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Tale of China's E-commerce Giant: Alibaba

Formed in 1999 in Jack Ma's Hangzhou flat, Alibaba has ridden China's seemingly insatiable appetite for online shopping to become one of the most valuable companies in the world. The US-listed company confirmed plans to add further value on Friday but listed additional shares in Hong Kong in a $13 billion offer. 

Alibaba is one of the world's most valuable companies
Alibaba is one of the world's most valuable companies

Here are the answers to the company's key questions:

How did Alibaba start?

Ma, a former English teacher who claims never to have written a line of computer code, had dabbled with mixed success in various ventures before friends introduced him to the internet during a trip to the United States in the 1990s.

With Amazon already making waves in online shopping, Ma persuaded a group of Chinese and foreign friends to face $60,000 for an e-commerce business-to-business venture in 1999.

Ma called it "Alibaba" because the word was easily pronounced in nearly every language, even Chinese, and because the catchphrase "open sesame" meant that its websites, according to the firm, "open a door to prosperity for small businesses."

Why has it been so successful?

Alibaba was established at a time when, after decades of rapid economic growth, Chinese incomes soared and the world became increasingly digitized.

That made it easy for Alibaba to facilitate trade between customers who are increasingly hooked on the convenience of online shopping and countless cheap goods manufacturers in the region.

Today, China has the largest online population in the world — more than 850 million — most of the smartphone users are deeply immersed in the growing digital ecosystem and e-commerce in the country.

The business generated by Alibaba's own mobile monthly active users — who in the latest financial quarter reached 785 million — fuelled rapid growth, and the company listed on Wall Street in September 2014 raised $25 billion in what remains the largest IPO ever.

What does it do?

E-commerce remains the bread and butter of the group, primarily through its consumer-to-consumer Taobao platform and the business-to-consumer Tmall, and generally through its digital payment system Alipay, which has become a leader in this field.

Chinese consumers can buy a wide range of products from apparel to electronics, food, luxury products and even more unique goods through Alibaba's platforms— including cargo planes from Boeing 747.

But the success of Alibaba also saw it invest heavily in new business lines.

It owns leading Chinese video streaming website Youku and purchased a stake in Steven Spielberg's Amblin Partners, owned by DreamWorks Pictures, among other entertainment ventures, from its Alibaba Pictures unit in 2016.

It also invests in cloud computing and other aspects of China's growing digital ecosystem, including Chinese food-delivery leader Ele.me's acquisition.

How big is it?

Alibaba is now the most valuable Chinese public company with a market capitalization of about $477 billion as of this week, and one of the most valuable top-10 in the world, though still trailing US e-commerce counterpart Amazon, worth around $870 billion.

At its headquarters in Ma's hometown of Hangzhou in China's eastern Zhejiang province, Alibaba now claims nearly 104,000 employees, but also around China and overseas.

The company has taken steps to go international in recent years, mostly in Southeast Asia where it runs the e-commerce site of Lazada.



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