October 21, 2015, by Tony Hong
Alibaba & Chinese Business Culture
By Donald Bain,
Student of UNNC Summer School 2015.
Despite China’s political and economic power, their business practices remain poor because the intrinsic complexities of Chinese culture. Therefore the ultimate question is to what extent does China’s national culture have an impact on firms. By observing a successful company like Alibaba, a multi-national e-commerce company founded in China, it might imply that although China has strict political regimes, it might have a rich source of strategic ideas for other businesses to learn from. It has been argued that China and more specifically Alibaba’s recent economic success is partially accredited to the adoption of Western style organizational and management practices and further observation of organisational culture by using cultural analytical tools created by leading anthropologists such as Hofstede, can uncover the basis of what the contributing factors have been to the enormous success. Such factors such as the level of collectivism and more applicably having a long-term orientated culture remain prominent factors.
However, while a long-term perspective and patience remain prominent characteristics in Chinese culture, when contradictory behaviors such as cash transactions to expedite business deals still dominate in companies like Alibaba, another analytical viewpoint must be taken. The long-held, Chinese “middle way” philosophy is the easiest explanation of this phenomenon. Much like in operatic choral music where, opposing voices work in harmony with each other, this particular paradox has two defining features holism and embracing paradox. When concerned with business practices in China, this particular paradox’s significance has been noted: “The excellent companies have learned how to manage paradox”. Moreover the eastern view towards the concept of time, is that time is cyclical and events are elastic and coexist. Alibaba is an example of one of the “excellent companies” which has shown the understanding and application of the middle way mindset. Jack Ma, Alibaba CEO, summarized the company’s “fast-slow” orientation with the use of an analogy: “One must run as fast as a rabbit, but be as patient as a turtle”.
It is Chinese tradition in both the family and business environment to give out red envelopes usually containing money to welcome the new year. However, despite Alibaba’s enormous success, Jack Ma, Alibabas founder and CEO decided not to dish-out the red envelopes to his employees because sales targets were not met. The question therefor is, what does this say about the culture within Alibaba. To the western person this might seem unfair, however China’s particularistic culture places an emphasis on relationships and circumstances of a situation, and because Alibaba’s employees did not reach a certain target, it remained Ma’s responsibility to highlight what is expected from them.
Alibaba has been known to fit the unconventional ‘family-model’ in business where relationships are more personalized, for example bosses are always referred to by their first names or even nicknames and managers seem to have a balance of autocratic but patriarchal behavior. To many people this flat management structure, which supports relationship based management would resemble that of a hub with spokes around a powerful founder. In this particular case the founder being Jack Ma.
The influence that China has on its management practices may be seen as a transgression of the country’s millennia-old cultural roots. On the other hand it can be seen as an acknowledgement that culture is as a dynamic process. I can now begin to see the considerable influence that the country’s national culture has on Alibaba’s business and management practices. Whether or not Alibaba’s cultural approach supports there ability to operate effectively in an international context during China’s rise is the next big question needing answered.