WSJ: Alibaba Founder Jack Ma Takes Center Stage Ahead of IPO

As Alibaba prepares to submit its first major filings as early as this week in what could be one of the largest initial public offerings in U.S. history, Mr. Ma—now executive chairman—still looms large in the company's dealings.

"I thought it would be easier when I stepped down from CEO, but now I'm finding out being a chairman, if you want to be a good chairman, is much busier than being a CEO," Mr. Ma told The Wall Street Journal.

Mr. Ma's success has given him celebrity status in China, where bookstore shelves stock his biographies and airports replay clips of his motivational speeches on business management.

Alibaba, the largest e-commerce company in the world's most populous country, dwarfs its U.S. counterparts. In 2013, the combined transaction volume of its Taobao e-commerce marketplace and another Alibaba-run shopping site called Tmall reached $240 billion, according to a person with knowledge of the figure. That is triple the size of eBayInc.,  more than double the size of Amazon.com Inc. Alipay, Alibaba's online payment platform, last year handled more than triple the amount of mobile payments processed by PayPal.

Even after the expected multibillion-dollar IPO, Alibaba's corporate structure will allow Mr. Ma, who owns about 7% of the company, to have a say in nominating more than half of its board. Mr. Ma also owns 46% of the holding company that controls Alipay.

Mr. Ma has been at the center of Alibaba's efforts to expand beyond e-commerce. Vehicles in which Mr. Ma owns a stake have invested in Chinese finance and media companies—in at least one case using loans from Alibaba.

Such deals may raise questions about whether Mr. Ma would ever prioritize his own investments over the interest of Alibaba shareholders, said Paul McKenzie, an analyst at Hong Kong-based brokerage CLSA. Mr. Ma didn't comment on his investments.

Even though he is no longer CEO, Mr. Ma remains the face of Alibaba. As the e-commerce company expands further into financial services, Mr. Ma has traded barbs with some of China's big banks.

In an interview with the state-run People's Daily last year, Mr. Ma said China's banks aren't lending to the country's small businesses: "I see there are 80% of the clients that are not covered."

At a conference last month, China Minsheng Bank CorpChairman Dong Wenbiao defended the current banking system and questioned Alibaba's financial ambitions. "I said to Jack Ma, 'Give up your reform efforts. You don't have the ability,' " Mr. Dong said.

Mr. Ma was born in Hangzhou, a city of 2.4 million people near Shanghai. His parents were performers of a traditional Chinese musical theater called pingtan. He came of age during China's economic flowering in the 1980s, learning English while an unpaid tour guide to foreign visitors.

After twice failing China's national university entrance exam, Mr. Ma was accepted to Hangzhou Teacher's Institute and graduated in 1988. As the economy improved in the early 1990s, Mr. Ma began looking beyond teaching for work in business. He has said he was rejected for a number of jobs, including as a manager at a Kentucky Fried Chicken.

During a 1995 trip to Seattle as a translator for a trade delegation, Mr. Ma went online for the first time. When he saw how scant information was about China, he set out to create his own company. That year, Mr. Ma started China Pages, an online directory of Chinese companies; Alibaba followed in 1999.

Colleagues say Mr. Ma—who is married with a son and daughter—loves performing. At Alibaba's annual "Alifest" conferences for customers and media, Mr. Ma has in past years shared the stage with former President Bill Clinton, Los Angeles Lakers basketball star Kobe Bryant and actor Arnold Schwarzenegger.

Mr. Ma has "that ability, even in a room of 600 people, to make people think [he is] talking to one person, to you," said Duncan Clark, a longtime acquaintance and tech consultant based in Beijing.

Mr. Ma's eccentric performances and his ability to motivate a crowd have helped build a cultlike following among Alibaba employees. At the company's Hangzhou headquarters, Mr. Ma has blessed hundreds of newlywed Alibaba employees in wedding attire during an annual ritual.

Mr. Ma's decisiveness and his willingness to take big risks helped the company overcome challenges, colleagues said.

When eBay Inc. entered China in 2002 by teaming up with a local shopping site, Mr. Ma developed Taobao to compete head-on with the U.S. company.

"Jack said that the best defense is offense," said Joe Tsai, Alibaba's executive vice chairman.

Mr. Ma also decided that Taobao should let merchants sell without paying listing or transaction fees, even though his first website—Alibaba.com—was barely breaking even. The no-fee model allowed Taobao to attract sellers quickly, and the business soon overtook eBay's Chinese market. Taobao later figured out ways to generate revenue through advertising.

In 2009, when the global financial crisis hit small Chinese merchants who were using Alibaba.com to find overseas buyers, company executives—including David Wei, Alibaba.com's then CEO—proposed cutting fees by as much as half.

"Jack said if merchants disappear there will be no Alibaba," Mr. Wei recalled. "Jack didn't even think for a second."

Cutting fees helped Alibaba.com weather the financial crisis and led to a jump in users, pushing up its net profit by 45% in 2010 over 2009.

Although Mr. Ma started Alibaba with little background in business or technology, he knew enough to pick the right people.

Several months after he launched Alibaba, Mr. Ma hired Mr. Tsai, a Taiwanese-born, Yale-educated lawyer. Mr. Tsai has played a central role in Alibaba's fundraising and acquisitions, from the first $5 million investment by Goldman Sachs Group Inc.GS -0.93% in 1999 to the widely anticipated U.S. IPO.

Current and former colleagues say Mr. Ma makes decisions with gut instinct.

In late 2004, when Alibaba decided to launch Alipay, Mr. Ma flew to Guangzhou to visit Jonathan Lu, Alibaba's current chief executive, who was then the head of a regional sales team.

Mr. Lu recalled Mr. Ma asking whether he knew anything about Alipay, or about PayPal. When Mr. Lu replied that he didn't, Mr. Ma responded, "Good. You are in charge of Alipay," Mr. Lu recalled.

Copper in Shanghai Rises to Near 8-Week High on Spot Premium

Copper futures in Shanghai advanced to near an eight-week high as tight supply pushed prices higher in the world’s biggest user of the metal.

The contract for July delivery on the Shanghai Futures Exchange rose as much as 0.6 percent to 47,920yuan ($7,665) a metric ton and traded at 47,750 yuan at 10:45 a.m. local time. The metal reached 48,160 yuan on April 28, the highest level for a most-active contract since March 10. The London Metal Exchange is closed for a holiday today.

Users in China have been paying the highest spot premium since 2011 to secure the metal, according to data compiled by Bloomberg. Copper for May delivery is about 700 yuan higher than the metal for June delivery, suggesting a tight availability in local market, according to Li Ye, an analyst at Shenyin & Wanguo Futures Co. in Shanghai.

“Shanghai copper futures are supported by limited physical supply as well as too much metal being tied up as collateral in financing agreements,” said Li. Chinese traders have locked up as much as 1 million tons as collateral to get credit for other investments, Goldman Sachs Group Inc. said on March 18.

Source: Bloomberg

China PMI Data Weigh on Asian Stocks

     The WSJ reports,"Hong Kong led Asian markets lower on Monday after data showed continued weakness in China's manufacturing sector.

The Hang Seng Index lost 1.2% after HSBC's final reading for its Purchasing Managers Index for China came in at 48.1 for April, lower than a preliminary reading of 48.3, and little moved from the 48 reading in March. A score below 50 indicates a contraction in manufacturing activity, while a score above that line points to an expansion.

The manufacturing data's impact rippled through currency markets, especially in Australia—a country with strong trade ties with China. The Australian dollar was last at US$0.9255, compared with US$0.9286 late Friday in New York. The yen strengthened to ¥101.88 to the dollar, compared with ¥102.21 late Friday.

Stocks were also under pressure in mainland China, with the Shanghai Composite down 0.8%. In addition to the poor PMI data, there were concerns over excessive supply of new stocks hitting the market after the Chinese securities regulator on Sunday evening unveiled prospectuses of 25 applicants for initial public offerings.

Australia's S&P ASX 200 fell 0.2%. Sydney was adding to a 1.3% decline that it suffered last week, which made it one of the region's worst performers over the previous five sessions—as it was weighed by falls in banks and retailers.

Elsewhere in Asia, Singapore's Straits Times Index was flat, Indonesia's JSX was up less than 0.1% and Philippines PSEi lost 0.3%".

Japan and South Korea were closed for a public holiday.

China factory activity shrinks in April, new export orders contract

The final reading of the HSBC/Markit purchasing managers' index (PMI) for April came in at 48.1, lower than a preliminary reading of 48.3 but up slightly from an eight-month low of 48.0 in March.

The HSBC/Markit PMI has been below the 50 level that separates growth from contraction since the start of 2014.

Output and new orders contracted in April, and new export orders slipped back into contraction after a recovery the previous month, the survey found.

"The latest data implied that domestic demand contracted at a slower pace, but remained sluggish. Meanwhile, both the new export orders and employment sub-indices contracted, and were revised down from the earlier flash readings," said Qu Hongbin, chief economist for China at HSBC.

"These indicate that the manufacturing sector, and the broader economy as a whole, continues to lose momentum," he added, saying the government needed to take bold action to make sure the economy regains its momentum.

Last week, China's official PMI rose to 50.4 from March's 50.3, indicating a slight expansion.

The official PMI is weighted more towards bigger and state-owned enterprises and tends to paint a rosier picture than the HSBC/Markit survey, which focuses more on smaller private firms.

SERVICES FARE BETTER

The services industry fared a little better, according to a separate official PMI released on Saturday, an encouraging sign in an economy that otherwise faces a cloudy outlook.

The PMI for the services industry rose to 54.8 in April from 54.5 in March, the National Bureau of Statistics said. The HSBC/Market services PMI is due on May 7.

China's growth engine has lost steam in the past year, squeezed by lackluster demand for exports and the government's push to cut its own investment in a bid to reshape the economy.

To prove China has the mettle to enact painful reforms, Premier Li Keqiang has repeatedly said policy would not be loosened drastically to counter any short-term dips in activity.

Economic growth slowed to an 18-month low of 7.4 percent in the first quarter of 2014. Economists in a Reuters poll expect growth of 7.3 percent for 2014, compared with the government's target of about 7.5 percent.

Source: Reuters

Ukraine Crisis: Closer to Civil War

Two days of chaos and violence in east and south-east Ukraine appeared on Saturday to be pushing the country ever closer to civil war, as the death toll rose to 42 following a military counter-offensive launched by authorities in Kiev against pro-Russia rebels.

An angry crowd confronted police outside the trade union building in Odessa where dozens of pro-Russia activists died on Friday night in a blaze started during clashes with pro-Ukraine protesters. Fighting continued in the east as the Ukrainian army continued to oust pro-Russia rebels.

The region has been rocked by unrest since the new government in Kiev came to power following demonstrations that ousted pro-Russia president Viktor Yanukovych at the end of February. Many in Ukraine's east, which has strong economic and cultural ties with Russia, say they now feel marginalised. What began as small-scale unrest rapidly escalated into an armed rebellion as pro-Russia militia groups seized government buildings. Kiev and its western allies have accused the Kremlin of orchestrating the chaos, which follows a Putin-backed putsch that resulted in Crimea's annexation last month.

Slavyansk was quickly established as the heartland of the pro-Russia forces operating in the region. Armed men, led by self-appointed mayor Vyacheslav Ponomaryov, have controlled the city, ringed by militia-controlled road blockades, for more than two weeks.

In Donetsk, Luhansk, Kostinovka and Horlivka, rebels have seized most of the state security and administrative buildings. Kidnappings and murders have become common as law enforcement officials defect to the rebels.

As the Ukrainian army edged ever closer to the rebel HQ in Slavyansk on Friday, gunfire echoed as fighting raged in the areas surrounding the city. Ambulances tore down the deserted streets throughout the night to collect the wounded and dead.

Source: TheGuardian

Ukraine's Crisis: Freed OSCE observers tell of ordeal during capture in Ukraine

The head of an OSCE team released by pro-Russia rebels in eastUkraine on Saturday has described how he and his colleagues faced a "constantly growing threat" as the situation deteriorated around them.

"The proverbial fire of handguns and artillery came closer and closer," said Colonel Axel Schneider at a press conference in Berlin on Saturday night. "But we were condemned to inaction. Anyone who hasn't gone through something like this can't imagine what it was like."

Schneider said his team had been allowed constant contact with the OSCE and their families throughout their capture.

Krzysztof Kobielski, a Polish major who formed part of the group, told Polish TV the team had faced "real danger" in three instances. "When there was shooting we didn't speak, we just stayed lying on the floor," Kobielski told TVN24. "All around us there were hundreds of men armed with knives, pistols and automatic weapons."

The group of military observers, consisting of four Germans, a Dane, a Pole and a Czech, were detained in the town of Kramatorsk, south of rebel-held Slovyansk on 25 April.

A Swedish member of the team was released earlier because he was suffering from diabetes. The terms of the OSCE team's release remain unclear.

Ukraine vowed on Sunday to broaden its operation against pro-Russia rebels. Andriy Parubiy, the chief of the national security and defence council, told AFP that the armed forces would expand the "active stage of the operation in other towns where extremists and terrorists are carrying out illegal activities".

Two days of chaos and violence in east and south-east Ukraine appeared to be pushing the country ever closer to civil war over the weekend. On Saturday, an angry crowd confronted police outside the trades union building in Odessa, where dozens of pro-Russia activists died on Friday night in a blaze started during clashes with pro-Ukraine protesters.

Ukraine: Pro-Russia prisoners released as activists storm Odessa police HQ

A group of pro-Russia activists has stormed the police headquarters in the southern Ukrainian city of Odessa and released scores of prisoners detained at the scene of deadly violence on Friday that culminated in people being burned alive in a trade union building.

In the pouring rain, men armed with clubs battered their way into the building through a vehicle entrance.

Ranks of riot police offered no resistance. When crowds burst into the compound and began smashing windows and wrecking police vans, officers agreed to release the activists.

Men and women, many in tears, emerged from the door of their cell block and left through a tunnel of cheering supporters. Local police said later that 67 people were set free.

"The police did not interfere," said Maksim, 26, an activist wearing a balaclava and a helmet who was one of the first to get inside the compound. "They are only defending their weapons."

Residents and government officials in Kiev have criticised the police, accusing them of fatal passivity during the violence in the Black Sea city.

More than 40 people were killed on Friday during street battles that escalated until pro-Ukraine activists launched a full-scale assault on the trade union building. It was defended by people opposed to the current regime and in favour of closer ties with Moscow.

The Ukrainian prime minister, Arsniy Yatsenyuk, told the BBC that Odessa's security forces were responsible for the deaths.

"I personally blame the security services and law enforcement office for doing nothing," he said. "[They] are inefficient and they violated the law."

Yatsenyuk, who was reportedly due to visit Odessa yesterday, also said that the region's police chief had been dismissed.

Those inside the compound said that there was a lot of sympathy for the pro-Russia cause among lower-ranking police offers. "The police are with us," said Mikhail, 21, who had just been released.

One activist said that he had personally witnessed how police had covered pro-Russia fighters during street battles on Friday.

As prisoners were set free, the crowd chanted: "Odessa is a Russian city" and "Heroes, heroes, heroes!". Many expressed outrage that those who had escaped being burned alive in the trade union building had ended up in jail, while their attackers had not been arrested.

"The [event on] 2 May was a genocide of Russian people," said Timur, 28, who joined in the attack on the police station.

The trade union building was opened to the public on Sunday. Detritus from Friday's battle, including baseball bats, helmets, shields, petrol canisters and children's nappies apparently used to bandage wounds, were scattered around it. Broken glass covered the floor and pools of dried blood were still visible in several rooms.

Source: TheGuardian

Mobile Messaging Market Watch: MIM vs. SMS

The number of messages sent using mobile devices is staggering: trillions a year globally and rising. Two types of mobile messaging services are battling for users’ thumbs and wallets: mobile instant messaging (MIM) and traditional text messaging (short messaging service or SMS). In 2014, MIM will win the battle for volume, generating over double the number of messages, but global revenues from SMS should be upwards of 50 times higher.

Mobile network operators, such as AT&T and Verizon, provide SMS using the same infrastructure that carries mobile phone calls. SMS was once the only way a mobile phone user could send a message to another person’s mobile phone. That changed with the arrival of mobile broadband and MIM apps offered by third-party providers, including startups like Line, WeChat, and WhatsApp. These services let users send messages from their smartphones via fixed or mobile broadband (an approach also known as “over the top,” or OTT). Facebook’s purchase of WhatsApp for $19 billion has drawn the business community’s attention to a fact that many teenagers and other users already knew: MIM services are rapidly gaining popularity as an alternative to SMS, but also as a substitute for email, social networks, PC-based instant messaging, phone calls and face-to-face conversations.

Deloitte predicts that MIM services will carry in excess of 50 billion messages per day this year, compared with 21 billion messages per day sent via SMS. This ratio of nearly 2.5 to 1 compares to near parity in 2012. However, SMS is expected to generate more than $100 billion globally in 2014, compared with about $2 billion from all MIM services (including value-added services offered via their platforms). 

There is a simple reason for the vast gulf between revenues for SMS and MIM. “Users often incur tariffs for SMS services (up to 10 cents per message when charged individually, and up to 50 cents when roaming), or else part of most user’s monthly subscription includes a quantity or unlimited text messages. In contrast, the median cost of MIM services is typically zero,” says Paul Lee, director and head of global technology, media, and telecommunications (TMT) research, Deloitte Touche Tohmatsu Limited (DTTL). “SMS should continue to generate significantly greater revenues than MIM in the short term.” Meanwhile, MIM services should continue to capture additional volume from all other forms of communication.

"MIM’s surging popularity is already extending into the workplace, where growing numbers of employees are informally using it. CIOs will also need to ensure that security and privacy protections are in place if employees use third-party MIM apps.

What’s Behind the Numbers?

“MIM services’ popularity arises, at least in part, because they can handle rapid-fire conversations among two or more parties, whereas an SMS conversation has a slight lag time and is limited to two parties,” says Lee. MIM users often rely on “presence awareness” features (which indicate someone’s availability) to know whether it is a good time to start conversing with another user—or multiple users.

Would-be users of MIM encounter some headwinds, however. “Although SMS is the messaging standard common to almost all mobile phones, there are many different MIM apps and they are not compatible—people need to have downloaded the same MIM app to have a conversation,” says Duncan Stewart, director of TMT research for Deloitte Canada, a member firm of DTTL. “The most popular MIM service has hundreds of millions of monthly users; SMS has billions.” MIM cannot be used on a basic mobile phone, he adds. It requires a smartphone, tablet, or mp4 player connected to a mobile data network or a Wi-Fi network. Moreover, some MIM services only work with a single operating system.

“The fact that MIM services are typically available for free or only a small fee goes a long way toward explaining their high popularity and low revenues,” says Lee. Some MIM services are a value-added offering to all users of a manufacturer’s smartphone. For example Apple’s iMessage service is included on every iPhone and there is no charge for using it. Other MIM services charge a nominal amount for a subscription—for example, WhatsApp charges subscribers a dollar a year, but the first year is free and the provider has also waived subsequent year’s fees for some users".

A Bigger Market for Smaller Tablets

It seems like everyone wants to get their hands on a compact tablet (with screens smaller than 8.5 inches diagonally). These devices have quickly captured the top spot in the product category. Deloitte estimates the installed base of compact tablets is now about 165 million units, compared with 160 million units for classic tablets (8.5 inches or larger).

Although the difference in screen size may seem small, the impact on the user experience can be significant. A tablet with a 7-inch screen has about half the area of one with a 10-inch screen. The smaller screen area can make it harder to read content and fill out forms, particularly on websites designed for PCs. As more web access moves to the compact tablet’s smaller touch screen, designers will likely need to adapt the size, shape, and function of HTML links, buttons, and other features.

People are more likely to carry compact tablets outside their home or office because these devices are also significantly lighter than classic tablets. Compact tablets’ greater portability creates an opportunity for operators to sell mobile broadband subscriptions to owners of devices capable of using cellular networks. Operators could also encourage owners of tablets that only use Wi-Fi to pair the device with their smartphone’s tethering capability to access a cellular network.

The greater diversity of tablet models means that CIOs will likely need to expand the portfolio of devices that IT supports. The best course may be to select the few options that will support the broadest range of roles and activities at the company.

Source: Deloitte