综研微语: Alibaba has turned the ordinary day of November 11 into a shopping carnival for Chinese netizens. However, over the past week, a wave of criticism against Taobao, Tmall, and e-commerce in general has been fermenting online. In response to these hot-button issues, renowned economist and president of the China Development Institute (Shenzhen), Fan Gang, wrote exclusively for this WeChat account: 'Criticism is valuable, but the problem is that the reasons for that criticism are specious and full of errors, so they need to be cleared up to set the record straight.'
After several Double Eleven events, a number of people have emerged to criticize Alibaba, attracting considerable attention. Criticism is valuable; we all look forward to meaningful criticism, especially of famous large enterprises. But the problem is that the reasons for that criticism are specious and full of errors, so they need to be cleared up to set the record straight.
Criticism 1: 'You can never look elegant in discounted clothes bought on Taobao.' The problem is that China's overall per capita income is only 13% of that of Europe and the US; breaking it down, 70% are low-income earners, for whom elegance is still a luxury that requires generations of hard work to achieve. Those who look down on Taobao shoppers must at least be rich second-generation who are well-fed and well-clothed and study abroad in first class. However, these rich second-generation are not yet the elegant people in the minds of Taobao critics, because they go to outlet malls abroad to shop, just at a different level. In fact, looking down on discounted goods on Taobao also reveals a snobbish disdain for China's manufacturing industry, which is developing step by step!
Criticism 2: 'Discounts ruin Chinese enterprises and Chinese manufacturing.' First, truly excellent products are not discounted on Double Eleven or any other day; there are many such products on Taobao, and no matter what punitive measures you set, they still do as they please; the internet platform cannot destroy them. Second, enterprises that cannot even afford a price war will eventually die even if everyone is explicitly prohibited from lowering prices. Third, the 'oligopolistic competition' you idealize—where a few enterprises agree not to lower prices, enjoy higher profits, and thus have money for innovation and advertising—does exist in some developed countries, but it is the result of a century or two of fierce market competition and waves of enterprises being eliminated in price wars, not the product of literati planning. You cannot have the results of market competition without the process; without decades of survival-of-the-fittest battles, our manufacturing industry will not mature, and industrial concentration will not increase. Without the pressure of price wars, no one will strive to improve efficiency or innovate products. Truly good enterprises are forged in price wars, not imagined by idealists. You don't need to list how helpless and complaining small shop owners are; as long as they haven't left, they can still afford to play, haven't been eliminated, and still have the potential to grow into large enterprises and famous brands. But the market never allows all participants to grow big; large enterprises always grow on the corpses of many small ones. Complaints always exist but are never useful, only eliciting the pity of literati.
Criticism 3: 'Low prices stimulate consumers to buy many unnecessary things, creating false prosperity in demand.' In fact, the basic idea of a planned economy is to strictly calculate that everyone consumes only necessary things, with no waste. But how do you know, and how can you define, what is necessary and unnecessary for others (not yourself)? What is needed today versus tomorrow? This is the fundamental reason why planned economies fail. And now our idealists are coming out to 'plan' again! For some people, buying something and putting it at home even if they don't use it later ('later' their needs might have 'reformed' because they listened to the idealists' teachings!) still satisfies some desire of theirs; this might be defined as waste by some, but it is always a component of market demand. If you want the market mechanism to allocate resources, some illusory demands will play a role, but their existence is much better than a planned economy that fails to meet people's various needs on a larger scale while producing a lot of unwanted goods! This is also why human society, after comparing options, ultimately chooses the path of a market economy.
Criticism 4: 'Online store employment is not real employment.' This is a genuine absurdity. Online store employment is certainly not state-owned enterprise employment, but a job that can earn a few thousand yuan a month is real employment for anyone, even if it might initially be low-income employment. Do you want to eliminate these jobs too? The basic trend of market economy development, especially with the emergence of new technologies like the internet, may lead to more self-employment, freelancing, flexible employment, and working from home in the future. As for how to get online store workers to participate more in social security, it depends on the reform and development of the social security system itself. To give people 'dignified lives,' we must first give them income; and a dignified life is not planned but created by the long process of market competition. It is clear that our literati envy the employment conditions in Chinese state-owned enterprises and foreign large companies, but 70% of China's workers have not received higher education and are still struggling on the edge of having no employment. Moreover, do you know that in the developed countries you envy, overall unemployment rates are rising, and more and more employment is self-employment? Additionally, some accuse online stores of excessive overtime. Japan's Economic Planning Agency has been fighting the overtime culture of Japanese companies for decades; they should also hire a few of our 'wise people' who oppose overtime.
Criticism 5: 'Internet platforms destroy the industry ecosystem; enterprises cannot survive without platforms.' This is typical half-understanding and groundless worry. The great technological revolution of the internet may be meant to change the ecosystem of some industries from now on, and some enterprises may have to coexist with the internet. Which enterprises in which industries will have space and opportunities for offline development in the future is ultimately determined by market competition under new technological conditions, and by the choices of enterprises, not planned by you in advance; shouting won't help.
Criticism 6: 'One Ma Yun is enough; the more Dong Mingzhu, the better.' This is, of course, correct. One platform might 'sweep the table,' but the more people selling on the platform, the better. The internet is just an information technology; it reduces our information costs and allows us to make better products, so we all should use the internet. But even if the internet is added ten thousand times, it cannot solve the problems of product quality and technological progress in various industries, nor replace the growth of manufacturing enterprises themselves. So we should actively create conditions for the development of China's manufacturing industry. But conversely, this is not a reason to criticize internet platforms; it is just a reminder that our enterprises should use the internet but not expect it to solve their fundamental problems.
Criticizing a red-hot strongman like Alibaba is a sign of 'moral integrity,' and it is gratifying that the fine tradition of Chinese literati still exists! However, in the modern fast-food media environment, there is a bit of grandstanding and 'attention-seeking.' My criticism of 'moral integrity literati' might make people suspect I took corporate advertising fees, even though I haven't spoken with Ma Yun for about 10 years, or rather, Ma Yun has deigned not to pay attention to us for 10 years. Alibaba certainly has flaws, and it might be a flash in the pan, possibly defeated by a better 'Ali 99' or eliminated by the next new technology, but it will certainly not be drowned by this kind of specious saliva. Don Quixote's lance, however long, has no power.
I wrote this article to ask everyone to think and rethink everything, and not to believe those alarmist claims. This matter seems small, but it reflects the mentality of some people in our late-developing country from all angles, so it is worth a critique of the critique. Once this article is posted online, a pile of bricks will surely be thrown at me. But I declare in advance that I will not utter a word to debate. My article is written for reading and reference. If you want to debate, please go read the basic textbooks of economics a few more times, and then read some economic history.
One more reminder: when reading economic history books, remember that in the early development history of developed countries and current multinational corporations and international brands, there were few or no stronger countries, enterprises, or brands pressing down on them and hitting them; while in our backward countries, our weak enterprises can only grow with difficulty under their pressure from all sides, and also have to listen to the sour sarcasm of some 'fake foreigners' about how high-end enterprises in developed countries are and how incapable we are. So we must innovate unique business models to cope. Read more and think more; you cannot know only one side and not the other.
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