A WALK ON THE WILD SIDE
After more than 20 years working for multinationals, Ng Wai Lun finds excitement at Alibaba.
By Jennifer Lee

Old habits are hard to break. After nearly four months on the job, Ng Wai Lun still wears a suit to work, despite his young colleagues’ more casual dress. Ng, who was most recently controller at PepsiCo Greater China Beverages, is the new group finance vice president for Chinese internet conglomerate Alibaba.com. He has much to adjust to. Gone are the plush offices, executive washrooms, and dedicated administrative assistants. Now Ng answers his own phone, fetches his own coffee, and toils late into the night.

But if he misses his old life, it doesn’t show. “This is a very exciting company to be in, at the forefront of the new economy – not just in China, but in the world as well,” says Ng, a Malaysian who has lived in China since 1993. “If you think about it, there is no company like Alibaba.” Indeed, Alibaba’s business mix includes B2B and C2C trading platforms, online payments, a recently acquired online classifieds business, search engine Yahoo! China, and a newly launched online software business.

Chinese companies such as Alibaba are working hard to lure away the local finance managers of Western multinationals (MNCs) and professional services firms. A growing number of executives are making the leap. For example, Shawn Wang left PricewaterhouseCoopers in late 2004 to become CFO of internet search firm Baidu.com, helping guide the company through its IPO process. Wu Yihong, a former mutual fund manager with JPMorgan, did the same with Home Inns & Hotels Management, a Chinese budget hotel chain that listed on Nasdaq in October.

Such career moves can be perilous, of course, but Ng argues that his assignment brings more opportunity than risk. “Alibaba is not a one-trick pony,” says Ng, who has also done stints with AstraZeneca, Revlon, Bristol Myers Squibb, and Rhone-Poulenc. “If it was, I wouldn’t go. There are many [one-trick ponies] around today in China. They may have US$200m in revenues, be listed on Nasdaq, but have just one source of revenue.” By contrast, Alibaba’s many parts “fit together like a jigsaw puzzle.” Says Ng: “They complement each other, and among them there are a lot of synergies.”

Making financial sense of that puzzle will be part of Ng’s challenge. His position is newly created, having been hived off from that of CFO Joseph Tsai, leaving Tsai to focus on corporate structuring issues, and mergers and acquisitions. Ng will take on many of the traditional CFO duties, covering reporting, accounting, planning and analysis, budgeting, treasury, audit, and tax.

Alibaba Group has six business lines. First is a platform for online B2B trading, a 982m renminbi market in 2005, of which Alibaba has a 53% share, according to market research firm Analysys International. Alibaba.com, the English version with 2.5m users, and china.alibaba.com for the domestic market with 14m users, are focused on small- to medium-sized businesses.

Taobao is the company’s C2C portal, though small businesses can also use the site to reach consumers. Taobao resembles US auction site eBay, but with an important difference: because Chinese consumers prefer to haggle, Alibaba connects buyers and sellers directly rather than using impersonal auctions. And, unlike Amazon.com in the US, Alibaba does not compete with its customers by selling products itself; it is simply a facilitator for others to do business. For now, Taobao’s platform is free to both buyers and sellers (an attempt made earlier in 2006 to charge users failed), although that may soon change.

The third leg of Alibaba is Alipay, which is similar to Paypal in the US. Because only banks can operate online payment systems in China, Alipay uses an escrow trust account to hold the funds from a buyer while the seller receives and inspects the product. Most of Alipay’s transactions come from Taobao customers, though that may change with the October introduction of a co-branded debit card, issued jointly with the China Construction Bank. The Alipay-Dragon Card is the first in China specifically designed for online payments – users of Taobao and Alipay need only input their card’s number, versus filling out a form. Alipay, previously a free service, began charging a small transaction fee in early January.

In 2005 Alibaba added online search to the mix when it took over the assets of Yahoo! China. This, says, Ng, has been one of the harder acquisitions to integrate because of cultural and business model differences.

Wrestling with Giants

Indeed, the search business could prove to be a test for Ng and the rest of Alibaba’s management team. Yahoo! China operates in an extremely competitive market – Google, Baidu, and Sohu are all working to draw Chinese internet users to their sites. Furthermore, the company has become embroiled in a draining legal dispute with the former general manager of Yahoo! China, Zhou Hongyi. Zhou, who left the company in 2005, now heads Qihoo.com, a software security firm. In August, Zhou sued Yahoo! China for defamation and in September Yahoo! China countersued, accusing Qihoo of unfair competition. Qihoo’s 360 Safeguard Anti-Spyware marks Yahoo Assistant as a malicious program, and advises users to delete it. In January, Yahoo! China won its case against Qihoo, a decision that is likely to be appealed. Zhou’s libel case against Yahoo! China has not yet been decided.

Other problems have beset the company. A June 15 report by Reporters Without Borders accused Yahoo! China of having the highest level of censorship among the major search engines operating in China, blocking such search terms as “democracy”, “human rights”, and “press freedom”. Ng freely admits that Alibaba has a strong working relationship with the Chinese government, but mainly in the area of online payments. Alibaba works closely with the People’s Bank of China to educate the central bank about the online payments industry, and to encourage it to issue licenses for online payment services companies to prevent fly-by-night operations from damaging the industry’s reputation. It is “a two-way conversation”, say Ng. “We ask them for advice and they ask us for advice. The upshot is we would like them to regulate this new online industry, and for them to give us a business license to officially run this.”

Ng will soon find himself contending with more acquisitions. The company announced in late October that it plans to grow aggressively through M&A. Indeed, in the same breath Alibaba announced that it had acquired Koubei, an online classified and information-sharing website similar to US-based Craigslist. And in January Alibaba unveiled its sixth business line, Alisoft, which provides online software designed specifically for small- and medium-sized businesses.

And then there is Sarbanes-Oxley, something Ng knows well from his years with multinationals. As a privately-owned company Alibaba has no legal requirement to comply with Sarbox, but plans to anyway. Ng says the step will help company operations and improve its corporate governance. Of course, it will also help when the company decides to go public – complying with the regulation would make available more financial markets and would show that Alibaba has its financials in order. For now, however, CEO Jack Ma says he is in no hurry to launch an IPO.

Whether or not Ng’s journey with Alibaba leads to that particular treasure is an open question. So far, at least, he is enjoying the ride.