President & Director, Alibaba Group
Özel Röportaj | Alibaba Grup Başkanı Michael Evans
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About J. Evans
J. Michael Evans, President of Alibaba Group, has discussed the company's international strategy and the impact of the COVID-19 pandemic on e-commerce and supply chains. In a 2023 interview with BloombergHT, Evans stated that Alibaba's initial decision to invest in Turkey was based on the country's geographic location, its manufacturing base, and the availability of a management team. He said that the company observed good coordination between the Turkish cabinet and ministries. Evans also commented on competition and regulation, stating that "competition is a good thing" and that regulatory frameworks should aim to give everyone an equal opportunity to participate. He noted that the impact of COVID-19 and the post-COVID period on supply chains has been important, and that disruptions have contributed to high inflation in many parts of the world. In earlier appearances, Evans discussed Alibaba's partnership with Farfetch and Richemont, describing it as a way to bring technology and creative solutions for retail to multiple markets. He said that the deal was about using technology and finding partners to create an experience for merchants and consumers that cannot be created by a single entity. Evans also spoke about the digitization of retail, stating that the concept of "new retail" — the digitization of the full retail value chain — is very important. He noted that Alibaba had passed two trillion US dollars in sales, with 90 percent of those sales happening on a mobile phone, and that the company had about 846 million highly engaged customers. Evans described Alibaba's strategy as connecting businesses in the developed world with consumers in emerging markets, and he expressed confidence that China had returned to pre-COVID levels of consumption and consumer confidence.
Transcript (34 segments)
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Interviewer0:00
In this section of the financial center, we are discussing a very important topic. Alibaba's President Michael Evans is with us. Thank you very much. It's great to have you here today. I'd like to start with your investment in Turkey. Alibaba is one of the most important investors in Turkey's e-commerce scene. What was your initial perspective when investing in Turkey? Because Trendyol became Turkey's first decacorn.
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J. Evans0:26
Actually, our first decision wasn't whether to invest in Trendyol. Our first decision was whether Turkey was the right place to conduct such a large operation. We focused on three things. First, Turkey's geographical location compared to Europe, the Middle East, and North Africa. Second, whether there was a manufacturing hub in Turkey, because as a company, we see production as vital in the supply chain. We saw this in Turkey and couldn't find it in many other places. The third point was whether we could find a management team, a team that could run this business in a technology company. Because we wanted this to be run by Turkish employees and Turkish leaders. We found this in Trendyol and in Turkey, and then we invested in Trendyol.
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Interviewer1:18
After investing in Trendyol, what was your dream? What was your core perspective? How long did you think it would take to realize your plans? Because this company showed exponential growth after your investments.
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J. Evans1:35
When I invested in Turkey, I came here five years ago. When I looked at which company to choose, Trendyol was still quite small. We started with very conservative goals because small companies can grow very quickly or they can disappear overnight. That's why we focused on the management team, on the specific business opportunity, and then encouraged them to grow as fast as possible. Looking at my expectations, they were never this high based on our current growth. This is not just a huge success story for Turkey; we also see the international part as very significant, and we think it has been very successful.
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Interviewer2:23
Of course, 'Think Global, Act Local' has become a very important slogan and motto. Looking at Turkey, can you explain how you managed this? Because globalization is a perspective that everyone has, and management teams have it too. But working with local teams, local partners, local managers, and the team is also a very important point to apply your dreams and plans to that market, isn't it?
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J. Evans2:51
Yes, that's right. But part of our globalization goals is that we try to keep the decision-making mechanism as centralized as possible. And if you do this with global goals, you can make too many mistakes. So the first goal is: do you have a strong enough local team, and can they run and lead this business? Right now, there are no Chinese employees working at Trendyol. This is entirely a Turkish leadership team, and they make very important decisions regarding running the operation. I am on the board of directors, along with my colleagues, and this board is a key point in understanding how things are going when making decisions about capital, technology, and the operation of the business. Globalizing this in many different parts of the world is key.
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Interviewer3:51
So, what is the importance of Trendyol and Turkey within your global corporate strategy? Because in many multinational firms, Turkey creates a very significant impact on their balance sheets in terms of growth. Many firms may not benefit financially, but Turkey plays a very important role in the balance sheets of many multinational companies.
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J. Evans4:19
We don't look at it exactly like that. We look at it this way: how do we position ourselves? How do we position ourselves strategically in a country that allows us to grow our business in this part of the world? When I say this part of the world, I mean the Middle East and Europe. Is this beneficial? Yes. Can we manufacture here? Because that's a huge part of the supply chain. Looking at how important Turkey is, it's close to both Europe and the Middle East. This gives us a strategic advantage and is a strategic key point for us.
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Interviewer5:01
You mentioned your international operations and that having a production base in Turkey is very beneficial. What is your perspective and plan regarding establishing a manufacturing hub within your operations, including Trendyol?
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J. Evans5:22
We do business in many parts of the world. Alibaba has huge businesses in Southeast Asia, South Asia, and as we develop our European business, Turkey is a very natural location for many hubs to form. In our international business, with qualified people, technology, and manufacturing capacity, this is a very logical choice. As you can see, we have very significant plans for the Middle East and Europe. We have taken concrete steps. I believe this will be a step-by-step process, just like we were humbly ambitious 4-5 years ago. Now, we are setting our European goal with humble ambition.
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Interviewer6:12
E-commerce is a very important strategy for managing your business in this geography. Trendyol has created such an opportunity. What is your main plan regarding e-commerce in Trendyol to access strong markets like Germany and Europe?
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J. Evans6:32
I like Trendyol's strategy. They are using the knowledge of the Turkish-origin population in Germany and also using Turkish products. This gives us a very serious competitive advantage, an advantage that other e-commerce players don't have. It also gives us confidence that we can be successful when we enter that market. But how can we establish local transitions in other countries, in Europe? This is an area with very serious competition, and we need to deal with that competition. We need to look at how we can differentiate ourselves to be successful.
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Interviewer7:18
You mentioned competition, which is a very important topic of discussion in the market, in the world, and in Turkey. How do you see the competition in Turkey?
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J. Evans7:26
When we first entered Turkey five years ago, there were a few different players, and most of them were relatively small. So we were going to compete with a small number of firms in a small market. Now, most of the competitors have grown, and some, like Trendyol, have grown faster. But we think competition is good. Many people ask, 'Why would competition be good? Isn't a monopoly better?' No, because we learn from our competitors. When we learn things from our competitors, it improves our own business. I'm talking about both local and international competition. We learn a lot from them, and this helps us a lot in defining our international strategy. And of course, sustainable competition is also very important at this point, because in key markets, we see that the leading companies are running this strategy.
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Interviewer8:25
Turkey has introduced a new e-commerce law to provide a better growth environment. What is your view on this, both regarding competition and the new e-commerce legislation?
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J. Evans8:39
As I said before, competition is a good thing. Regulating e-commerce competition according to e-commerce conditions is a natural and evolutionary process. If you look at the world, at the regulatory environment, not just for e-commerce but for telecommunications, financial services, all market regulations, by definition, none of them are perfect. They start with good intentions and strongly, but they don't work perfectly. The basic principles of regulation must provide equal participation opportunities for everyone so that actors can compete on an equal footing. The regulation improves over time. This is true not just for Turkey but for everywhere in the world. But such a regulatory environment is good if it provides equal competition conditions. If it doesn't provide equal competition opportunities, then problems arise.
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Interviewer9:37
You also met with officials from the Turkish government. After these meetings, after getting their perspectives, what are your comments?
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J. Evans9:48
I had a few observations. First, it was very productive. It was very easy to make visits throughout the day in Ankara, to go places, to meet people, and to meet many people in a very short time. This was very beneficial. It was a very different experience for me because we can't always do this so easily in other countries. Meeting many people very effectively and efficiently in a short time was great. The meetings were also very good. Secondly, we saw a very high level of coordination between the cabinet and ministries. This is a very important issue, not just for us but for other businesses too, because we want to see symmetry, a symmetry of perspective. We want to see symmetry in their views on the future, both for the Turkish economy and globally, and for our industry. My third observation is that there are many important projects that we need to work on, projects we want to work on. So there is a serious unity.
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Interviewer12:01
The discussion point is about these super apps. What is your general view on them? We see countries trying to decide whether this is a good thing or a bad thing. What are your plans in this regard? What is your view on countries that allow or don't allow super apps?
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J. Evans12:31
I think there are mixed views on this. For example, looking at China, it was believed that there should be a single super app to bring traffic together and make everything people need available in one place. But it was decided that super apps are no longer the right solution and that the structure should shift to multiple apps. Why? Because our merchants and consumers have different value proposition expectations. Some people want to take things slower, some want to go faster, some want more entertainment, and the combination of commerce and entertainment. Some just want to shop. Combining all of this into a single super app is very difficult. To penetrate consumers, you need several different apps. In your ecosystem, they should have different apps they can use to access what they want. The issue of super apps or non-super apps is very confusing terminology for people. The real question is: what do consumers want, what do merchants want, and then how do we bring them together with technology and interfaces to give them what they need.
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Interviewer14:04
You mentioned the decision you made specifically for China and expanding your app strategy. Will you do this in Turkey or other markets as well, or is it only for China?
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J. Evans14:19
That's a great question. What we will do in Turkey will depend on our merchants, small businesses, and consumers. If we feel that a single super app can meet their dreams and desires, we will do it. But if we think we need to split the app into different parts to provide a better value proposition to our consumers, then we will do that.
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Interviewer14:45
You mentioned merchants and their importance in your business. I personally believe this provides equal opportunity for everyone. If you live in a rural area in Turkey, it gives you the opportunity to start a product and sell it in Istanbul or anywhere in the world. So this is a very important strategy. To enable their growth and make it possible for them to improve their businesses, what operations or opportunities do you offer to merchants who want to do this everywhere in the world, to companies that want to become bigger?
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J. Evans15:27
Historically, small businesses never had access to these resources and opportunities. They couldn't get out of the local environment. The advantage e-commerce provides to small businesses is the ability to digitize their services and sell their products to a wider market. This wider market can be in Turkey or a wider international market. This becomes possible when you give them these digital tools. When we say digital tools, many people don't even know what we're talking about. We're talking about infrastructure assets, payment infrastructure, and things like that. Making it possible for them to do this digitally instead of physically. Also, it can be about taking their IP out of the domestic market. This way, we also prevent their IP from being stolen or taken over by someone else. Turkey is a very serious example of this. We have over 300,000 merchants on the platform, and we have a team that travels to all cities. Looking at local communities, they talk to people to see what they need and what we can offer them. Because everyone's desire is to grow their business even more. We make it possible for them to do this. This was already Alibaba's legacy, and by combining it with Trendyol, we are enabling more companies to grow in the country and the world.
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Interviewer17:12
The COVID-19 period was a very important turning point for almost everyone, and it was a breaking point for e-commerce. I want to ask you a few questions about the post-COVID-19 period. How did it affect your business and your operations?
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J. Evans17:35
The COVID period actually helped our business in many ways because people bought many things online that they would traditionally buy from physical stores. But the post-COVID period is being experienced with different experiences in different countries. Looking at China, for example, today, I can say we have entered the post-COVID world in the last two weeks. It's finally opening up because China was after COVID. But I think the most important impact was on the supply chain. The impact of COVID and the post-COVID period on the supply chain was very significant, and the supply chain is an issue for every part of the world. We see how effective the disruption in the supply chain has been, especially in a situation of high inflation in many parts of the world. The impact of these disruptions in the supply chain, along with energy prices, will affect the whole world, including China, as we enter the post-COVID period. I think we have learned many lessons. If there are disruptions in supply chains and people can't travel, can't go to work, or can't do anything, it changed our views on what would happen if they had to stay home. It showed us how our strategies need to evolve and deepen during and after the COVID period.
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Interviewer19:05
So, what is your solution to such problems?
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J. Evans19:08
The main principle, the main lesson here is that we must be much more flexible. We must adapt much better to our consumers and the consumers and merchants who trust us. If there wasn't COVID tomorrow, something else would happen. And if we are in an operational environment, not just us but all companies, when they enter such an operational environment, they need to be stable and establish an operational strategy. Strategies cannot be rigid; they need to be flexible. They need to change quickly, and what makes this rapid change possible is technology. Yes, this was a very important lesson the world learned in the post-COVID period. At the same time, looking at e-commerce, looking at trade companies in many parts of the world, globalization has been a huge opportunity for everyone. Many companies have grown and increased their scale thanks to globalization. Maybe it's the COVID period, maybe geopolitical issues, but we are looking at globalization a bit more in reverse. If supply chains are changing, if alliances are changing, what strategy can be applied to position yourself better, to create a more diversified production and supply base?
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Interviewer20:42
First of all, if we are to talk about what is called globalization, I'm still not sure if there is deglobalization. People talk about it, but I'm not even sure if we have experienced full globalization.
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J. Evans20:55
I will be there in a few weeks, and there will be a very important discussion about globalization.
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Interviewer22:04
I have a question. Turkey has had a dream of hosting the Olympic Games for a very long time. As someone with the Olympic spirit, what is your experience and what is your view? As a rower, as an athlete who won a gold medal, what is your perspective?
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J. Evans22:22
You can look at it at a very basic level or a very high level. Winning is always a better experience than not winning, of course. But looking at it from another dimension, the sport I did was entirely about teamwork. No matter what you do, no matter how successful you are, if your team members are not equally successful, you could never be successful. This had a very serious impact on my view of the business world. My view on improving my business and being successful is that everything depends on the team. It's not about technology; it's entirely about the people in the team. And your twin brother was in your rowing team, wasn't he? Yes, but he is more handsome than me. And coming to our last question, regarding Turkey and the Olympics, I'll say this: if Doha can host the World Cup, which I was at the final, it was a great event, why can't Turkey? Why can't Turkey host it?
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Interviewer23:30
Thank you very much. Thank you for being with us today.
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J. Evans23:33
Thank you, sir.