Deep Dive with Jack Ma on Malaysia and the Digital Silk Road

AvantiKumar | March 29, 2017

During the recent launch of Malaysia's DFTZ, Alibaba's Jack Ma spoke at length on Malaysia, global globalisation and the Digital Silk Road.

Photo - Jack Ma, Alibaba Group Holding's Founder and Executive Chairman.

  Although the launch in Malaysia last week of the Digital Free Trade Zone (DFTZ) - the first eHub in the world outside of China - is the culmination of a long held dream for Alibaba Group Holding's founder and executive chairman Jack Ma, the speed of its execution has surprised some industry commentators.

Speaking during the launch in Kuala Lumpur, Ma said, "I am so excited to be here. Only four months ago, [Malaysian] prime minister [Datuk Seri Mohd. Najib Abdul Razak] and I were together in Beijing - and in the space of about ten minutes, we decided to do something in Malaysia, which was to launch the DFTZ."

The DFTZ - a joint undertaking between Chinese eCommerce conglomerate Alibaba Group and the national ICT agency Malaysia Digital Economy Corporation (MDEC) - was launched by the prime minister, with MDEC's chief executive officer Dato' Yasmin Mahmood in attendance.

Ma admitted that at that time, he and his team didn't think it was possible. "We had been discussing that project with many countries in Europe and Asia, and there were many things to do and obstacles to surmount, such as bureaucrats and technology. Amazingly, after four months, this thing happened!"

"I want to share here that it took us only ten minutes to agree on this project - but I had been thinking about this for more than 10 years. And I am pretty sure that the prime minister had also thought about this for a long, long time. Only when the opportunity comes, when the chance come, can we make it happen - and we did it," he said.

Ma also said that Malaysia had caught his eye a few decades ago, and that he was proud to be able to do something with the nation. "Malaysia inspired me in 1996-1997. When I was starting my Internet business in 1995, I remember that around that time, I read news in China about the Multimedia Super Corridor in Malaysia. It made me think: 'Hmm! there is something there in that country! It's a brave idea for the digital world.'"

"By working with governments, business people can do better," said Ma. "This is the perfect project, where a globalisation-focused company like Alibaba works with a country with great vision and great leadership - and we made this thing happen in four months."

Ma said that the launch was a stepping stone towards greater things. "I am a strong believer that if trade starts, war stops. Trade will make people respect other people's culture. Trade is not about product exchange, it is about an idea exchange, and about innovation exchange. I am a strong believer that one day, when the world starts trade, the wars will stop - and when the wars stop, the trade begins."

He added that his presence at the launch today - alongside Alibaba Group director and chief executive officer Daniel Zhang, And Financial Services executive chairman Lucy Peng, the Alibaba senior management, and the 16 largest logistics companies of China - was history in the making for them all. "Today symbolises that government and businesses can work together; it symbolises that a nation can commit to creating a digital economy that is inclusive for everybody. I know that it's not easy. We can launch and negotiate in four months; to make it happen, it takes about four years or 14 years; to improve it, it would take about 40 years - but if we start from today, things could happen."

Why globalisation is important

 Ma added that globalisation is the way to go for the world economy, despite huge resistance to the idea. "Many years ago, I was invited to Davos to join the World Economic Forum for the first time. At that point, China had not joined the World Trade Organisation (WTO) yet. I thought that the world would welcome globalisation - but that day, hundreds of people were against it! People were demonstrating on the streets. People hated globalisation. I had no idea, because we thought that globalisation was good - but people did not like it."

He said that it was this conflict of ideas that made him consider what globalisation needed to be, and how it could be done in a better way. "That was in 2001 - but I think today a lot of people hate cross-border trade. A lot of people say globalisation is no good - but I am a strong believer in globalisation."

Ma thinks that globalisation should be given the chance to prove itself. "I think that globalisation is still a baby; it's only less than 20 years. We should give globalisation at least another 20-30 years. We should make it more inclusive, we should get more people involved in it. In history, those countries that had great emperors and kings controlled trade. If they loved to do cross-border trades, their nations would grow. Their nation's business people would be happy - and the people themselves would then be happy."

He noted that in the past 50 years, world trade was controlled by roughly 16,000 big companies, and that only big companies had this opportunity. "Small businesses were denied these opportunities. Developing countries did not have these opportunities. What if we would make 90% of the small businesses a part of this? What if we could make it so that the developing countries could benefit from globalisation? What if we could give another 30 years for globalisation to be more inclusive? This is what I believe."

Silk Road success due to tin

 Ma said that the first people to embark on globalisation did so via the legendary Silk Road. "At that time, they were using the traditional way to create the Silk Road. Today, in the Internet Age, I think that we should transform the Silk Road into the eRoad. The eRoad connects every country, and gives an inclusive opportunity to everybody."

He said that the DFTZ "would be the perfect vehicle to bring about this new connecting road for world commerce. In ancient times, wherever there is a sea, we have a seaport; wherever there are airplanes, we have airports; for buses, we have a bus stop. On the eRoad, we need an eHub, which will empower everybody. If you have dreams, if you work real hard, if you have a dream of being outside your area of specialty, this eHub is for you."

Ma said that the reason the Silk Road became a success was due to Malaysia's major export of the time: tin. "China is famous for the Silk Road - but without Malaysia, the Silk Road would not have been that successful. The Silk Road at that time forced businesses to make products to sell tea leaves, which was so expensive at that time, and very difficult to preserve. Malaysia provided the solution: tin. The mining of tin in Malaysia allowed tea to be stored safely, and allowed the tea to be sold on the Silk Road - which was what made the Silk Road so powerful."

He believed that without Malaysia's tin mines, the Silk Road tea trade would not have been so successful. "Of course, without the tea trade and without the Silk Road, Malaysia would never have reaped the success of being the number one tin producing country in the 18th Century. This was the most amazing result of trade and business - and both our countries gained by it."

 Changing the perspective

 Ma said that a different point of view can result in "huge and positive consequences. In the US, eCommerce is seen as the dessert; in China, it is the main course. I feel sorry for the WTO negotiators. I think when you put 200 government officers in a wide room to agree on something, it is very difficult. If you put 200 business people in a wide room, we would negotiate on something."

He said that it was a point of view that had changed over the past 10 years, because nobody back then would believe that eCommerce could happen in China. "People keep on asking me: 'Why did Alibaba grow that big in eCommerce, bigger than the United States?' It's not because we are smart - I'm not smart, and we did not have that many smart people 15 years ago. This is because the business infrastructure in China at that time was really bad - while in the USA, the commercial infrastructure was so good. So it was very difficult for eCommerce to survive."

Ma believes that the situation is the same here in Malaysia. "I heard that 97 percent of the businesses in Malaysia are small and medium enterprises (SMEs) - but they control only less than 40 percent of the GDP. I think that 90 percent of small businesses can produce at least 80 percent of GDP - because if we have more small businesses, it means that we can have more jobs; we can have a middle class; and the country's economy can be stabilised, can be sustainable. The DFTZ is trying to make businesses more inclusive, more sustainable, and trying to make the business world more happy and healthy."

He said that the business of logistics will be a deciding factor in helping an eBusiness to grow fast. "15 years ago, China only created less than one billion packages per year; today, China created more than 30 billion packages per year. Today, the 16 companies that have come here handle 70% of the logistic packages delivered in China - and none of these companies even existed 10 years ago! This is the magic of technology, of entrepreneurship."

Ma said that targets and goals are achievable with the right attitude and determination. "If we really want to do it, we can make it happen - and we want to make logistics to be the centre of this hub. We will make sure that the average in the next 20 years will be 72 hours anywhere in the world. If you want to place an order online, within 72 hours - or three days - you will receive it. This will be the heart of this area's specialty."

 30-30-30 focus

 Ma joked that his image has improved over the years. "I want to say that the first time I heard about Alibaba having the wrong definition was in Malaysia! They think that Alibaba is a thief! We will prove it wrong! I was considered one - people called me a thief and a liar 18 years ago when I told them about what the Internet is in future, what eCommerce would do for the world. Nobody believed it - and we proved them wrong over the past 18 years. Let's work together to change the definition of Alibaba for Malaysia."

"I flew for more than 800 hours in the air," he said. "I travelled around the world, and I learned a lot of things. But I understand one thing: what globalisation means. It's not cheaper labour, or low cost raw materials. Globalisation means creating jobs; creating values for the local people. Globalisation means making technology, financing, everything inclusive - and globalisation means respecting other cultures."

He referenced the 30-30-30 focus that he had been advocating. "This is what we want to do in the next 30 years, using the technology, making young people below 30 years old having small businesses of less than 30 people - the next 30 years is the great period for civilisation. If we are going to do good, let's do it in a good way."

Ma said that the blending of the Silk Road with the One Road was something that everyone should think about. "We should use the technology, we should leverage on the young people. Let's mobilise the small businesses, It's about inclusivity, friendship, and peace - and I think this country, this location has been so friendly to business, not only today but even as far back as history, and it is going to continue to be so in future. Because of the digital, this country and this area could be more powerful. This is what I believe."

In ending his address, Ma posed a question that everyone kept asking him. "In the future, which side will win - the Western side, or the Eastern side? I am a believer in this: it's not a Western win nor an Eastern wing; if we are working together, we both win. And there is nothing that we cannot do when we are working together, making sure that the world is for young people, making sure the world is for small businesses, and making sure that everything that we are going to do is inclusive."

The latest edition of this article, which is supplemented with transcribed extracts from Jack Ma's speech, is at Computerworld Malaysia.

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