Page 54 - How China Is Winning the Tech Race

eaten up by integrating teams and processes and recruiting several high-level
executives who specialized in search, marketing, and community services.
“The big growth will come next year,” he promises, ticking off online adver-
tising, paid search, and integrated e-commerce services as key revenue
streams.
As part of the remake, much of Yahoo! China’s inner workings, including
servers and platforms for search and e-mail, are being moved to China too.
“The Net is about culture. You can’t have expats working on it if you are
going to succeed,” says Zeng.
He goes on to list another reason why Yahoo! China has a leg up simply
because it is run by Chinese in China. “The Net is also about speed. Inter-
national management slows down procedures,” says Zeng.

Alibaba’ s curse

Just six years ago, Alibaba.com was saved from bankruptcy during the dot-
com crash by a nail-biting restructuring after overexpanding during the
Internet bubble. The turnaround was orchestrated by newly appointed chief
operating officer Savio Kwan, a former General Electric top executive in
China. When Kwan was recruited in January 2001, Alibaba had been burning
through $2 million per month and had less than $10 million in the bank,
recalls Tina Ju, a Chinese venture capitalist and four-time investor in Alibaba.
“I saw the sentiment change at the company from Jack Ma’s vision of con-
quering the world in B2B [business-to-business e-commerce] to nearly going
bankrupt,” she tells me over coffee one morning in the Marriott Hotel lobby
in Shanghai. “It couldn’t have been done without the visionary and spiritual
leadership of Jack Ma,” Ju says. “Everyone in Alibaba believed in him.”
But it was Kwan who was assigned the painstaking task of pruning the
staff. “Jack could have made the job cuts, but it would have been difficult for
him to lay off those he had recruited,” she explains, adding that the layoffs
were “very brutal but necessary.”
Kwan cut the high-cost engineering team in the United States from 40
people to 3 in one day. He cut the senior-level marketing team to 10 people;
got rid of dozens of highly paid expatriate staff members in Beijing, Hong
Kong, and Shanghai; and ended expensive leases. The remaining staffers were
given the option of having their salaries cut in half but tripling their options

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