Cultural Collapse

Three years ago when we had a company trip to Shanghai and Hangzhou, one of our programs was to visit a tea farm at the West Lake Xi Hu, Hangzhou. That place is famous with its unfermented Longjing green tea and after a short teatime session, most of us bought home some tealeaves.

XiHu Longjing Tea Farm

My friend in Beijing who knew our tea farm tour told me after sometimes that the tealeaves we bought must be brought over from anywhere BUT the West Lake. He explained to me that the good grade Xihu tealeaves are quite in demand and available in short supply in the country. They are normally pre-booked before harvest and regular group tourists like us who are not tea hobbyists, wouldn’t be served with the original Xihu tea.  

If his statement was true, it means that we were cheated right under our noses. Isn’t it bizarre to see the tea farm before your eyes, but later being served tealeaves planted from somewhere else? Could this really happen? But when this happened in China, I couldn’t be certain. 

And I was shocked again after reading a headline on an IT magazine of China last month. The investigative report divulged a set of unspoken rules being played and resulted in the cultural collapse in TaoBao, the largest local B2C and C2C e-commerce portal being operated in China. Founded in 2003, TaoBao is owned by a conglomerate Alibaba Group, which based its headquarters in Hangzhou, China, and also the owner of a very successful B2B portal alibaba.com. After they ousted its rival eBay in China, TaoBao e-marketplace grew so big that any e-merchants who want to sell goods online in China have to deal with them and pay substantial fees accordingly.

Jack Ma &Taobao.com

However, online tenancy is just the beginning.  To prosper further, e-merchants have to gain certain privileges and that is where TaoBao managers come in to assist you, unofficially.  You would be “assisted” by the managers to jump queue when you participating in online promotion activities, and/or to make your merchandise more “noticeable” compared to other products and the list goes on.

Or for a naïve new e-merchant, you may receive a call from a stranger who tells you that your products have just been blasted with 10 bad reviews from different “customers”, and he could help you to remove the reviews with a price, specifically, USD50 per review. And for all the ten reviews, he will try to get you a quantity discount. He may further offer you to sign the credit promotion package and guarantee a Diamond for your company goodwill level by posting enough of positive reviews.

The best of all strategies was, TaoBao manager would recommend you to sign up for an agent dedicated to you; a person who has an immense experience dealing  with TaoBao, and he would be in charge for all your online matters. He will be charging a fee monthly and the best way is to cut some of your profits from TaoBao.  To prosper even more, you may consider offering some stakes or partnership in your company to TaoBao managers (of course, they will use proxy to hold the shares).

The periodical further observes, “Every evening, some luxury cars owned by e-merchants would stop by at Alibaba Group’s headquarters to pick up some managers to be entertained at nightclubs and bars in Hangzhou.” 

The unspoken rules are becoming an open secret. No matter how drastic the actions taken by Alibaba boss, Mr. Jack Ma, to fire the top and middle executives from time to time, the sleazy activities continued.

TaoBao’s problem was not exceptional, because corruption always involves two willing parties. If fraud is a norm, the entire society has to be blamed. The Biweekly concludes, TaoBao is entrapped in such a quagmire, and predict if the corruptive culture persists, it will backfire one day; but if Taobao does clean up the mess, it will jeopardize its current business.    

The Red Guard march in The Cultural Revolution 

In fact, if we study modern history of China, we would know that the decade-long Cultural Revolution from 1966 through 1976 has vastly destroyed good values of the nation. To restore the missing values in human nature, experts estimate, it takes generations.

The idea is quite absurd to the outside world. When Yahoo! new CEO Scott Thompson had to step down after a resume discrepancy scandal, we saw how the Chairman of Alibaba Group, Mr. Jack Ma still standing strong even when he span off and swallowed up the company’s payment business AliPay without the knowledge of any key shareholders, including Yahoo! Inc.  With this, we have no more doubt as to why TaoBao suffered a cultural collapse.

And for a country or a corporate that has no Cultural Revolution to blame, we have to bear in mind, a fish rots from the head down.

by Teh Hon Seng, CEO, FingerTec HQ