INTERNET: Alibaba’s Govt Relations Campaign in Overdrive

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Bottom line: Alibaba needs to take a more low-key approach to improving its government relations, rather than making a big spectacle of cultivating better ties with Beijing.

Alibaba govt relations campaign in overdrive

Alibaba (NYSE: BABA) founder and chief cheerleader Jack Ma has never really understood the meaning of the word “moderation”, which is all too clear with his sudden interest in cultivating better relations with Beijing. Ma has been pulling all the stops in a bid to be closely associated with this week’s US trip by Chinese President Xi Jinping, appearing at related events and announcing a new donation that synchronized nicely with a concurrent speech by Xi.

All that schmoozing certainly looks understandable, and Ma was actually just one of many US and Chinese tech leaders trying to share the stage with China’s president on his first state trip to the US. But Alibaba’s public relations machine was taking things just a bit too far when it joined the Beijing love affair and began promoting stories related to US-Chinese themes from the official Xinhua news agency, often considered the mouthpiece of the Chinese government.

Alibaba News

The fact of the matter is that Alibaba and Ma don’t have many other places to focus their PR machine these days, which perhaps explains the decision to work on improving government relations. The company has been under constant attack this year, staring with a government report critical of rampant trade in pirated goods on one of Alibaba’s main e-commerce sites.

Investors haven’t been too nice to the company either, using its stock as a play toy for making quick profits rather than a serious investment vehicle. Such short-term buyers snapped up its shares and made some quick money when the company was riding high after its IPO a year ago. Most of those investors have now gone, leaving short-sellers to move in and make more profits from the company’s tumbling stock. The shares seem to reach new all-time lows with each trading session, falling 3 percent in the last session to trade 16 percent below their IPO price.

Against that backdrop, I actually commended the company last week when media reported it was setting up a second headquarters in Beijing to improve its ties with the many regulators that oversee its core e-commerce businesses. (previous post) Poor relations with Beijing, specifically with the nation’s commerce regulators, were largely to blame for inflaming the piracy scandal that rocked Alibaba early this year.

Moving to Excess

But now Ma’s hyperactive drive to curry favor with Beijing is starting to look just a little excessive. A photo of Xi on the Seattle leg of his US trip was quite revealing, with Ma sharing the front row of a group photo with 2 of his biggest Internet rivals — Richard Liu, CEO of JD.com (Nasdaq: JD) and Pony Ma, head of Tencent (HKEx: 700). (English article) Those 3 China tech titans shared a much bigger stage with leaders from US tech giants including Apple (Nasdaq: AAPL), Microsoft (Nasdaq: MSFT) and Amazon (Nasdaq: AMZN), just to name a few.

But Ma was never one to be upstaged by his rivals, and announced a $5 million donation to a UN group that supports career development of women a few days later. Not coincidentally, his announcement came shortly after Xi delivered his own UN speech where he promised to promote gender equality and development opportunities for women. Following that donation, Alibaba also helped to forward several Xinhua stories highlighting Sino-US business ties to people who follow the company.

I know its a dog-eat-dog world, and everyone needs to work hard to get noticed in such a crowded marketplace. But Jack Ma’s overzealousness to get himself and Alibaba noticed by Beijing is quickly starting to look similarly excessive like many of the other things he does. The company certainly needs to cultivate better relations with Beijing, so Ma can’t be faulted for doing that. But perhaps he could take a cue from others at the Seattle event, and be content to work quietly behind the scenes on his government relations agenda rather than making such a public spectacle of everything.

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