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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.

Callum Connects

Agnes Yee, Legal & Compliance Recruiter of Space Executive

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Agnes Yee started Space Executive in Singapore, which is a hub for businesses in some of the world’s fastest growing economies.

What’s your story?
After graduation, I joined a design media company as a Business Development Executive, during the era when ‘reading a magazine online’ was unheard of. I believe that laid the foundation for being unfazed by rejections.

I fell into recruitment pre-GFC and rode the highs and lows in the early years. A decade later, I decided to set up my own recruitment company, partly because I could. I’m acutely aware of the face that being an Asian female in Singapore is sometimes a privilege, and that many women in the world are living a very different existence.
Thereafter, we joined Space Executive as part of a merger. I am currently the Partner of Space Executive, a recruitment company focused specialist disciplines, including Legal, Finance, Digital, Sales and Marketing and Change. We also run Space Ventures, a venture capital business, which invests in seed and pre-series A businesses.

What excites you most about your industry?
On a daily basis, we’re influencing how one spends a third of their day. It is interesting how the Internet has transformed the industry, and I’m excited to see how we can harness technology to bring us to the next phase of this business.

The VC is an extension of applying our skills and experience in reading people. We very much invest in the people as much as the idea. Being a native Singaporean, it’s been exhilarating watching Southeast Asia becoming a hotbed of ideas; and young entrepreneurs simply daring to dream.

What’s your connection to Asia?
I’m a born and bred Singaporean. I love that I speak both English and Mandarin, grew up playing with Indian friends and eating Malay food.

Favourite city in Asia for business and why?
Singapore for the low barriers of entry to set up a business, but has to be China (and Hong Kong) for their hunger and constant innovation.

What’s the best piece of advice you ever received?
青春不要留白 which translates to ‘Don’t waste your youth.’

Who inspires you?
Anyone who has gone against the grain.

What have you just learnt recently that blew you away?
It wasn’t recent but reading the article on https://waitbutwhy.com/2015/12/the-tail-end.html never fails to blow my mind how little time we have left. Charting our lives in weeks, and realising I only have enough time left to enjoy 60 Christmas turkeys, read 300 books (all if I’m lucky); and mostly, I’m left with the last 5% of the time that I spend in-person with my parents.

If you had your time again, what would you do differently?
I’m cognisant that every decision I made in life has brought me to where I am today, and I wouldn’t change one thing. But I’d really like to have had more time to travel.

How do you unwind?
Exercise and wine.

Favourite Asian destination for relaxation? Why?
Trekking any mountain in Asia. It brings us back to the most basic. To overcome elements of nature and our own mind.

Everyone in business should read this book:
Start with Why, Simon Sinek

Shameless plug for your business:
Space Executive started in Singapore, a hub for businesses in some of the world’s fastest growing economies. We assist organisations in accessing a targeted and specialised, and often times transient talent pool.

Out of Singapore, we have recruited across 14 countries; and have embarked on our global expansion plans with offices in Hong Kong and London this year, and US, Japan and Europe in the following years.

Space Ventures provides funding, management and financial guidance to young businesses with original ideas. We have invested in peer to peer lending platforms, credit scoring, social media education, and other start-ups spanning diverse industries. We are always interested in hearing more about new ideas.

How can people connect with you?
https://www.linkedin.com/in/agnesyee/

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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Callum Connects

Chrystie Dao-Szabo, Founder of iPayMy

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Chrystie Dao-Szabo founded iPaymy for Business – a secure and easy to use
platform enabling SMEs to pay rent, salaries, invoices, and even corporate tax using the credit cards they already have in their wallet today.

What’s your story?
I’m Chrystie Dao-Szabo, and I’ve worked as an international banker for over 22 years. During that time, I travelled through Asia, Australia and Europe, and everywhere I saw how my clients struggled with managing their finances and keeping cash around.

I wanted to use my experience to help them, but I also knew the solution they needed didn’t exist yet. This pushed me to give up on my secure career, and instead look into the innovative world of FinTech for an answer.

This is how I founded iPaymy – at its launch, a platform to help consumers pay their monthly expenses using their credit cards. We’ve grown a lot since, and today, iPaymy for Business is a platform that allows business owners to use their credit cards to pay for rent, salaries, invoices and taxes, freeing up their cash for business-critical operations.

What excites you most about your industry?
What excites me most about FinTech is it’s culture of constant disruption, thanks to cool and innovative products and services coming out every day.

What’s your connection to Asia?
I was born in Vietnam, grew up in Australia and worked in Asia, Europe and Australia. Being raised by traditional Vietnamese parents meant that deep down I was still an Asian at heart, so I have a strong connection with the region.

Favourite city in Asia for business and why?
Singapore of course. It’s easy to do business, English is the main language, and the infrastructures like public transportation are great. Also, the government supports local innovation in multiple ways, like giving grants for SMEs and FinTechs.

What’s the best piece of advice you ever received?
Keep giving, and one day you will receive.

Who inspires you?
My parents. My father had a successful business in Vietnam just before the fall of Saigon in 1975. After the war, my father was sent to a re-education camp for three years, which meant my mum had to bring up two young kids – a 3-year-old, me and my 4-year old brother on her own.

In 1980, we all fled Vietnam on a boat and arrived in Sydney, Australia via refugee camps in Indonesia and Singapore. There, my parents had to start over with nothing to their names and only AUD 50 given to them by the Australian government.
They went on to build several businesses in Australia!

What have you just learnt recently that blew you away?
The number of young and smart people who have carved out successful careers by founding their own startups (or joining really cool ones). When I was starting out my career, doing any of these was not a viable option; it was either working for an accounting firm, an insurance company or a bank.

If you had your time again, what would you do differently?
If I were starting out my career now, I would choose the path of joining a startup as you get to learn so much about running a business and how to assemble a winning team.

How do you unwind?
I like travelling to a beach or a resort destination and just relaxing by the pool or beach. I also like to unwind after work with a glass of champagne or wine, and a bowl of truffle fries.

Favourite Asian destination for relaxation? Why?
Thailand. I love the people and the spicy Thai food.

Everyone in business should read this book:
The E-Myth. It’s a book series that dismantles common myths about entrepreneurship in different industries.

Shameless plug for your business:
With iPaymy for Business, SMEs can pay rent, salaries, invoices, and even corporate tax using the credit cards they already have in their wallet today. SMEs love iPaymy because it works like a credit card, but pays like cash.

iPaymy’s secure and easy to use platform reliably delivers payments to vendors while freeing up cash and providing access to interest free credit. Forget the delays and aggravations that come with traditional SME financing options. Schedule recurring payments, manage invoices, set payment reminders, and monitor payment status all from one dashboard.

It’s never been easier for SMEs to meet monthly payment obligations while keeping cash available to fuel growth, bridge receivable gaps, and make immediate investment in the supplies, services, and expertise needed to drive a growing business forward.

How can people connect with you?
You can find me on LinkedIn or contact me by email.
My LinkedIn: https://www.linkedin.com/in/chrystiedaoszabo/
My email: [email protected]

Twitter handle?
https://twitter.com/ceedeees

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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