For Alibaba, Covid-19 isn’t its first encounter with epidemic. This week, TechNode’s translation column looks back at China’s last great epidemic, bringing you the story of how Alibaba launched Taobao during SARS, and how it expanded its online business while its headquarters were quarantined.
This article was translated and abridged by courtesy of our friends at Huasheng Taolue. TechNode has not independently verified the claims made in this article.
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The battle of Alibaba: Life under SARS
Yang Kai, Huashang Taolue
Feb. 7, 2020
Should we go or should we stay?
It was April 2003 and Jack Ma faced a difficult decision. The 93rd Canton Fair was about to start, and Ma had promised 50 clients he would exhibit their goods for free. But Guangzhou had already been classed as a SARS epidemic zone.
The Guangzhou government said everything was fine, but most exhibitors were reluctant to take the risk. In 2002, the 92nd Canton Fair had seen 135,000 exhibitors trading $19.7 billion in goods. This dropped to 22,000 exhibitors in the year of SARS and only $3.8 billion was traded.
After discussions, he decided Alibaba would meet its obligations to clients and participate as planned.
On April 11, project leader Song Jie flew to Guangzhou, staying there for seven full days. Alibaba’s brave resolve made the press, and its clients received plenty of international orders. Things seemed to be moving in the right direction.
On April 18, Song Jie returned to Hangzhou, and went to work as usual three days later. Her sore throat, runny nose, and nasal congestion were not taken too seriously. But on April 20, Gao Qiang, Deputy Minister of Health, announced disturbing figures: “1,807 cases of atypical pneumonia have been reported nationwide, 339 in Beijing.” Five days earlier, only 37 cases had been confirmed. Panic spread quickly.
On May 2, Song Jie got a fever. By May 5, it was 39.1 degrees centigrade (about 102.4 degrees Fahrenheit). She was diagnosed with “suspected SARS” and sent to Hangzhou Xixi Hospital for isolation and treatment. When her phone stopped working, she was in complete isolation. Jack Ma sent her a new phone and a CD player. On May 7, she was confirmed as the fourth SARS case in Zhejiang Province.
Song Jie was transferred to the confirmed ward on the fifth floor, witnessing her isolation unit neighbor dying that same night. The 26-year-old was pushed to the brink of death.
Alibaba was at the brink of extinction. Not only were the leadership worried about Song Jie, but they were also concerned about being infected. Not to mention, public opinion had turned on the company for sending its employees to Guangzhou. Other companies in Alibaba’s building saw the firm as a “public enemy” for bringing SARS into their midst. Employees remember that at the time, if they were identified as Alibaba employees, people would shout, “SARS is here, run away!”
Song Jie had come into contact with many people since returning to Hangzhou from the fair. The risk of contagion was huge. All 500 people in the building where she lived with her family were put on lockdown. 100 medical workers and patients were quarantined.
At 4 p.m. on May 6, Jack Ma announced informed all employees that they would be working from home. The world’s biggest B2B website was under lockdown. Ma never expected SARS to strike his company such a blow.
In little over two hours, more than 400 employees left headquarters. “There wasn’t even a supervisor in charge. Everyone knew what they were doing,” co-founder Lucy Peng recalled. Technicians made sure every colleague had a solid internet connection at home and access to the system. Reporting processes were hastily revised.
During quarantine, the headquarters were sealed off with a heavy iron chain. A tent was set up downstairs to take charge of diet, temperature checks, disinfection, and care. Jack Ma’s house was guarded night and day.
As for work, however, everything went on as usual.
The day would begin at 8 a.m. as usual, without the usual group lunch chatter, ending around 8 p.m. Instead of the dinners with teammates, Alibaba staff organized online chat groups. Someone broadcast themselves eating a watermelon. Leaders sang emotional songs.
The customer service hotline was redirected to staff at home, and their families were asked to answer the phone with, “Hello, this is Alibaba.” Customers may have wondered why old people’s and children’s voices were suddenly on the other end of the line. The first day of remote work was May 7. Alibaba’s business volume set a new record, with more than 12,500 business leads in China alone.
Only six people escaped isolation. Jack Ma had set up a small R&D team to strategize on combatting e-commerce giant eBay. These six quietly left the Huaxing Technology Building and moved to a lakeside apartment to work, bypassing the mass quarantine order.
At 8 o’clock on the evening of May 10, 2003, Alibaba’s “secret weapon” was unveiled. Taobao officially went online—on the fourth day of the quarantine.
At this time, Jack Ma was at home, unable to celebrate with his team. They made a call to raise a glass and “Bless Taobao.” The homepage launched with the slogan: “Think of those who start a business in trying times.”
When the SARS quarantine was lifted on May 19, the iron chains on the headquarters were unlocked. Videos by Sheng Yifei went around and “Friends” by canto pop singer Alan Tan was playing on every computer. “We all cried that night”, recalled Zhou Lan, a former employee. Three days later, Song Jie was the first SARS patient in Hangzhou to be released.
On April 20, 2005, Jack Ma designated May 10 Alibaba Day. At that point, two years had passed since SARS.
He said, “We should always remember this spirit, not working for ourselves, but working for our shared beliefs and customers.”
During SARS, exhibitions were postponed, traders stopped visiting and orders were cancelled. Traditional business models came up against road blocks—or in Alibaba’s case, chains.
SMEs were advised by experts to try:
- Online business
- Stationing staff overseas for exhibitions and trade fairs
- Business development through representatives and offices of international buyers in Mainland China
Doing business online was the most viable and safe solution for SMEs at the time and Alibaba aimed to lock in its SME clients. 90% of its 1.9 million members in 2003 were SMEs.
Alibaba had been expanding rapidly until Song Jie’s infection.
In March 2003, it accumulated 3,500 new members a day, an increase of 50% from the previous quarter. The number of new business opportunities listed daily reached 9,000 to 12,000, a three-fold increase from the previous quarter. The number of Chinese suppliers Alibaba counted as customers was higher than in 2002: over the same period, it doubled.
At the height of the crisis, Mao Linsheng, Hangzhou’s mayor, made a special trip to an Alibaba office that was not under quarantine. He encouraged companies to use e-commerce to beat the financial troubles created by the epidemic. Alibaba lived up to his expectations, boosting its performance by the power of five post quarantine.
In addition to Alibaba’s hard work, SARS was significant in turning hundreds of thousands of Chinese people into online shoppers.
Duncan Clark wrote in “Alibaba: The House That Jack Ma Built”: “For many Chinese, the the SARS outbreak and high-speed domestic travel came by chance, making people realize what they could do at home. The full power of China’s e-commerce boom may not have been felt until years later, but this was indeed the beginning.”
SARS confirmed the effectiveness of digital mobile technology.
Jack Ma has said that SARS cannot be called an opportunity. But the event saw Alibaba confront and overcome severe challenges, and made Alibaba’s team more committed than ever.
Whether you can survive a crisis is an important measure of a company’s value. And if you can turn a crisis into something positive with new energy and change in the culture, you have a company culture to sustain you for years to come.
17 years ago, Alibaba was a relatively small enterprise. Now it’s China’s largest internet company. In the face of the current Covid-19 virus threat, Alibaba doesn’t need to think about existential threats, but instead can take on social responsibilities and help resolve the crisis.
While much has changed at Alibaba, and China’s economy has grown in size and strength, the values honed during the SARS crisis are clearly visible today. Just as the behind-the-scenes heroes of the SARS Campaign Zhong Nanshan and Li Lanjuan are still on the front line fighting this new epidemic, Alibaba is there on the sidelines offering all the support it can muster.