Since its founding in 1999, the Alibaba Group has achieved extraordinary success providing a variety of online services in China, including e-commerce, cloud computing, and online payments. But expanding globally is more complex than simply duplicating its services in other markets, executive vice chairman Joe Tsai YC ’86, LAW ’90 said in a talk at Yale SOM on September 30.
Tsai spoke with Dean Edward A. Snyder as part of the Becton Fellowship Program.
“Alibaba today is still very much a China-based business,” Tsai said. “Most of our operations are based in China. So when we expand globally, what it means is that we have to build our business from the ground up, serving customers that are not familiar to us from our home market.”
In order to successfully expand into new markets, he said, the company needs expertise in the new customer base, and that means hiring locally. “When we expand into Southeast Asia, we need to make sure we have people who are familiar with those markets,” he said. “When we come to the U.S., we have to hire Americans.”
But hiring locally comes with additional challenges for a Chinese company, he said. An American multinational, he pointed out, can hire in countries around the world, confident that it can find strong candidates who share a language with colleagues elsewhere: English.
“The corporate language for Alibaba today is still Chinese,” he said. “And most of our executives communicate in Chinese. But when we hire people in Italy, in the U.K., in the United States, by definition we are hiring people that can’t communicate with headquarters, because very few people around the globe today speak Chinese. And you don’t want to limit your talent pool by only looking at people who speak Chinese.
Something as ordinary as a performance review is complicated by language and cultural barriers, he noted. Gently telling an employee about the need for improvement while conveying support and appreciation, all in an unfamiliar language, is challenging. “That alone creates a lot of friction and misunderstanding,” he said.
One solution is Alibaba Global Leadership Academy, which brings new hires to the company’s headquarters in Hangzhou, China.
“We hire people from around the world, have them spend 18 months at headquarters, and then have them work in our offices around the world,” Tsai said. “Through programs like that, we hope to bring in an element of internationalization through osmosis.”
About the Event
Joe Tsai YC ’86, LAW ’90, executive vice chairman of Alibaba Group, will be on campus for a Becton Fellowship Program event. Tsai will engage in conversation with Edward A. Snyder, Indra K. Nooyi Dean and & William S. Beinecke Professor of Economics and Management, on a variety of topics including managing a high-tech company, geographic market division, and the antiglobalization narrative. This is a Global Network for Advanced Management event and is open to the Yale community. The Becton Fellowship Program brings distinguished practitioners from public and private institutions to Yale to elevate discussions within Yale SOM and to strengthen the School’s relationships across all sectors and regions of the world.