Alibaba's IPO architect lays out blueprint

Tsai, a 50-year-old Taiwan-born Yale law school graduate, has emerged as Alibaba's chief strategist and financial tactician. He left Swedish investment firm Investor AB's Hong Kong office in 1999 to join what was then founder Jack Ma's startup - Alibaba.

Tsai served 14 years as Alibaba's chief financial officer, steering investment strategy and handling negotiations with big-buck investors like Yahoo and Japan's Softbank Corp, with its 37 percent stake.

As Alibaba's executive vice chairman since early 2013, Tsai has taken on the role of driving more than $3.8 billion of investments in everything from digital mapping to online education.

The strategy, said Tsai, has a single focus: to boost Alibaba's core e-commerce business, especially as consumers shop more on smartphones. "We'll be sticking very close to our knitting, staying very true to our core business, e-commerce," said Tsai.

Inventing E-commerce

That business is huge. Take China's "Singles' Day", the annual November 11 commercial celebration for people who are single that Alibaba has turned into the world's biggest online shopping day.

Last time, goods sold on Alibaba's platforms were worth over 35 billion yuan ($5.63 billion). By comparison, the last US "Cyber Monday" of year-end holiday sales online racked up $1.74 billion.

"Alibaba effectively created the way e-commerce works in China," said Duncan Clark, managing director at Beijing-based technology advisor BDA. "It took a lot of guts and a lot of capital," said Clark, hired as a consultant in Alibaba's early years, who introduced Ma at a Stanford University lecture in 2011.

Alibaba today has over 25,000 employees. Its Taobao marketplace allows individuals and small businesses to sell directly to customers. Instead of collecting a fee on sales, like eBay Inc, it charges vendors to advertise.

Alibaba's other big business, Tmall.com, is more like Amazon Inc. It provides an online storefront for brand-name companies like sportswear maker Nike Inc and clothing retailer Gap Inc, earning revenue from sales commissions and set-up fees.

Connecting these businesses is Alipay, an online payment platform comparable to eBay's PayPal that allows consumers to skirt traditional bank payment systems. Alipay, part of Alibaba Small and Micro Financial Services Group and not part of any proposed listed company, controls almost half of China's online payment market.

At home Alibaba is investing in financial services, housed within Alibaba Small and Micro Financial Services Group. It is buying a controlling stake in a local fund management firm, and laying the groundwork for a private bank.

"We want to provide financial services to our customer base because we see that as an extension of what we do," said Tsai.

Underpinning Alipay's financial services ambition is the trove of personal and corporate credit data it collects from customers. "We hope that we can make changes to the financial system in China," said Tsai. "As you know, the financial system in China is a little bit antiquated."

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