Page 30 - Forbes - Asia (July - August 2018)

FORBES ASIA
Q&A WITH MING ZENG

overwhelming, we will ind some way to overcome that barrier. technology that was developed in-house. People have to un-
So to take this example, it might not be bad that we didn’t buy derstand that at companies like Alibaba, we drive innovation,
Moneygram. Ant Financial just launched an international wire we are a high-tech powerhouse.
transfer service—an even newer, more innovative technology,
based on blockchain. So what happens if a government tilts the playing eld like
the U.S. now seems to be doing?
hat seems to be an opportunity that the U.S. government For most American companies, their principal worry seems
has given you that you might not have seized on your own. to be whether their home base in the U.S. is being destroyed.
Yes, they push us into a corner—we have to ind more innova- It is not about whether they can succeed globally. It’s about
tive ways to do things. whether their very foundation is being taken away. For
example, take Walmart. heir real threat is to what degree
Do companies have to have a certain scale to take advan- Amazon will crush them. Amazon is getting into grocery
tage of that? You are so hugely dominant in the regions and delivery, buying Whole Foods. More and more companies
sectors where you do business. Is that equally applicable to are under the threat of Amazon. Can they really compete
companies that are less dominant? against Amazon? Companies need irst to buy into the new
We started with a very small startup. You cannot answer this logic of the future. hey have to believe it. With internet
question from the perspective of Alibaba today. You have to companies, that’s how they grow up. So they are living it
have a historical perspective. How did we get here? hat’s why 100%. Most traditional companies may accept such terms as
the lessons are so valuable. Let’s take this international money mobile internet, artiicial intelligence, but very few of them
transfer. We are nobody in this area. here are so many other really understand how they actually work. So without a real
players who have larger positions. We launched a service just understanding in the irst place, it’s impossible for them to
as another startup, and we just found a new way to push the start an organizational transformation. My book explains how
envelope, to build new value for the customer. It’s not about our internet companies really work and how they can gain the
size, it’s about our innovation experience and our understand- competitive advantage—lessons that will apply to everyone
ing of where the future goes. in the future. If they want to understand how to survive they
have to understand and believe in these new rules. And then
It’s also a suggestion of why the U.S. is never going to win they have to transform their organization, to follow this new
in a trade war with China, because China will always have logic. It is going to be a very diicult challenge, but that is the
a new and innovative way of circumventing these obstacles only way to survive in the future.
that the U.S. or any other country is putting up.
Yes. he so-called trade dispute is also an issue of the industrial here are at least three multibillion-dollar private equity
age, the old paradigm. And what determines the future is who funds in the U.S. that are targeting Asia, particularly China.
wins in the game of smart business. hink about Apple, Google, How can companies in China especially make themselves
Amazon, and Facebook and Microsot—the only competition more attractive to these potential investors, to these fund
is who becomes the irst trillion-dollar company. I would doubt managers?
if any of their CEOs spend very much time at all on the U.S.- I will be quite blunt. You are asking the wrong question. You are
China trade dispute. falling into the old trap. he challenge is not for these innova-
tive Chinese companies to look more attractive to the U.S. pri-
You say that China is the “richest petri dish of innovation in vate equity funds. he challenge is for the U.S. equity irms to
the world.” Washington has tagged China with stealing in- become more attractive to these innovative Chinese companies.
novation from other countries. But you say you are develop-
ing it yourself—fostering the kind of innovation that will not Okay, how do they do that then?
necessarily need to take or borrow from other countries. Globally—and it is not just about China—the balance between
My irst book ten years ago was about the fast growth of capital and innovative companies is shiting. he innovative
manufacturing companies in China. At that time innova- companies are the scarce resources. Capital is abundant. So the
tion in China was mostly driven by low-cost imitation. But game is changing from entrepreneurs trying to court capital
when we got into the internet era, like, for example, cloud to capital that has to court the private innovation companies.
computing, Alibaba developed the core technology of cloud here is a generational shit. To answer your question more
computing all by ourselves. Also with artiicial intelligence. directly, the U.S. funds have to become much more local
How to apply that to real-world problems still takes tremen- because they are competing against second-generation Chinese
dous innovation. We try, whenever a customer comes to our funds. he irst generation of entrepreneurs not only make the
website, to show them a tailor-made Web page which will be money but also invest this money. So they are more attractive
diferent, even if the person logs on two hours later. It will be to the local entrepreneurs of the next generation. It is not easy
adjusted according to the person’s browsing history for those for U.S.-based private capital funds to compete against this new
two hours. his is only feasible using artiicial intelligence generation of funds in China. F

28 | FORBES ASIA JULY / AUGUST 2018