E-COMMERCE: Alibaba’s Ma Keeps Promise to Obama

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Bottom line: Jack Ma’s meeting this week with Barack Obama and quick followup with major funding commitments for entrepreneurs are part of Alibaba’s efforts to improve its government relations and lay a stronger foundation for future growth.

Alibaba’s Ma hobnobs with Obama

Alibaba’s (NYSE: BABA) outgoing founder Jack Ma is quickly becoming China’s business ambassador to the west, following recent meetings with British Prime Minster David Cameron last month and now this week with US President Barack Obama. I’m usually slightly skeptical of such efforts, which seem more intended to grab headlines and hype Alibaba rather than to do anything substantive.

But even I was impressed at how quickly Alibaba has followed up with its pledge to help young entrepreneurs during the Obama meeting, with its new announcement of more than $400 million in assistance to start-up business owners in Hong Kong and Taiwan. It’s quite likely that these 2 programs were already in the works when Ma met with Obama on Wednesday in Manila, on the sidelines of the annual Asia-Pacific Economic Cooperation summit that brings together world leaders from the Pacific Rim.

Still, the speed with which Alibaba made the commitments testifies to Ma’s ability to quickly translate his words into action. That’s quite important for any company, and often difficult in a massive firm like Alibaba with a market value of nearly $200 billion. It also underscores the reality that Ma is still clearly the main decision maker at Alibaba, despite naming several new CEOs and other top executives over the last 2 years as he tries to position the company for his eventual exit.

Ma’s meeting with Obama was a hit in the media headlines, as the US president abandoned usual protocol to quiz the talkative Alibaba founder on issues surrounding entrpreneurship in Asia. (English article) Ma’s outgoing nature and good command of English has helped him to get such meetings, in contrast with most of China’s other top Internet entrepreneurs who are less linguistically adept and outgoing.

Just last month Ma met with Britain’s Cameron, who hired the Alibaba chief to join his Business Advisory Group. Not coincidentally, Ma’s high-profile visits came at around the same time that China’s own President Xi Jinping was visiting first Britain in October, and most recently the Philippines this week for the APEC summit. I would be remiss if I didn’t point out that improving his company’s own ties with Beijing is just as much on Ma’s agenda as meeting global leaders, following a high-profile dispute between Alibaba and China’s commerce regulator early this year over trafficking in pirated goods.

Speedy Follow-Up

All that said, I was still quite impressed with not only the speed but also the size of the 2 commitments to assisting entrepreneurs that Alibaba announced just a day after the Obama meeting. One will see Alibaba set up a fund with the equivalent of about $300 million to help entrepreneurs in Taiwan (company announcement), while the other will see establishment of a similar $130 million fund for Hong Kong. (company announcement)

Showing that it’s serious about the commitment, Alibaba is hiring the well-respected Gobi Partners and China Development Industrial Bank as the first of several local companies it will use to manage the funds in Hong Kong and Taiwan, respectively. The total sums are quite large for funds targeting such small businesses, meaning they will probably take quite a while to disburse and should ultimately help hundreds of entrepreneurs.

The bottom line in all this is that Ma and Alibaba are working hard to improve their government relations, which will be critical to the company’s continuing success at home and also a new global expansion to power its future growth. Alibaba still faces an uphill climb on the piracy issue, especially as the US gets set to issue an annual report that could criticize Alibaba for failing to be more aggressive in tackling counterfeits in its online marketplaces. But these kinds of efforts should certainly have a positive effect over the longer term, and could help to lay a more solid foundation for Alibaba’s future growth both at home and abroad.

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