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The Taoist philosophy behind Alibaba, China’s e-commerce giant

Alibaba has played a key role in China’s meteoric economic rise.
Credit: Annelisa Leinbach; Alexey Novikov, Desire / Adobe Stock
Key Takeaways
  • Alibaba is the world’s largest online retailer, by some measures.
  • In The Tao of Alibaba, Brian A. Wong explores the philosophy behind the retail giant and its effects on China’s decades-long economic transformation.
  • Alibaba is in a constant state of becoming, adapting, and changing, but it has stayed faithful to a steady set of principles, according to Wong.
This article has been excerpted from The Tao of Alibaba: Inside the Chinese Digital Giant That Is Changing the World by Brian A. Wong. Copyright © 2022. Available from PublicAffairs, an imprint of Perseus Books, LLC, a subsidiary of Hachette Book Group, Inc.

I have long admired how the visionary thinker R. Buckminster Fuller articulated a philosophical, almost spiritual faith in the power of technology to transform the human condition, to elevate human dignity and empowerment. He criticized some technologies — fossil fuels, for instance, and atomic energy — but few have believed more wholeheartedly, with an almost childlike exuberance, in the transcendent power of well-engineered, innovative tools to liberate people from the clutches of poverty, disease, and exploitation.

“We’re going to start emancipating humanity from being muscle and reflex machines,” Fuller wrote in his slender book Operating Manual for Spaceship Earth. “We’re going to give everybody a chance to develop their most powerful mental and intuitive faculties.” And that mission, in his view, was urgent. “We have discovered that we have the inherent capability and inferentially the responsibility of making humanity comprehensively and sustainably successful.”

Jack Ma and his transformative technological “tool,” the Alibaba digital ecosystem, falls into that ambitious, visionary project. He had the good fortune, though, to have launched his business at the dawn of the digital age, and so Jack was not only able to embrace a philosophical dedication to individual empowerment and societal transformation but also to create platforms that have contributed to that kind of uplift on a historic scale. The Alibaba digital ecosystem benefited from and helped accelerate one of the greatest successes of economic advancement in history: China’s meteoric rise over the past four decades from a deeply impoverished, struggling agricultural nation into what is now both an industrial and postindustrial powerhouse that is generating unprecedented wealth for its citizens.

When I first visited my Chinese ancestral village in 1985 with my father, as a middle school student from California, I had jetted from an affluent, modern society to a village in Taishan where commerce was powered by three-wheeled rickshaws and motorbikes, sputtering along under bulging gunny sacks and clucking chickens in wicker cages. I felt an emotional bond with the land of my ancestors but was startled by its humble state.

Fast-forward more than thirty years to the Taobao Villages Alibaba supported in once-impoverished rural backwaters and to the digital ecosystems that have now put China far ahead in its e-commerce growth. The rate of extreme poverty in China — once seen as an intractable reality — has plummeted. According to World Bank data, the extreme poverty rate in China — people living on the equivalent of $1.90 or less per day — declined from 88 percent of the population in 1981 to 36 percent in 1999 and 0.7 percent in 2015. Today, according to some studies, China has completely eliminated such extreme deprivation.

While the poverty eradication campaign has been a society-wide effort over many decades, it has been more recently fueled, in part, by finger taps on keyboards and smartphones, running on magical flows of electrons that would have seemed inconceivable in the subsistence economy of a couple generations ago. With mobile payment users in China reaching 872 million in the first half of 2021, mobile payments now constitute 50 percent of all payments, while cash now makes up only 13 percent, according to the China Internet Network Information Center. Meanwhile, eMarketer, a research firm, estimates that China proximity mobile payment users constitute close to 87 percent of the country’s mobile phone users compared to 45 percent in the United States and 24 percent in the UK. In a 2019 article, CGAP (Consultative Group to Assist the Poor) noted that “digital payments are becoming so dominant that the People’s Bank of China has had to forbid what it sees as discrimination against cash by merchants who accept only digital payments. This is all the more remarkable because just two decades ago, China was basically a cash economy.”

Today, China is moving from a fast-growth economy to one focused on quality growth with an emphasis on the development of high value-added areas such as chips, smartphones, solar panels, and electric vehicle production, changing the contours of the global trading system in an increasingly complex world. Yet without a doubt, daily life and consumption habits have been revolutionized by the advent of ecommerce and digital payments.

Perhaps the most significant dimension of the transformation is in how much of the wealth being created has gone to Chinese workers, small business owners, farmers, and women. That was a core element in Jack Ma’s mission, more inclusive prosperity. Alibaba represents a case study of how one company has managed to create a positive social impact that most would have said was impossible. How could a company in a country with so little to begin with build a digital ecosystem of such abundance? That is a powerful question I address in my book, The Tao of Alibaba.

But the benefits have not gone just to the Chinese. Alibaba teams all over the world have worked to help make that transformative platform of 1s and 0s one of China’s more valuable exports, whether through education or our local business platforms in emerging markets in Southeast Asia, South Asia, the Middle East, Africa, and elsewhere. The Alibaba Global Initiative (AGI) program has trained hundreds of entrepreneurs in how to create and deploy digital ecosystems, replicating the success we achieved in China. Even better, our work at AGI merely planted the seeds of innovation. The entrepreneurs themselves not only replicated the success of the digital economy but also enlarged on what we taught them. The students have been educating their teachers.

But the local entrepreneurs there are also employing digital sorcery to generate more inclusive growth in countries where the old economic models had failed to generate as much of a lift. Replicability of this digital model has become evident in the rise of a plethora of new regional platforms from India to Indonesia. Players such as Tokopedia and Shopee have filled the need for a retail commerce platform not unlike Taobao in China, innovative payment platforms like Paytm, GrabPay, and DANA digital wallet have filled a similar role as Alipay, while Gojek, EasyParcel, and Shipper have created their own logistics network suited for local market characteristics. These and many of the AGI entrepreneurs highlighted in my book are just a few examples reflecting what Fuller meant when he talked about using technology for “emancipating humanity” and are the fulfillment of a major element in Jack Ma’s founding vision for Alibaba.

The Yin and Yang of Digital Opportunity

The Tao of Alibaba is a phrase for numerous characteristics of the Alibaba model: how it integrates a host of elements to align with a company’s mission and vision, how it aims to follow the Taoist principle of operating in harmony with the environment’s natural course or the way, and how Alibaba’s principles are often a marriage of opposites, a sort of strategic dialectic that drives constant change, constant reinvention, a unity of contradictions, yin and yang in opposition and partnership.

What are those opposites? Alibaba is a very large organization that values the small, individual entrepreneur. Its spin-out, Ant Group, one of the largest fintech companies, derived its name from the idea that, individually, a single ant can do little, but an ant colony, a collective, is capable of building or moving mountains. Alibaba is in a constant state of becoming, adapting, and changing, but it has stayed faithful to a steady set of principles.

And Alibaba is a for-profit enterprise that naturally seeks to boost returns, but it does so in the service of what it perceives to be the common good, broadly shared societal improvement — in other words, as Jack often says, creating an organization guided by a charitable heart but driven by business mechanisms.

The Taoist philosophy emphasizes interconnections, and Jack was an architect of one of the great feats of interconnectedness by putting so many people and small businesses on the web for the first time. Discerning the way means resisting separateness and division and appreciating the natural connections of the world. As Puett and Gross-Loh wrote, “The more we see the world as differentiated, the more removed we become from the Way. The more we see the world as interconnected, the closer we come to the Way.”

Tens of millions of businesses, many previously too small to participate in global trade, and over a billion consumers, lots of them previously unbanked and disconnected from the mainstream economy, have now been linked thanks to Alibaba and other digital platforms. Alibaba thrived on these links and further strengthened itself by teaching this model to entrepreneurs in numerous emerging markets.

This ecosystem model rejects the zero-sum philosophy that used to be prevalent in the business world. The new model has proven, over and over, that collaboration, sharing, transparency, mentoring, and mutual support are more successful approaches for accelerating development and inclusive wealth creation in the digital economy. This, too, is very much in line with one of Bucky Fuller’s farsighted appeals.

“So, planners, architects, and engineers, take the initiative,” Fuller wrote. “Go to work, and above all co-operate and don’t hold back on one another or try to gain at the expense of another. Any success in such lopsidedness will be increasingly short-lived. These are the synergetic rules that evolution is employing and trying to make clear to us. They are not man-made laws. They are infinitely accommodative laws of the intellectual integrity governing the universe.”

The Uncarved Block

Taoism, of course, cannot be reduced to just these few principles. It is a complex system, a thought process, a sometimes enigmatic assemblage of ideas that have survived for centuries because they have offered a guide of sorts for living life with meaning. Laozi, regarded as the great philosopher of Taoism, whether he was a real historical character or not, often resorted to riddles to express the dialectic behind the principles.

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“If all people of the world know that beauty is beauty, then there is ugliness,” he wrote. “If all people of the world know that good is good, then there is already evil.”

One of his more compelling expressions was an idea written in Chinese as pu (朴), which can be defined as “natural, simple” or “honest.” As a Taoist concept, it is sometimes translated as “the uncarved block.” In other words, it suggests, among other things, something with innate potential. The potential is in the nature of the block. We can regard this as the possibility, promise, and opportunity in our lives.

At Alibaba, we sometimes described this critical trait as a simple and innocent quality, which essentially meant being positive, open to change and fresh approaches. What I learned after almost twenty years at Alibaba is that this sense of youthful confidence is part of our Tao. It suggests the optimism behind our platforms. We often spoke inside the company of how much we cherished this innocent and naïve culture as a source of our confidence that anything is possible.

Most of the entrepreneurs attending the AGI training programs arrived expecting just to hear about Alibaba’s latest business models and the technological applications of commerce, payment, logistics, and big data. But they were surprised instead to learn in the process how the Tao of Alibaba placed more emphasis on ethos — the interactions among the softer, more subtle aspects of a company’s purpose, objectives, strategy, organization, and people and how they must all interact and strike a balance.

The reality of understanding the tao is that, much like Jack’s own life journey, it requires trial and error, real experience, and then conscious iteration before you can master the process. At the same time it requires persistence and resilience to endure such a journey. That persistence is highly reliant on whether the entrepreneur and his or her team have a strong sense of mission and vision. Numerous entrepreneurs told me that this simple realization helped liberate their thinking and unleash a whole new mindset filled with inspiration. And this was even after some of them had been operating their companies for years.

There will inevitably be challenging times along the journey, times when you feel overwhelmed by factors out of your control. It is, therefore, critical that we all take the time as founders or leaders of our organizations to periodically ask the important question of why our company exists and whether we have aligned all of the critical components of the tao to fit that purpose. Once that question is answered, you and your team will be well anchored, you will be more able to resolve the seeming contradictions before you, you will be able to shape the uncarved block, and, ultimately, you will enable your enterprise to grow and to evolve in a more cohesive and coordinated way.

In hindsight, what our success in teaching the digital model through the AGI program demonstrated, repeatedly, is not just that it is replicable but that it is actually evolving beyond much of what Alibaba created. The model promises newer and more interesting iterations each time a digital entrepreneur seeks to solve a problem and invents a creative new approach in line with the conditions in that country.


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