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Dark Side Of Alibaba’s Massive Profits

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Every year on November 11, e-commerce giant Alibaba makes business headlines with its sales record on Singles Day, a holiday celebrating China’s single men and women that has become a popular online shopping day. This year, the company racked up US$9.3 billion, almost doubled last year’s US$ 5.8 billion.

The news came about two months after Alibaba set the record for the world’s largest initial public offering (IPO) in the US stock market, with its market value measured asUS$231 billion at closing time on its first day.

Alibaba’s rosy prospects are to a large extent a result of its monopolized status in China’s online shopping market. Yet to maintain such privilege, it has to work closely with the government and the Chinese Communist Party in sanctioning independent organizations and political dissents.

In September, not long before Alibaba’s began trading on the US stock market, the Taobao online shop of an independent library project called China Rural Library (CRL) was forced to shut down while the authorities cracked down its 19 libraries across the country. The CRL’s main income for its education and library project has been generated from its online shop. The Chinese authorities consider independent citizen initiatives a challenge to the Chinese Community Party’s representation of the people.

A few days ago, Amazon-like Taobao, which is owned by Alibaba, shut down artist Wu Tun’s online shop, which sold T-shirts with the phrase “Love Can’t Be Here” printed on them. The Chinese character for “love” sounds like “Ai,” and the T-shirt is inspired by an overseas campaign, “Ai Can’t be Here,” which calls for the release of Ai Weiwei, an artist-activist who was detained for 81 days without any official charges in 2011. Currently Ai is still monitored by the national security police and could not leave the country.

Prominent political dissident Hu Jia explained to Radio Free Asia how the authorities have suppressed dissents via online shops:

Once your voice your opinion in opposition, the authorities take two measures to get at you. First, cut off your social contacts. Make you feel lonely and sad as your family and friends are forced to stay away. Second, cut off your income. They collect information from all sources and identify dissidents’ major sources of income. If you get your income from mainland China, it is too easy to bring you down: They just need to shut down your online shop. In less than 10 minutes, your shop no longer exists.

Political dissidents have not only criticized Taobao. The monopolized market means small retailers face vicious competition, of which only a minority of shops survive.

A small retail shop owner explained the adverse effects of the monopoly on online shopping business in China. The article circulated online for a period of time and Letscorp, a website that bridges information across the Chinese-speaking community, reposted it on November 13, 2014:

The majority of people, including myself, will shop online. I get all my clothing and hardware from the Internet. It is very convenient and cheap, which is really great. […]

Yet the adverse effects are: 1. A large number of shops — fashion shops, hardware shops, electronics shops — will be forced to close. Even if they manage to survive, business is difficult and they hardly make enough profit to carry on. From what has been reported online, Beijing’s Zhongguancun, Shenzhen’s Huaqiang North district [both are famous shopping destinations for computers and electronics] and others are in a great depression.

2. Many owners of small retail shops are forced to shutter. Their sales workers lose their jobs. The situation affects the landlord of shop floors as they can’t rent out their place. These people are directly affected by Taobao.

The original idea of Taobao is to reduce the transaction costs so that the consumers can get more benefit. This is a good intention. But now the platform has evolved into something that the founder could not foresee. It will eventually eliminate all the middlemen and the manufacturers will have to compete with each other in a vigorous manner. […]

Jack Ma [the founder and CEO of Alibaba] once said, in the future there would be no more trading except from e-commerce […] Now 50 percent of the retail business in China is traded through Taobao. The price is so low that there is very little profit margin. The pricing has affected the prices in real shops. Please imagine the future of China’s economy. Without making enough profits, how can people support their families?

 

written by Oiwan Lam of GlobalVoices. see more.

Entrepreneurship

Women on Top in Tech – Daphne Ng, CEO of JEDTrade

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(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Daphne Ng is the CEO of JEDTrade, a blockchain technology company focused on trade, supply chain, and financial inclusion projects in ASEAN. She is also the Scretary-General at ACCESS and Exco. of Singapore Fintech Association

What makes you do what you do?
I was introduced to blockchain technology in 2016 after I left my corporate banking career after 10 years. It was my mentor who first got me interested in this technology, which I then went on to delve further into, on its potential applications in the lending and trade finance space – domains where I came from.

How did you rise in the industry you are in?
Being in the space for 2 years and actively involved in the ecosystem, I was able to bring on the projects, network and a good degree of thought leadership in this vertical. Early on in the startup journey, our team faced many challenges. And to me, the key to rising above failures are two essential factors – resilience and support. While resilience is innate, I received a lot of help be it in terms of connections or advice. ‘Nobody succeeds without help’ rings very true for me.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
From the start, I focused on my domain expertise in trade finance and the application construct of how blockchain and DLT can be applied to these use cases. Also, my strategy from the start was to build a technology company made up of 80% tech and engineers, which is also our key competitive advantage today. At the end of the day, deliverables are about strategy and execution, which includes building and leading an ‘A’ team.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work?
I have many mentors, which includes our company advisors (all of whom are well-known in this industry) and mostly informal mentors I meet via my connections, and on various occasions and circumstances. Creating opportunities also means putting myself in the right place, at the right time. And in my case, these were mostly organic and genuine friendships formed from the initial connection.

How did you make a match if you and how did you end up being mentored by him?
To me, a match in values is very important. It also takes humility to ask for help and be willing to listen to advice, which is important in order for mentorships to be successful – be it formal or informal.

Now as a leader how do you spot, develop, keep, grow and support your talent?
I love this question! I am passionate about building strong teams and helping my people grow. I abide by the 3Rs when identifying talents: resourcefulness, resilience and right values. And then I invest in the ‘potential’ and this means giving them room to lead, make decisions and take risks.

Do you consciously or unconsciously support diversity and why?
My support of diverse talents, skillsets and characters can be seen in the make-up of our core team – all helming specific roles and each bringing their own value to the table. We need the sum of all parts to build a great company.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb?
Great leaders emerge in times of failures and challenges, never abandoning the team, and always putting the team’s interests before her own. And I consciously live by these mottos every day.

Advice for others?
My advice to other entrepreneurs: be resolute and dare to be different. If you are going to follow others, then you will end up on the same path as them. No right or wrong; but I would rather chart my own path. This June, we are officially launching our blockchain project, Jupiter Chain (www.jupiterchain.tech), which have garnered much interest in the industry, even before we made it public. We believe this project is the epitome of marrying innovation with practical implementation, and we want to be the first to truly operationalize blockchain for our ecosystem projects in this region.


If you’d like to get in touch with Daphne Ng, please feel free to reach out to her on LinkedIn: https://www.linkedin.com/in/daphne-ng-%E9%BB%84%E7%91%9E%E7%8E%B2/

To learn more about JEDTrade, please click here.

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Callum Connects

Jace Koh, Founder of U Ventures

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Jace Koh believes cash flow is the lifeblood of your business. Understanding it will enhance your ability to run and manage your business.

What’s your story?
My name is Jace Koh and I am the Founder of U Ventures. I’ve always been inclined towards investment and entrepreneurship. I’ve played a hand in starting businesses across these industries – professional services, cloud integration, software and music. I believe that succeeding in business is tough, but that’s what makes the rewards even sweeter.

What excites you most about your industry?
Everything excites me. These are my beliefs:

  • Why is accounting important?
    The accounting department is the heart. Cash flow is like blood stream, it pumps blood to various parts of the body like cash flow is pumped to various departments and/or functions in a business. It is vital to the life and death of the business.
  • Is accounting boring?
    Accountants are artists too. They paint the numbers the way they want them to be.
  • What makes a good accountant?
    A good accountant can tell you a story about the business by looking at the numbers.
  • Why is budgeting and projection important?
    Accountants are like fortune tellers, they can predict the numbers and if you wish to understand your business and make informed decisions, feel free to speak to our friendly consultants to secure a meeting.

What’s your connection to Asia?
I was born and raised in Singapore, and here’s where I want to be.

Favourite city in Asia for business and why?
Singapore is my favourite city. We have great legal systems in place, good security and people with integrity. Most importantly, we have a government that fosters a good environment for doing business. I recently went for a cultural exchange programme in Hong Kong to learn more about their startups. I found out that the Hong Kong government generally only supports local business owners in terms of grants. They’ve recently been more lenient and changed the eligibility to include all businesses that have at least 50% local shareholding. But comparing that to Singapore, the government only requires a 30% local shareholding to obtain government support. In the early days of starting a business, all the support you can get is precious. It’s great that we have a government that understands that.

What’s the best piece of advice you ever received?
The best time ever to plant a tree was 10 years ago as the tree would have grown so big to provide you with shelter and all. When is the next best time to plant a tree? It is today. Because in 10 years time, the tree would have grown big enough to provide you shelter and all.

Who inspires you?
Jack Ma. His journey to success is one of the most inspiring as it proves that with determination and great foresight, even the poorest can turn their lives around. I personally relate to his story a lot, and this is my favourite quote from him, “If you don’t give up, you still have a chance. Giving up is the greatest failure.”

What have you just learnt recently that blew you away?
I’ve faced multiple rejections throughout my business journey, and recently came across a fact on Jack Ma about how he was once rejected for 32 different jobs. It resonated very deeply and taught me the importance of tenacity, especially during tough times.

If you had your time again, what would you do differently?
Nothing. I live a life with no regrets. Everything I do, regardless of whether it is right or wrong, happy or sad, and regardless of outcome, it’s a lesson with something to take away.

How do you unwind?
I love to pamper myself through retail therapy and going for spas. I also make a conscious effort to take time off work to have a break outside to unwind as well as to uncloud my mind. This moment of reflection from time to time helps me see more clearly on how I can improve myself.

Favourite Asian destination for relaxation? Why?
Taiwan! Good food with no language barriers and the people are great!

Everyone in business should read this book:
I don’t really read books. Mostly, I learn from my daily life and interactions with hundreds of other business owners. To me, people tell the most interesting stories.

Shameless plug for your business:
We’re not just corporate secretaries, we’re “business doctors.”
U Ventures is a Xero certified advisory firm that goes beyond traditional accounting services to provide solutions for your business. You can reach us on our website: http://uventures.com.sg/

How can people connect with you?
Converse to connect. You can reach me via email at [email protected] or alternatively, on LinkedIn here: https://www.linkedin.com/in/jacekoh/

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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