its existing client base to promote the online software service.

China's B2B transaction volume up 25.5% in 2007, survey finds

BEIJING, Jan. 9 (Xinhua) -- Business-to-business (B2B) transactions hit 1,250 billion yuan (168.9 billion U.S. dollars) in China last year, up 25.5 percent from 2006, according to a survey released on Tuesday.

The "Netguide 2008" survey, which provides a wrap-up of 2007, polled more than 300 web sites and about 200 enterprises, with 50,786 interviewees around the country.

The survey, conducted by the Data Center of the China Internet (DCCI), reported that the newly-listed Alibaba.com was first in the e-commerce marketplace and accounted for about 70 percent of market share.

Alibaba.com is one of China's fastest-growing Internet companies. Its registered members soared to 24.6 million in 2007 from 6 million in 2004.Paying members increased to 255,000 by June 2007 from 77,000 in 2004.

Alibaba.com, which reportedly has the world's biggest base of online suppliers, raised 1.5 billion U.S dollars in its initial public offering (IPO) last November -- the second-largest Internet offering in history after Google's IPO in 2004.

Other e-biz dotcoms on the top list are netsun.com, globalsources.com, cn.made-in-china.com and hc360.com, according to the survey.

The Netguide 2008 also forecasts that China's B2B trade volume will exceed 1,620 billion yuan (218.9 billion U.S. dollars) in 2008 and 2,130 billion yuan (287.8 billion U.S. dollars) in 2009.

Internet overtakes TV in Sweden, the UK will be next

2009 should see the UK become the first major economy in which the internet overtakes television as the No. 1 advertising medium, according to a new forecast from GroupM. The new prediction follows GroupM's report released in December, which estimated that the internet would become the top ad medium in Sweden this year and that the UK and Denmark would follow suit.

GroupM now forecasts that the UK will likely pass that mark by the end of 2008 when the internet will account for 24.8% of British ad spending, just behind a projected 26 per cent share for TV.

The forecast assumes internet ad spending in the UK will grow 30.8% during 2007 to US$6.7 billion vs. a one per cent rate of growth for television, which will climb to about $7 billion. The GroupM analysis assumes online ad spending would need to climb six per cent or more during 2009 to overtake the market's television advertising volume.

Chinese Tech Stock Weekly Summary

Alibaba Group revealed its decision to combine the group's human and material resources in the coming three to five years as it begins a strategy focusing on talent. The company said it is also forming a team to respond to the changing e-commerce market. Media sources appear to validate this move as they report that four executives from Alibaba, including its COO Li Qi, CTO Wu Jiong, Executive Vice President Sun Tongyu and Senior Vice President Li Xuhui, will collectively resign from their current positions and spend time studying. The leave of the four executives is said to be part of Alibaba's newly launched talent strategy. Alibaba also disclosed that it will call back Zeng Ming, president of Yahoo (YHOO) China, to work as chief of staff for the group, transfer Senior Vice President Lu Zhaoxi to work as president of Taobao.com, Senior Vice President Jin Jianhang as president of Yahoo China, and vice president Shao Xiaofeng as executive president of Alipay. The company, however, has not said anything about who will be its candidates for the positions of COO and CTO.

MFG.com Raises $26 Million From Fidelity Ventures, Goes After Alibaba

Mitch Free has a knack for attracting high-profile investors to his manufacturing marketplace, MFG.com. First, Jeff Bezos convinced Free to back out of a previous agreement to sell the company and personally invested $14 million in September, 2005. Then Bezos put in some more money along with the German Samwer brothers (who founded Alando, Jamba, and invested in Studivz) in a $4 million round in January, 2007. Now, Free has raised another $26 million, nearly all of it from Fidelity (Fidelity Ventures and Fidelity Asia Ventures put in $25 million, the rest came from existing shareholders including the Samwers’ European Founders Fund). The big seller was founder and CEO Free, who sold a chunk of his personal shares in the company. With this funding, his stake went from a controlling 50 percent to less than 30 percent.

Never heard of MFG.com? You are probably not in the manufacturing industry. Founded in 2000 and based in Atlanta, MFG.com is an eBay for manufacturers—a B2B marketplace for sourcing manufactured parts from all over the world. Companies as diverse as Black & Decker, Harley Davidson, NCR, and Sara Lee use the site to find suppliers for machined parts, plastic moldings, metal stampings, and fabrications.

You can find nearly $50 million worth of requests for manufacturing quotes per day on the site, complete with CAD diagrams and other specifications. Manufacturers bid on the requests. MFG.com makes money by selling yearly subscriptions of several thousand dollars each to suppliers who want access to MFG.com’s community of purchasing mangers and engineers at buying companies (who get to use the site for for no charge). Free learned that in the manufacturing world suppliers are much more willing to pay a flat fee than to give a cut of each transaction.

Over the past year, he’s been making a big push into China and connecting the vast network of manufacturing suppliers there with corporate customers all over the world. In part, that is what attracted Fidelity Ventures, which was an early investor in Alibaba and sold its stake to Yahoo. One part of Alibaba’s business is an online B2B directory. Fidelity’s Larry Cheng, who invested in Alibaba and now will take a board seat at MFG.com, told Free that he sees MFG.com as an “Alibaba on steroids.” (Cheng is also a board member of P2P lender Prosper). Daniel Auerbach of Fidelity Ventures Asia will take an observer seat on MFG.com’s board. Aurbach was previously an Alibaba board member.

Free has been known to talk smack about Alibaba, which recently had a successful IPO. He tells me:

The Alibaba model (directory “brochure-ware”) is not very deep but it was in step with the sophistication of the Chinese market. To truly remove inefficiencies in the manufacturing industry there has to be a platform that facilitates collaboration, transactions, negotiation, audit trails, intellectual property protection and more. MFG.com has built that platform and is preparing to scale it globally.

Free plans on using MFG.com’s new capital to continue expansion in the U.S., Europe, and China, as well as to ramp up in India, Japan and Eastern Europe. But he has greater aspirations for MFG.com than just to break into new markets. He wants MFG.com to become the “operating system for the manufacturing industry.” His acquisition in 2006 of SourcingParts.com gives him the technology and customer reach to build Web-based software for the manufacturing industry. He wants to build a platform similar to Salesforce.com’s AppExchange for manufacturing-oriented applications. He’s already gathered the community of purchasing and factory managers who might use such software.

Another possible use for that $26 million is more acquisitions. Free has talked to me about his desire to find 3-D search technology that can operate on a commercial scale to match an engineer’s CAD diagrams with the historical inventory of parts sourced on MFG.com. His idea is to offer a service that would allow engineers to estimate the manufacturing costs of their designs on the fly, based on the shape and materials of the parts they need. If he ever finds such a technology, now he has the money to buy it.

India a Priority Market for Alibaba!

Alibaba.com, claimed to be the number one online marketplace for China and international trade, last month held its first 'Open Sesame' event in the country along the sidelines of the fifth 'China Products Exhibition' in Mumbai.

With the objective of helping small and medium suppliers/exporters from India promote their products to the world and expand internationally, the event witnessed participation from over 100 small exporters from India. It was an occasion for Indian members of Alibaba to converge, and share their experiences in international trade and e-commerce.

During the event, Brian Wong, senior director (International Business Development and Marketing) of Alibaba.com, said, "India is a priority market for Alibaba.com in 2008 and beyond. We want to become the number one online marketplace for international trade to- and from- India."

"We plan to double our Indian membership base in 2008, and are actively looking for local partners in India to help us reach more local small and medium enterprises."

With a membership base of nearly 300,000 registered users, India figures in the higher-ups on Alibaba's list of priority markets worldwide. The way they look at it, local partners would only help them expand their membership (the current target being 3 million small and medium businesses in the country), and better serve local customers.

Almost a month down the line, have they managed to rope-in local partner/s? Wong declined to comment except that in future, they intend to set-up sales and customer service capabilities in India, either directly or through local partners.

What's Alibaba's India plan, considering they've also launched their first country-specific (India) channel at www.alibaba.com/countrysearch/IN/India.html?

Alibaba has different types of passes on offer for suppliers and exporters, but they claim their suppliers are a class apart because they have to undergo authentication and verification by independent third party agencies. In the event suppliers fail the test, Alibaba retains the option to reject their membership application/s.

Currently, Alibaba offers two types of passes to its suppliers; one, the Gold Supplier membership package meant for suppliers based in mainland China, Hong Kong, and Macau, and the other, the International TrustPass membership package meant for suppliers based outside of China.

The Gold Supplier membership is available for a one- to two- year term and comes for RMB 50,000 annually, whereas the International TrustPass membership is available for a one- to three- year term and costs $589 annually.

The benefits arising out of these memberships are many: for instance, member suppliers can have their own Web site or 'premium storefront' on Alibaba.com, where they can display their company profile and product information; Gold Supplier members can get 'priority placement' in buyers' search results vis-a-vis International TrustPass members; all members can get high quality customer service and support; and they can purchase other value-added services like premium placements, and so on.

However in Alibaba's experience, more than 85 percent buyers prefer to do business with International TrustPass members.

Says Sanjay Ranawat of Krish Exports (an Indian manufacturer and exporter of stainless steel untensils and kitchenware, and an International TrustPass member since 2006), "I believe Alibaba.com is the number one B2B portal. It is more reliable than any other trade Web site, magazine, newsletter, or promotion company, and is more effective in targeting the right customers than trade shows."

What about existing competition in the B2B space? Back in 2000, there were many competitors but after the Internet bubble went bust, Wong believes Alibaba is now truly the leading B2B marketplace both in China and globally.

He has statistics to prove his point. In 2006, they were the largest online B2B company in China, basis the number of registered users, according to iResearch. And their combined international and China marketplaces are the most-visited Web sites in the world in two business categories; namely, e-commerce, and international business and trade, as per Alexa rankings.

Wong believes they have several pluses. For starters, the ability to provide suppliers and buyers with a one-stop shop for establishing online presence, identifying and interacting with potential trade partners, and conducting business on the Internet.

Also, their ability to transcend geographical and time barriers, making global sourcing available 24x7, their market leadership which creates a strong network effect, and most importantly, their positioning as a global trade model with local features and services, which helps them in being really close to their customers and members, to know exactly what it is that they want.

Alibaba in Year 2007

Alibaba's shares almost tripled on its first day after an initial public offering in Hong Kong at the beginning of November 2007 — it closed at HK$39.50 from their HK$13.50 offer price. The company's listing prospectus said it would triple profit to RMB622 million in 2007, making the stock very palatable for investors.

The company is unique among Chinese Internet services in that it has few equals. Whereas Sina.com, Sohu.com, Netease.com, and Tom.com all compete for the same Chinese Internet consumers by providing similar services, Alibaba is unrivaled in China. Sure, there is Global Sources pecking at its heels, but Alibaba is different in that it really focuses on Internet-only activity (yes, it does have a print magazine and is starting to do conferences, but it is really a different animal than GSOL).

Jack Ma, Alibaba's founder, speaks in grand, patriotic terms about how Alibaba is bridging the divide between China and the outside. He speaks so much of Alibaba being the bond among people around the world and of Alibaba bringing new kudos to China, that it's easy to forget Alibaba thrives on the same capitalism that was a crime a few decades ago. Alibaba straddles both New and Old China.

I am not saying Alibaba is the top Internet company for 2007 — the company still has a long way to go to prove good governance, a sustainable model, and the ability to mutate as times change. Instead, the buzz around its IPO coupled with its hold on Yahoo! China (and the furor around that entity in U.S. courts); its dynamic business model; and the growth of its subsidiaries like Alimama and Alipay in 2007 make the Alibaba IPO my China technology news story of the year.

Alibaba Focuses On Talent As Top Executives Depart

Alibaba Group has announced that it will combine the group's human and material resources in the coming three to five years to initiate a talent strategy and create a team to cope with the changing e-commerce market.

According to Daily Economic News, four executives from Alibaba, including its COO Li Qi, CTO Wu Jiong, Executive Vice President Sun Tongyu and Senior Vice President Li Xuhui, will collectively resign from their current positions and spend time studying.

The leave of the four executives is said to be part of the Alibaba's newly launched talent strategy. Wang Shuai, a spokesperson from Alibaba, says that ten people will go for further studies and all of them are top management of the company. Wang says that among the persons to leave, Li Qi and Wu Jiong will resign from the company on June 1, 2008 and January 1, 2008, respectively, and both Sun Tongyu and Li Xuhui will resign on March 1, 2008.

In the meantime, Alibaba will call back Zeng Ming, president of Yahoo China, to work as chief of staff for the group, transfer Senior Vice President Lu Zhaoxi to work as president of Taobao.com, Senior Vice President Jin Jianhang as president of Yahoo China, and vice president Shao Xiaofeng as executive president of Alipay. However, Alibaba has not announced who will fill the COO and CTO candidates.

Alibaba to Help Chinese Consumers Buy from US Retailers

Philliou Selwanes Partners (PSP) announced it has entered into an agreement with Chinese firm Alibaba to promote its online-payment service Alipay in North America. PSP is a New York consulting and advisory firm focused on the financial services industry, developing new products and payment-related strategies for banks, payment networks, insurance companies and retailers worldwide.

PSP will work with the online merchants and merchant-acquirers to integrate Alipay into their payment mix alongside other payment offerings. The company pointed to research conducted by UPS that showed demand among Chinese consumers for US merchandise (http://pressroom.ups.com/chinasurvey/index.html).

PSP partner Philip J. Philliou said, "As China has undergone a meteoric economic expansion, the opportunities for U.S. retailers have been limited by our differing payment systems. This alliance agreement removes those barriers and opens up great new potential for North American merchants to add millions of dollars in new sales volume from an untapped marketplace."

Alipay is a subsidiary of eBay-competitor Alibaba, the leading Chinese auction marketplace. eBay has had difficulty gaining traction in Asia and recently announced a deal with Yahoo Japan to help Japanese consumers purchase items from eBay.com using eBay's PayPal payment service (http://www.auctionbytes.com/cab/abu/y207/m12/abu0205/s04).

More on Alibaba and Europe

It has really been the year of Alibaba, so appropriate that we go out on another note about them. There's an interesting snippet on Thomson Financial (reposted here by Forbes) in which Alibaba.com David Wei reportedly tells the FT Deutschland that the company will spend "about" 60% of its US$1.7 billion IPO proceeds on acquisitions.

Wei goes on to say that "we have decided to invest more in Europe", adding "with more than 20 million SMEs, Europe is a very important market for us".

Online businesses gear up to welcome 2008 with a bang

As 2007 draws to a close, the pace of activity at the office and warehouse of Bangalore-based Indiaplaza.in, is getting increasingly hectic. Business has been brisk this festive season. “In terms of growth it’s been an incredible year. We expect to do 3-4 times more business than last year,” says K Vaitheeswaran, co-founder and COO, Indiaplaza. A chunk of the firm’s business online comes from sales of books and electronic gadgets such as digital music players, mobile phones, and digital cameras, and is targeted at NRIs in the US who send gifts home.
Clearly, those in the online business have reason to cheer — from online shopping portals to internet trade exchanges, these are indeed good times for those doing business on the internet. According to recent research jointly conducted by the Internet and Mobile Association of India (IAMAI) and research firm IMRB, the consumer ecommerce market in India is expected to grow by 30% in 2007-08 to Rs 9210 crore, of which the online travel segment will continue to dominate with nearly 80% share. Advertising revenues for the industry too, saw an upsurge this year. From Rs 218 crore last year, this year online ad revenues are expected to touch Rs 320 crore.
No wonder it’s an opportunity larger players like Indiatimes (part of Bennett, Coleman & Company Ltd, which also owns this newspaper), Rediff, and Yahoo, among others are looking to tap in a big way. “The year 2007 was great year and we launched a number of new applications, and the new look Indiatimes.com, which is a friendlier Web 2.0 version. It was like a new beginning for us,” says Upen Roop Rai, director Times Internet Ltd (TIL). This year indiatimes’ Gross Merchandise Value (GMV) —the industry measure of online sales—more than doubled over last year, and much if it comes from the travel portal, adds Rai.
It’s not just the consumer business that’s hotting up. B2B portal tradeindia.com is also preparing to usher in the New Year with a host of new technology-driven initiatives. “Our market is the SMEs who want to showcase their products to the world,” says its founder and CEO Bikky Khosla from Dubai where he’s just arrived for a holiday. So the company has introduced a service, ‘Call Me Free’, where instead waiting for suppliers to revert to a query interested buyers can key in their contact phone number, and they will be connected immediately by tradeindia’s operators directly to the respective suppliers through a conference call, for free. The technology is provided by US-based eStara’s Voice Over Internet Protocol (VoIP) platform.
“We try and ensure that the limitations of SMEs is compensated through smart use of technology,” says Khosla, who plans to introduce an SMS enquiry service to speed up transactions, and host online videos of suppliers’ facilities for buyers to see before they contact them. Next on the cards is a video-conferencing based inspection of goods. Phew! Tradeindia did revenues of Rs 17 crore in 2006-07, and with increasing awareness and spread of broadband networks, Khosla expects to close this fiscal 35% higher than last year.
For consumer ecommerce sites, it will be a whole new game as innovations in technology and demographic shifts promise exciting times ahead. Says TIL’s Rai, “In the coming year, social networking will play a dominant role and will open up a lot more advertising spending. Search engine marketing is another area that will grow faster.”

Cisco CEO Connects Asian American Multi-Tech Group

Santa Clara, Calif. – “The emerging markets are leading the future,” Cisco Systems CEO John Chambers told the audience at the annual Asian American Multi-Technology Association conference on December 12.
Chambers delivered the conference keynote speech, focusing on the collaboration model implemented by his company’s management, and on ways to integrate several countries in an open platform.
Cisco’s recent announcement of its $16 billion investment in China has sent a new wave into the sea of Chinese financing by world multinationals. Its cooperation with the China Development Bank and Chinese Ministry of Education is helping Cisco ride the crest of this wave.

“China is becoming the center of innovation and creativity,” Chambers said, emphasizing Cisco’s establishment of another 300 Cisco Network Academies in that country, in addition to the 200 that have trained 90,000 students. Chambers also discussed Cisco’s increasing involvement in health care and environmental projects as part of the Clinton Global Initiative.

Cisco’s latest funding for the Alibaba Group, along with its hefty investment in China overall, have positioned the company at the center of the Middle Kingdom’s technological platform. Last month, Alibaba received a $17 million investment from Cisco before its IPO at the Hong Kong Stock Exchange and the company’s shares tripled on the first day of trading, boosting its reputation as the largest e-commerce company in China.

Founded in 1979, the Asian American MultiTechnology Association is a business network based in Silicon Valley that promotes the success of technology enterprises in the Pacific Rim. The association has a worldwide network of 10,000 members from more than 2,000 companies, including members in the Internet, wireless, telecommunications, computers, semiconductor, software, hardware, electronics and bio-tech industries. The AAMA has a Beijing office and a new Shanghai chapter started by William Chen, an American-born, Chinese venture capitalist with DT Capital.

“This is the largest conference in the AAMA history with such positive energy and high quality and quantity of attendees,” said Kyung Yoon, the group’s president and vice chairman of Heidrick & Struggles. Yoon added that China’s emergence as an economy influencing the markets of the Asia Pacific region and around the world motivated the group to focus its conference on China this year.

“It is incredible to meet the members of my network from all over the world here,” said Christine Hsu, founder of ORIENTED.com, a happy-hour social network for cross-cultural professionals that also served as a media sponsor for the conference. Hsu started ORIENTED.com in Shanghai, Beijing and Taipei five years ago with funds from angel investors in the Greater China region, and it now boasts 300,000 members worldwide.

For other tech entrepreneurs, it was the direct contact with VCs that attracted them to the AAMA Connect conference. “The Venture Capitalists Day is truly educational,” said Dr. Liming Yang, a VP with Algaen, a biotech company founded by a group of mainland Chinese academics in California. Dr. Liming submitted a business plan that won interest among the VCs at the conference.

An IPO discussion led by Anna Mok, a partner at Deloitte, also inspired the attending entrepreneurs with their future possibilities.

The AAMA conference has helped connect rising entrepreneurs with VC communities from China, India, Vietnam and the United States. Gerd Goette, managing partner of Siemens Venture Capital, estimated that their Beijing office staff will double over the next couple years with their intention to increase their investment in China. “It is a new wave of gold rush,” said Goette about the VC funding pouring into China.