The Alibaba way unleashing grassroots entrepreneurship to build the world’s most innovative internet company

351 Pages·2016·4.75 MB·English

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This book is dedicated to two giants in the field: Professor William Baumol for
his seminal work on innovation and entrepreneurship, and Professor Edmund
Phelps for his contributions to the understanding of the importance of
institutions and grassroots dynamism to economic growth and well-being.
I want to thank them for being mentors in my economic research.
CONTENTS
INNOVATION AND GRASSROOTS ENTREPRENEURSHIP: KEY INSTRUMENTS OF
ECONOMIC GROWTH by William J. Baumol
FOREWORD by Edmund S. Phelps
AUTHOR’S PREFACE TO THE CHINESE EDITION by Ying Lowrey
AUTHOR’S PREFACE TO THE ENGLISH-LANGUAGE EDITION by Ying Lowrey
CHAPTER ONE : THE ALIBABA WAY
CHAPTER TWO : ALIBABA’S EFFICIENCY AND THE ALIBABA
ECOSYSTEM
by Chen Liang
CHAPTER THREE : THE TAOBAO PLATFORM: TEACHING PEOPLE
HOW TO FISH
by Fang Ruonai
CHAPTER FOUR : CLUSTERING INNOVATIONS THAT STARTED WITH
1688.COM
by Xiang Songlin
CHAPTER FIVE : INTEGRITY CAPITAL–BASED MICROFINANCE
by Dong Youying
CHAPTER SIX : E-COMMERCE LEGISLATION AND INNOVATIONS IN
REGULATORY SUPERVISION BY THE PUBLIC
by Huang Lingling
CHAPTER SEVEN : THE “ROUTINIZATION” OF ALIBABA’S
CORPORATE CULTURE INNOVATION
by Quan Tao
CHAPTER EIGHT : GRASSROOTS STARTUPS ARE THE WAY TO
EXPAND EMPLOYMENT
by Sun Xiaoyu, Xiang Songlin, and Ying Lowrey
POSTSCRIPT
INDEX
INNOVATION AND GRASSROOTS
ENTREPRENEURSHIP: KEY INSTRUMENTS OF
ECONOMIC GROWTH
Throughout history, China has been a guide to economic progress, in many eras
serving as a model for other nations—though sometimes showing what
approaches are best avoided. Now it has returned to its role as a source of
guidance and is again achieving domestic progress and offering the promise of
future prosperity. The lessons to be learned will surely be useful to China itself
because much of its economy has not yet abandoned older and less productive
modes of operation and management. This valuable book offers a guide to the
activities that will contribute to China’s success.
However, such a book will also serve as an instrument that benefits China
indirectly by enhancing the purchasing power of other countries that are China’s
customers. Here we must remember that impoverished customers are not good
customers. It follows that China stands to benefit both directly and indirectly by
understanding the economic activities that enhance prosperity.
A key to progress in this direction is the opportunity for encouragement of
entrepreneurial activity, within small enterprises and large firms. Both have
already made substantial contributions and promise to remain a source of these
benefits in the future. These observations may appear to be self-evident, but it is
important to bear in mind that entrepreneurs can be relied on to seek to promote
their own gains, whether or not the actions adopted are beneficial to other
enterprises.
Recent developments in China have shown dramatically how such a society
can benefit from the contributions of entrepreneurs and their colleagues in
carrying out the activities of a firm. However, they also have provided
unfortunate examples in which entrepreneurs put their own well-being ahead of
society’s welfare. Evidently, the general welfare requires the adoption of
incentives that encourage those entrepreneurs whose activities are beneficial,
while discouraging others, whose actions conflict with the interests of society.
In China, some of these incentives already have been put to use. In other
cases, the orientation of the firms themselves has contributed to achievement of
such goals. But there is still more to be learned from the beneficial undertakings
of enterprises that are laggards on the road to progress. Indeed, in China and
other countries that have experienced substantial growth, some enterprises have
explicitly designed their activities to achieve private benefits at the expense of
their employees and their customers.
This book focuses on the firms whose activities contribute to the general
welfare through the use of innovation—both in producing and in bringing goods
and services to the public—that also multiplies the benefits to society provided
by small entrepreneurs. Based on both observed experience and years of
research, Professor Lowrey’s discussion brings out the developments of the
recent past that have enhanced the general welfare.
More than that of any other nation, China’s history entails a story of invention
that is unique in its abundance and, thereby, illustrates dramatically how
grassroots entrepreneurship can contribute to the general welfare—or, in other
circumstances, how it can fail to do so. Such contributions clearly offer
extraordinary enhancements to economic growth and, thereby, to the general
welfare. The analysis offered in this book indicates directions that will enhance
both by using innovation to unleash productive grassroots entrepreneurship.
William J. Baumol
Professor Emeritus of Economics ,
New York University, and
Professor Emeritus of Economics ,
Princeton University
FOREWORD
My book, Mass Flourishing , argues that the surge in economic activity and the
emergence of widespread growth and prosperity observed during the 1800s and
first half of the 1900s cannot be understood solely as a consequence of scientific
discoveries or changes in government policies or institutions. An important
factor, often disregarded, was a change in attitudes, which finally led to the
unleashing of entrepreneurs and, in turn, innovation. New or improved products
and methods resulted in the spread of more rewarding work and a sense of
flourishing—of personal growth.
Professor Lowrey’s book, which describes and analyzes the tremendous
dynamism created by Alibaba’s ecosystem, exemplifies my basic themes
transported to China’s modern age. Rather than the steam engine of the
nineteenth century, Alibaba uses information technology to enable mass
innovation to flourish. Thanks to this technology, “growing by unleashing
grassroots entrepreneurship” can be adapted by companies as a new strategy to
win markets; it also can become a nation’s strategy to improve the lives of its
people.
China has changed greatly in the last 35 years: Markets have been created,
skyscrapers are everywhere, people are migrating in pursuit of jobs, and
urbanization is taking advantage of the country’s late development. Perhaps
most important, companies such as Alibaba have become leaders of the
international trend in e-commerce. Using Internet technology, Alibaba and
others are creating environments where grassroots entrepreneurs can easily enter
markets with little or low cost. This new ecosystem allows small businesses to
avoid middlemen between them and consumers. The ecosystem also includes
open, transparent, efficient, and accountable services, such as logistics and
finance, for millions of e-commerce retailers.
E-commerce has changed attitudes toward the possibility of individuals using
their initiative and creativity to become entrepreneurs. This is extremely