Alibaba’s 100% growth rate to world dominance

The Leadership Network sat down with Xuan Jin, Lead Solutions Architect at Alibaba Cloud, to discuss Alibaba’s ambitions to conquer Europe, Alibaba Cloud’s future as the engine of the Alibaba Group and the difficulties of adapting to the challenges associated with being a Chinese company entering European market.

Xuan Jin, Lead Solutions Architect at Alibaba Cloud

Tell us about your background and how did you end up working for Alibaba.

I started off doing software engineering, working as a software developer at Oracle. I worked there for several years delivering Java software then moved on to other companies including Cisco as a site reliability engineer and progressed to a tech lead level. At that time, I was looking after server and performance issues, troubleshooting escalating and providing fixes in Cloud environments. The opportunity at Alibaba Cloud matched my background perfectly, both in terms of technical skills and Chinese heritage, although I’ve never worked in a Chinese company before. I met European general manager and he persuaded me to join. I believe my technical skills as well as local experience will be really important in facilitating Alibaba Cloud’s business expansion and helping it succeed in Europe. 

What’s been on your agenda for the past few years?

We have three offices in Europe: London, Paris and Frankfurt, among which, London is the head office. I’ve been busy building and leading the technical team here. Recruiting local talent and enabling them has been a big priority. The local employees need to be empowered by Alibaba Cloud’s technologies as well as embrace the culture difference and at the same time be mindful of the local practices. That is a lot to handle. We’ve also been actively recruiting more business and technical partners around Europe to help us expand. As a new business, with limited resources, the only way to grow is to embrace the local business partners, local technology partners and to win together.

What are you looking for when recruiting your team?

Top priority for Alibaba Cloud is a cultural fit. Alibaba is a very unique company. When I joint Alibaba, I felt a cultural shock even though I am Chinese. I had to adapt very quickly. On one side, the company is so dynamic and fast-paced, just like the challenging Internet world we live in. On the other side, we must always think about how to enable others: colleagues, partners and most importantly, customers. Altruism is so important here. We are not here just to sell a product but to provide value - not just for our customers, but for colleagues as well. What Jack Ma, Alibaba’s Chairman, said is “Joining Alibaba I cannot promise you to be rich, but we can make sure that after three years you will see a better self.” Joining Alibaba really is an opportunity to change and improve yourself. A lot of companies, such as Cisco, do this via employee training, but at Alibaba we do it in a different way by broadening your insight and responsibilities. It provides a platform to jump out of the daily routine and really think and dream big. When discussing the position at Alibaba Cloud, all I recall hearing is “Here is Europe. Go conquer.” You can see how that’s motivated me.

What is the definition of value provided to the customer for Alibaba?

To give an example, we utilise our local experiences in China where we have developed technologies such as Cloud Computing, Bigdata and Artificial Intelligence (AI) and look at how we can  improve efficiency. We have, just recently, done the case with traditional business service company where they are using manpower to make job scheduling. That costs them quite a lot in terms of time and efficiency. We used AI to greatly improve the efficiency and accuracy, but still sticking to their business rules.

How does what you do here at Alibaba Cloud relate to Alibaba’s bigger vision?

Alibaba Group

Alibaba’s group mission is to make it easy to do business anywhere. Under that mission, Jack Ma envisioned the ‘Five New’s.’ That is: new retail, new energy, new finance, new technology and new manufacturing. We are very much aligned with this mission from Alibaba’s Cloud’s perspective, as we are laying down the foundations of all these News, being driven by Alibaba Cloud technology. Cloud is the engine to enable digital transformation.

Is there any particular reason why Alibaba decided to pursue the Cloud business?

The main driver was actually internal. Alibaba Cloud was started back in 2009. It was a very early stage of cloud computing. Apart from Amazon, nobody else was doing public Cloud computing at that time. During the first 10 years that Alibaba started, it has grown so rapidly, expanding its business into different domains. The group has come to the stage where it needs robust, scalable and cost-effective computing to support the continuous growth of the group. We are already seeing that the commercial softwares and hardwares can no longer scale to the needs of the Alibaba Group. Back then it was forecasted that if Alibaba doesn’t find a new way of computing, the Group’s business would stagger in 18 months.  First we made cloud computing successful to support the group’s business. Then  we introduced the products and services to the public so that they can enjoy the same technology that empowered the incredible 11.11 Shopping Festival.

Tell us about Alibaba’s Cloud business

Alibaba market share

Scale-wise, we are the biggest Cloud provider in China. We currently have more than 47% market share in China.  But we haven’t expanded overseas until late 2015. That’s probably why we’re not as known as Amazon Web Services in the European market because we have been focused on developing the Chinese market. Outside China, we also have a strong presence in APAC, that is aligned with the Group’s development strategy. In Europe, we are the newcomer. We currently have two regions – one in London and one in Frankfurt. We also have a region in Middle-East, in Dubai. We offer infrastructure as a service, platform as a service and software as a service, all fully automated via API and SDK. Globally, we are in the top four of Cloud providers. In addition, we also offer private cloud, which is called Apsara Stack.

How do you consider Alibaba Cloud different to Amazon Web Services?

In many ways, we are similar to AWS. I believe the reason is that both Cloud businesses have the same roots in e-commerce and  are very early adopters of Cloud technology. If you compare AWS’ product portfolio to Alibaba Cloud, you will not be surprised to find many similarities. In terms of differences, Alibaba Cloud definitely survived the world’s most severe stress test – the 11.11 Shopping Festival. This year we achieved over $30b GMV through Alibaba’s platform, in a single day. We have seen a peak of 400K transactions per second. Supporting such a big event provides Alibaba Cloud with a unique scenario to help make the products more solid and robust. The landscape of Chinese economy and the power with which it drives digital transformation is what gives Alibaba Cloud the edge over the competitors.

One other difference is mobile transactions, which account for 90% in the case of 11.11 shopping festival. Asking the question of how do you provide more accurate predictions in those scenarios has allowed us to derive a lot of business cases, which now benefit our offerings in Europe. With such small device and limited screen estate, pushing through more sales is a challenge. As it’s not easy to navigate on your mobile screen, Alibaba need to be really clever to understand customer needs and make precise real-time recommendations and search optimisations for the user to guide them through their entire shopping experience.  Data-driven and user-centric, one important feature we derived from the Chinese market is called ‘1000 people 1000 faces’, which means every time you open an app, it is customised to your needs. My Tmall app is very different to my wife’s, as my shopping experiences and hers are very different. When applied to technology, we have learnt that we need to have a single view of customer preferences across different business units. The data and business metrics need to be unified, and the recommendations have to be real-time as well. That logic has inspired a lot of technology improvements.

Alibaba Cloud has seen great annual growth rate of 104%, but still has long way to go with gaining worldwide market share. What’s the strategy for global expansion?

You came at the right time. Today, we have announced Alibaba Cloud’s upgrade to a new business unit called ‘Alibaba Cloud Intelligence’ business unit. CEO’s open letter said “We are opening up Alibaba’s platform to the world. All Alibaba’s technologies will be opened to the general public: machine intelligence, data technologies and database technologies”. That gives a very clear signal that the strategy is one of democratisation of Alibaba’s technology to benefit the general public all over the world.

Can you talk us through Alibaba’s European cloud strategy?

From European strategy point of view, we have proposed our initiative called vertical business cloud. The mission for us is to see how we can utilise our accumulated business insight to aid the digital transformation in Europe. A lot of practices in China over the last 10 years have been quite valuable, because of the scale and the advancement of the digital economy. We have accumulated a lot of focused industry knowledge across manufacturing, retail and finance to name a few. We want to bring this knowledge into the local market and be vertically focused and provide industry solutions to help them improve efficiency and deliver business value.

What’s your biggest challenge?

Our biggest challenge is market acceptance and the perception of the Alibaba Cloud brand. We are still new, we’ve just entered the international market more than two years ago. Some of our competitors have been established for over ten years.  They have been the default choice of cloud services in Europe for many years. There is also the perception of the Chinese vendor and associated questions of security and compliance – all understandable. We are working very hard to convince the market that we are a localised company. We are here, we are committed and compliant to the highest standard.

Product wise, within my own role, I am also seeing some gaps in migrating some of the best practices and technologies from China to the local market. As we still rely a lot on the team in China for expertise, time difference can be somehow difficult. But it’s just a matter of time to establish our capabilities locally and make the processes more seamless.

How do you inspire a digital mindset in the company?

Alibaba itself was born on the Internet, so the digital mindset was embedded by default: it’s a gene in the Alibaba group. When Alibaba was born, all Jack Ma was thinking about is how to use Internet to help the Chinese vendors do business with the rest of the world, that is the foundation of Alibaba. It has since been the same, to provide a digital way for business expansion, in terms of e-commerce, logistics, finance and the cloud. We now call Alibaba a digital technology company. We use our expertise and data technologies to help companies find a way to scale, to find new business opportunities and to derive value from data accumulated in daily transactions.

For companies that are on their way to digital transformation, the first thing is to understand the importance of data. Data is no longer a cost, but an asset. Data is a new fuel to the digital world. Once importance of data is accepted, we need to identify how we can use Cloud technology and data technology to derive the value out of it.

What’s in the pipeline for Alibaba Cloud?

This is an ever-changing business world. Definitely AI and Big Data are still going to be the buzzwords and focus points for the Cloud, and we are also looking very closely at IoT, where the enormous devices will be connected to the cloud and data will be accumulated, as well as blockchain and how it can transform current business models.

What is it like to work for one of the most powerful businesses globally today?

I would describe it in three words: dynamic, challenging and autonomous.

Dynamic refers to our daily work. ‘Embrace change’ is a phrase you’ll hear most often at Alibaba. There are new things coming out every day and that requires internal changes as well, so the ability to embrace change really is crucial. It’s also very challenging. We’re facing challenges from many different stakeholders: our customers, partners, internally peers and leaders etc. There are a lot of competing priorities to manage on a daily basis. Truly you are given a lot of responsibility, but in the mean time you’re given the flexibility and space for imagination. Everyone is welcome to make an impact. In terms of prioritising all of it, customer always comes first. From my point of view, my role currently requires me to enable others: how I can replicate my knowledge and empower the team are my priorities. I’m happy to step in myself when needed, but my goal is for the team to succeed.

How did you have to adapt operations in Europe compared to China?

Language adaptation was a given. When it comes to business engagement, there were a lot of changes that needed to be considered, such as the common approach to the customer. In a traditional company, there is a lot of thinking, and less doing. At Alibaba Cloud, by nature of the business environment in China, things happen much faster. Therefore we needed to adapt to bring both sides to the same speed. We have also recruited a lot of local partners and enabling them and inspiring the same mindset in them has also been challenging.

On an individual level, the recognition of the value of the group has been a significant aspect for people to realise. When you’re looking for a local talent, cultural fit is more important at this moment. We’re still a start-up company in Europe and we want to bring in a team that has a recognition of the group’s value – embracing change, customer first mentality.  

How do you establish a cloud ecosystem across technologies, processes and serves suppliers that client needs globally with a high degree of automation?

We develop the tool sets to support the development and usage of cloud infrastructure, so it’s all automated and people are able to self-service in the cloud platform. Therefore, the need for suppliers is not that relevant here. It’s up to Alibaba Cloud to provide appropriate tool set and training through our training centres and our solution architects to enable the local customers to get on the cloud to do their business.

Alibaba Cloud has been said to be the main business for Alibaba in the future. How do you see that happening?

I think it is already happening. We have been upgraded just today to Alibaba Cloud Intelligence to put more responsibilities on us to provide technology capabilities into the group. We are also providing the group’s intelligence and technologies to the rest of the world. It will be, I believe, the main business for Alibaba in the future because Alibaba Cloud lies at the foundation of the group’s mission. We have to be globalised so that Alibaba can be globalised. To me, it’s very exciting. We are seeing the business grow every day at a very high speed. To a traditional company, 10% growth is good. We’re doing over 100% growth.

What do you consider to be key to driving data-driven customer engagement?

That is down to the vertical business experiences that we provide. If you want to transform a business and provide digital service to traditional companies, first thing you need to do is understand their business.  At Alibaba, we are very industry-specific and always try to understand how we can address customer challenges from their business point of view. In Europe we need to understand the local market and bring that expertise to help customer business grow. There are a lot of common features and scenarios involved, but every industry and company are different, so localisation really is key and that’s why we’re here. 

How do you actively engage groups of consumers around new digitally enabled business models?

AntFinancial

We jump out of the Cloud business quite frequently on a daily basis when it comes to communication about the customer. The Alibaba group is big and we have other business units within the offices here in London – Tmall Global, who’s bringing brands from overseas to China, as well AntFinance, who’s looking after Alipay. We work very closely with them to see, apart from Cloud, what else we can provide for the customer as a group? We utilise all the resources from within the Alibaba Group to help us serve local businesses better.

What process or methodology do you use to drive actionable insight solutions based on data analytics?

We always want to see where does the business value lie for the customer and how can we help. We don’t want to deliver a solution for the sake of the technologies.

For example, managing data easily is of value, but it may not be enough for a business. We have our data governance methodology we call one Data, one ID, one Service. This methodology came from the group practice. During the 11. 11 shopping festival, it is estimated that around 30% of sales were driven by real-time recommendations. That requires a good understanding of user’s profile and the only way to do that is to utilise data from all business units in the Alibaba group, instead of all siloed data. When we know a customer much better, it leads to a more accurate recommendation.

On one hand, China has evolved quite a lot in the digital world. People are used to living in the mobile world, doing their shopping online and entertaining online. It is yet to come in Europe, but I can see the same is happening here too.  On the other hand, Europe is very experienced in a lot of fields such as manufacturing and retailing. Alibaba group could be the bridge between China and the rest of the world. We could be bringing this industry expertise from Europe and the rest of the world to China. China has announced a big import strategy, and Alibaba Group has announced a mission to help import $200b worth of goods and services in the next five years. Alibaba Cloud is the perfect gateway to go east for the digital world’s.

Who do you look up to for new ideas?

Personally, I look up to technology leader within Alibaba, such as Dr Wanli Min, who is leading machine intelligence and who is also the creator of ET brains. Talking to him always inspires me. As far as leadership inspiration, I have to say Satya Nandella, CEO of Microsoft. He is such an amazing person who managed to transform a giant company into the Cloud strategy so quickly with so much concentration. Everything has changed since his appointment, bringing Microsoft back to life. He is a big inspiration to me.

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