Exclusive Interview with Mr Kuo Zhang President Alibaba.com
It has been busy days for the trade organisations in Geneva lately, and one of the important events was the Aid for Trade Global Review at the World Trade Organization. One of the main speakers of the event was Mr Kuo Zuang, President of Alibaba.com, who had come all the way from China to attend the event. Alibaba.com has become a reference point in international trade. Let us briefly mention that the platform has a network of over 200,000 suppliers and more than 50 million buyers worldwide. We were lucky to meet Mr Zuang, an outgoing and easy-going person who despite his busy schedule found time to answer our numerous questions.
Q: You’re the president of Alibaba.com, a B2B (business-to-business) branch of the well-known Alibaba Group. Could you tell us a little bit about your background?
I started my career in Taobao and Timor, which is a domestic business-to-consumer company (B2C). In 2011, I joined Alibaba, and for seven years I worked in Alibaba.com, which is the first business set up by Jack Ma, Joe Tsai, and the other 18 founders. Both buyers and sellers on Alibaba.com are small and medium entrepreneurs and enterprises. We are trying to build a platform for them so they can meet and trade with each other. We also deploy the payment networks and logistics. And now, with the help of AI, they can work very efficiently on this platform.
Q: Is it reserved for Chinese businesses, or can anyone join your platform?
Right now, all the buyers on Alibaba.com are global. Yearly, there are nearly 50 million small business buyers on Alibaba.com, the sellers’ number over 200,000 in dozens of different countries. So, it’s not reserved for businesses in China, but available to suppliers all around the world.
Q: Operating in so many different countries require a lot of coordination. It must be quite challenging to make sure that the products arrive on time, and that they are not damaged etc.
Actually, there are a lot of services, and the majority of the services we provide are digital services, such as marketing. So, the customers and suppliers can upload their product list on the website, on Alibaba.com.
Now, with the help of AI tools, they don’t need to write everything, like the product titles, the images, keywords. Product descriptions can be generated by AI tools for marketing. So, it’s much easier for them to manage than before.
And for many using Alibaba digital platform for the first time, who don’t know how to do it, we have a local team to help them incubate and help with lectures. We also have a community of suppliers who can help each other. This is a part for the supplier side. As for the buyer side, we launched a program we call Alibaba Guarantee.
In the beginning, when the buyer and the seller start to trade with each other, the number one challenge is trust. Who should move first? Should I pay first or should you produce, manufacture and deliver it first? Alibaba is a platform in the middle, so, we can facilitate payments. Thus, both the sellers and the buyers can trust the platform to help them manage many of the details like payments, FinTech, the finance services, the logistics services. If there are disputes after this kind of a trial or this trade, Alibaba.com will take care of the after-sales services.
Thus, it’s easy for the buyers to start to trade with the sellers. Once the trust has been built, everything’s much simpler and more straightforward. We handle the payments, the logistics, the after-sales services for both sellers and the buyers.
And then when they have had transactions, they can leave comments on the platform, and it becomes their digital credit. So, when the next buyers come, they understand what the performance of this supplier is, their expertise, what certificate they get.
Q: Buying things on the internet can sometimes expose you to risks of being hacked, cheated or victims of other forms of fraud. How do you secure trade and protect people?
First of all, when we list suppliers on the platform, they must follow certain rules. They should also have certificates and authorisations to sell from their countries. We punish all bad behaviour. So, if the suppliers for example cheat once, they will go out of business. Everything leaves a trace on the internet, and all the transactions and all the sorts of services viewed will become their credit.
This encourages the suppliers to provide better service, a better quality of product and to know if they are price competitive. The buyers can ask questions or make quotations, and the suppliers reply fast and professionally, providing better competence compared with the others. In the end, you build a platform, a mechanism, which can work for a larger economy, and this is how internet and the platform work.
If for example, a buyer encounters problems with system transactions, we will come to this buyer to figure out what’s going on. And then we will figure out how we should handle this sort of matter.
As I said in the beginning, it’s all about how to build trust between each other, so that you can trust the platform, trust it to help you to handle the rest. Then both the buyers and suppliers can focus on what they are best at. If they are good at manufacturing, they can focus on their product, their services and prices. The buyers just focus on how to grow their business. They don’t need to worry about all kinds of complex and complicated rules like customs, foreign currency.
Q: If I am looking for something, I go to your platform and buy it. I’m based in Europe, and the product is located in China. How long does it take before I get it?
If it is by sea, it might take up to a month. If it is by air, 11 to 14 days. It depends upon the means of transport. There are different types of transport services – air freight, train, and maritime freight. It depends on things such as the weight of the product and whether will it require a container or if it’s simply a parcel.
Q: Do you have all kinds of products like Amazon? Are you a competitor to Amazon or are your categories broader than theirs?
In fact, we have a broader choice than Amazon, which is a more consumer-centred platform. We have different categories, half of them are consumer products, and the rest of them are non-consumer goods such as industry products, raw materials, all sorts of a small machines for retailers and local shops.
You can buy all sorts of small equipment and the machines you need to run your business. We sell a lot of machines Actually, a lot of Amazon sellers buy from us. They create their own brands and they can resell either on Amazon or other platforms. We are B2B, and we cater to the small and medium enterprises either to sell or to buy from Alibaba.com.
Q: How is it to be in this business today when there are sanctions and trade restrictions? Is this creating problems for you?
The fundamental economic rule is demand and supply. From a buyer’s perspective, if you are an entrepreneur and a buyer, what do you care most about? The first would be what product to produce, secondly where to find the employees and how to manage them. Taxes and tariffs are only one part of the daily concerns. What we provide is the most competitive price, and then we can deliver in time, thus solving the practical problems. This is our main focus.
If you ask whether sanctions or tariffs can affect us, the answer is: definitely. In the end, it’s all about how the trade world actually operates, from demand and on to supply. We focus on the demand for supplies and how to lower the barriers so that more SMBs can come in.
In Europe, we have invested in a German company called Visible, which has had two websites for the last for 19 years. Another is the Europages, founded in France 74 years ago. They both come from the Yellow Pages and have now been transformed into digital platforms.
We invested in these companies because we believe in the future. Globalization is both globalized and localized. Within Europe, intra-Europe’s GDP is larger than import-export Europe. Our technology is helping to upgrade the engine of Visible. Within the European trade system the SME is much more efficient and actually works much more easily than before. We are helping SMEs both within Europe and outside.
Q: How come we don’t know about this Visible?
If, for example, you are you in the business of industry machinery in Germany, I suspect that you know the platform. If you are a small business outside Germany, there are all sorts of SMBs on Europages as well.
Europages and Visible are platforms catering directly to customers rather than doing advertising and outreach, and they are the top top among B2B platforms in Europe.
Q: So, for you, the world is already globalized…
This is the case. Visible has nearly 20,000 suppliers in Europe. Compared with the number of SMEs in the world, this is still only single-digit penetration into global trade, which is in the neighbourhood of US$ 25 trillion per year. So, there is still a lot of room for growth for digital transformation in global trade.
Q: You’re using a lot of AI, and many people are afraid of it. What do you think about that?
What replaced the coachman on a wagon? It wasn’t a car. It was the driver of a car. For AI, I think it is the same. What replaces the people is not AI. It is people who have the eye to use AI tools. They can be more efficient and can get things done more easily, and such people are replacing people who actually know very little about how to use it.
What we provide today is different layers. First, it is about tools for efficiency. As I said, we launched our first AI tool last October. Today there are 20,000 suppliers using these tools on a daily basis in China, and we have 10,000 suppliers outside China using the AI tools. Of almost 200 countries, 50% of them are developing countries like India, Pakistan, Vietnam, Malaysia. All of them are using AI tools to manage their products, their marketing services, their customer engagement…
Some of the SMEs are not good in English or in their buyer’s language. AI tools can help them to auto-pilot to answer questions from buyers. So, they are leveraging these tools as much as possible to improve their business performance.
The second layer is about using AI to become a knowledge engine and a decision engine. If, for example, you are an SME, I think the questions that you want to ask are what sort of product you should make, what market you are targeting, and what sort of products are of interest to the customers. These are the first questions that need answers.
AI tools can help you to get all this straight in your mind – the markets you are targeting, the customers’ needs today and the data analytics. They can also help you generate ideas that can support your work and find suppliers for your products. In the end, they are going to be a kind of engine of creativity for the buyers so they can have a dream of their product and make it come true. We can help them generate all their requests and then send the quotations to the suppliers using AI tools like a palette or auto palette for them to communicate to the suppliers. These are going to be some of the different perspectives for using tools for both buyers and sellers.
Q: It’s very impressive, all these are technology tools. How long did it take to develop them?
We started early last year when the GPT – actually the Genitive AI – was a real thing. We understand very well the very complicated global tree, and we think this is the best scenario for AI.
There are many cases where we can use AI to solve problems for the buyers and sellers – the language barrier, the culture issues, how to manage their products, how to manage their customers, how to generate ideas. With all these different complicated components and the moving parts actually using AI, we can help them meet the cap and to accelerate the process. It took us about half a year to amortise our first tools.
We launched it last October, and since then we have kept improving our tools. Since the power of AI keeps growing along with the model size and the inference capability, the overall power is growing, and we’re leveraging that power to make sure that we can steadily make our tools better. Currently, when sellers want to generate a text or imagery for their product, we give them multiple choices, and we track the data. Some 70% of all the choices we provide to the sellers are accepted. They think it’s better than what they read or what they find on their own. The sort of content we generate for the suppliers can ideally attract 27% more traffic for them. AI helps them optimize all the data and have all the keywords and images, and then we can use AI to generate background for their product. They don’t need to move things around in trucks or move big machines or to take pictures. All these things can be ultimately generated for them, making it so much easier for them.
Q: How many people are working for you, and do you have teams in all the countries where you’re based?
Not all of them, but in countries where there are many suppliers. And in some of the developing countries where we think there’s a big potential we have service people.
For many of the countries, we have partners, like our channel partners. We propose that they work with Iver.com, and that’s how the suppliers get on board.
There are channel partners, direct service people, and there are other sorts of network services like the banking systems, logistic services people that we are integrated into. In Europe now we have around 700 employees for both alibaba.com and Visible. We also have more than 100 in Vietnam, Hong Kong and Taiwan as of this year, and we are developing Korea, Mexico and the U.S.
Q: What about the Arab world and Africa? Are you doing business with them as well? And how does it work?
We work with the International Trade Center (ITC). We have an incubation program there, and we have more than a hundred African SMEs that we are helping to be successful. They can be ambassadors in Africa, a lead by example.
Q: I know that you have a tight schedule, but I would just ask: if you have a message to our readers and the international community, what would that be?
The first one is to embrace digitization. Digitization is the biggest change transforming the world, transforming trade, transforming everything. It is a sort of steel and will be a growing economy engine, especially for the SMEs. There is their lack of resources, sometimes they need to handle their business single-handedly, and they need to leverage their tools as much as possible to reduce barriers and improve efficiency.
The second is to go global. Though you mentioned sanctions and tariffs, globalization is the only way for them to grow business and to be more resilient, more resilient to the turbulence for example during the pandemic. Many SMEs went out of business. For many SMEs, we boost their business because they embrace the digitization and transform their business. We see a lot of such successful cases. After the pandemic, buyers actually tripled their size compared with before, which means more and more SMEs actually have come to digitalization and gone global.
The third and not the least is AI. Though many people talk about their fear of AI, they should think of it as a tool for efficiency, a tool for decision-making and creativity.
And in the end are the tools as agents that can help people automate things and do things much more efficiently. What replaces a man is another man who can leverage AI the most. So, embrace the technology and the digitalization.
We actually as a platform see our mission as making it easy to do business anywhere, and especially for the SMEs. So this is the message that I would like to deliver to them through your channel.
Leaving Mr Kuo Zhang off to his next meeting, we wish him lots of success in all his endeavours. The e-trade is the new way of doing business, and it was indeed a very inspiring encounter.
