Jack Ma: Going Free Cannot Work In Nowadays Market

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Alibaba’s Jack Ma spoke at 2013 IT Pioneer Summit held by Shenzhen government yesterday. As usually, he refuted price wars in e-commerce sector. This time he threw out a new analogy saying that participating in price wars is like using a machine gun as a stick, and those participants ” are applying information technologies and ideas but with management thinking and skills so out-of-date as those used for last century… Thus in today’s world, e-commerce players are fighting in price, not value”.

As information technologies have advanced to this day, do we lack technologies or ideas? No. What lacks is how to put them into practice.

He addressed it again and again. What’s true is his company has been making money from paid search, display ads, payment & transaction commissions, financial services, among other things, that have nothing to do with pricing.

Going free cannot work in these days.

He cautions nowadays Chinese entrepreneurs that going free can hardly help them survive.

Some people would say you Jack Ma (offered services) for free ten years ago, isn’t it? Free tech (service model) worked ten years ago, but doesn’t for today. Ten years ago, Tencent, Baidu and Alibaba was very young.

Today if you go free, Tencent, Baidu and Alibaba would help you die. You cannot survive with ideas that worked five or ten years ago, or in last century.

He means you’d die sooner for big players can copy fast, gain users faster and can afford offering services for free way longer than you can.

Being nervous about WeChat is a good thing.

When asked by Tencent’s CEO, Pony Ma, that how dared Alibaba to challenge the banking industry, Jack Ma said that they never thought of challenging anyone but what to create.

Numerous online sellers and mid- and small-businesses need money but have no access. But we have solutions.

To me, my responsibility isn’t to help financial institutions. Helping them and poor people are the government’s responsibilities. But helping clients, numerous Taobao retailers, is my responsibility. I’d stick with it when I have a solution.

Today banks are nervous. I think being nervous is a good thing. It’d be abnormal if they don’t feel so. It’s the same that I’m very nervous when seeing WeChat.

If the financial sector isn’t nervous, our small businesses would feel nervous. So it’s a contribution to the society if Alibaba group can make the existing financial system feeling nervous.

image credit: guancha.cn