Chinese ecommerce company Alibaba handled over US$170 Trillion in 2012 through C2C, C2B and B2B portals mainly in China, but established a foothold in the U.S. in 2014. On April 29, 2015, CEO Yu Yongfu announced he would not diversify into social media despite the current passion for them globally.
Alibaba’s Yu Yongfu may have concluded the social media market in China is already overtraded. He may also be keeping a weather eye on the recent ticking off Cyberspace Administration gave NetEase that resulted in 24,000 posts being removed. There is good money in international ecommerce. It will be interesting to look back on his decision in 12 months’ time.
The announcement to steer clear of social media came at a news conference where Yu Yongfu revealed further details about the takeover of AutoNavi and UCWeb. These sit better in the Alibaba stable since the former focuses on digital map content and navigation, while the latter provides mobile browser services. Accordingly these will join the Alibaba mobile business division alongside mobile search engine Shenma, mobile games providers PP Helper and 9Game, and the Alibaba Literature start-up released a week ago.
Implications for Alibaba Talent
A shake-up has already begun and there are bound to be casualties because some support activities (admin, finance etc.) will merge. UCWeb and AutoNavi each had upwards of 3,000 employees before the change. A 10% rationalisation could mean 600 key skillsets walking out the door and into the arms of the competition. CEO Yu Yongfu also alluded to the fact that 9Game and Shenma have already ‘started integrating their sales and staff’.
Alibaba Literature is also bound to start making waves soon. According to China Daily it is challenging Tencent and Baidu head on with plans to ‘form an eco-system of content economy, with businesses ranging from digital reading, digital communication to derivative product chains’. Alibaba already has strategic shareholdings in Enlight Media and Huayi Brothers.
Alibaba and Social Media in the Longer Term
In so doing, Alibaba has further built out its brand as a trustworthy internet provider, with potent technology skills underpinning user-friendly interfaces that are crisp and easy to understand. Managers bore easily, and Alibaba’s are clearly on a hunt to add variety to every day. I wonder when I look back on the decision to stay out of social media in twelve months’ time, whether a better title might have been Alibaba Draws the Line against Social Media (for now)