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Analysis

Era of Easy Business Over: Jack Ma

Alibaba Group (阿里巴巴集团) co-founder and chairman Jack Ma believes that only companies embracing 'New Manufacturing' will survive in the digital era.

Oct 5, 2018 by A. Alfaro
Era of Easy Business Over: Jack Ma

Alibaba Group (阿里巴巴集团) co-founder and chairman Jack Ma believes that only companies embracing 'New Manufacturing' will survive in the digital era.

Speaking at the Computing Conference organised by the tech giant in Hangzhou this week, Ma added that New Manufacturing would not only drive the group’s business, it would also shape the future of China’s economy.

Like New Retail, the term New Manufacturing was also coined by Ma. The concept involves embracing cloud computing, Internet of Things (IoT), data, artificial intelligence etc to the manufacturing process. The traditional reliance on industrial machines alone would eliminate manufacturing companies from the business, Ma predicted.

However, unlike his prophecy that traditional e-commerce would disappear, Ma’s forecast about manufacturing is that the industry will not disappear.

“It will disappear only if manufacturing technology does not keep up …you cannot succeed if you don’t use these new technologies.”

Earlier this year, the veteran entrepreneur also declared that all easy business ideas have already been exhausted.

“It will not be enough for companies to rely on their innovation capability and financial strength to fuel a rapid growth and profits. In the internet era, New Retail marks a new beginning and a new opportunity to control the to-client market.”

Alibaba’s foray into New Retail via TMall, Hema Supermarkets and Intime Retail has already begun to taste success. New Retail services, still handled by Alibaba’s e-commerce arm, has grown by 344% in 2018.

However, manufacturing is a completely new turf for Alibaba.

But thanks to its strong cloud computing division, the company known to be a quick innovator came up with supET, a manufacturing internet platform founded in June this year in collaboration with the Zhejiang provincial government. The platform already has about 200 companies on it. More than 20 ceramic factories have already embraced the new upgrades while 200 other companies are expected to join the bandwagon within this financial year.

The company also declared that a ceramics factory where the group had been trying out the new model, saw a 6% rise in productivity and 10% decrease in delivery cycle.

It is natural to compare Alibaba's performance to its rival Tencent (腾讯). The Shenzhen-based company is performing well in the online music, digital media, sport and other fields, according to reports. China Literature got recently listed and QQ Music is preparing its IPO. These two companies, both subsidiaries of Tencent, are already profitable.

Alibaba's cloud computing services are among the world's strongest and these dominate the Chinese market. They potentially could become one of the main sources of income for Alibaba.

For companies such as Amazon and Microsoft, this is already a reality. With e-commerce cooling down and a strong competition in the digital media and entertainment sector, cloud computing can be considered one of Alibaba's most promising business lines.

According to Jack Ma, new manufacturing is the perfect integration between manufacturing and services. The key to its success lays in a good use of the Internet, cloud computing, Internet of Things, artificial intelligence and big data.

A. Alfaro

A. Alfaro is a Beijing-based freelance reporter. He focuses on China's politics, culture and society. He can be reached at varofaro@gmail.com. 

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