Alibaba founder and CEO, Jack Ma, gives an exclusive interview to China Entrepreneur Magazine about the whole Alipay / VIE / Yahoo controversy.

1. A Synopsis of the Alipay Case
过 满 暧 ， 还 ， 给
计 员带 时
As the entire license distribution process has been full of uncertainty, rumour and
plot, licensing in the third-party payments industry has brought a set of constantly
changing risks and opportunities to the Ali board of directors, each of whom had their
own ideas.
/ 记
简单 说， 线 盘 悬 ，
线 势 对 资态
这 队诉 转 ……这 这
线 拧
The Alipay saga can essentially be broken down into two threads. One is the suspense
of the licensing legislation that has been hovering over China’s third-party payments
industry for the last five years, and the other is the struggle between the members of
Alibaba’s 4-man board of directors. On the periphery of these two threads, pinching and
pulling at them, are elements including the development of the payment industry
environment, fluctuations in China’s feeling towards foreign investment, the ups and
downs of the relationship between Alibaba and Yahoo over the past few years, and shifts
in the demands of Alibaba’s management team.
终 结 ： 队 为 夺 颁 ，单
脐带
The result? In order to get a third-party payments license from the Bank of China
(BoC), Alibaba’s management team unilaterally cut off Alipay’s umbilical cord to its parent
company, the Alibaba Group.
线 对 资 ( 软 39%
29.3% ) 虑，2009 7 24 ， 纪 层 过 结
调 获 6 1 ， 岛 资
alipay 70% 转让给 谢 资 （简
），alipay “协议 ”( VIE)
Let’s look at the first thread. Due to its sensitivity towards its own identity as a foreign-
invested company (foreign enterprises Yahoo and Softbank own 39% and 29.3% shares
in Ali Group respectively), on July 24 2009 Alibaba’s board of directors, through the
minutes of a meeting, authorised their management level to legally obtain a payments
license through a re-arrangement of their stock rights structure. On the 1st of the
previous month, Alibaba’s wholly-owned Cayman Islands-registered subsidiary Alipay
transferred 70% of shares to Jack Ma and Xie Shihuang’s Zhejiang Alibaba E-Commerce
Limited (shortened to Zhejiang Alibaba), and Alipay and Zhejiang Alibaba maintained a

2. “variable interest entity” (VIE) relationship.
2010 6 21 ， 5 办 （ “2
”） 规 ： 资 ，须报 ；2011 9 1 ，
许办 2010 8 6 ，alipay 30%
转让给
On June 21 2010, after five years of drafting, the BoC released its “Measures for
Managing Non-Financial Organization Payment Services” (also known as “Order 2”) in
which it was ruled that if a company had foreign investment, it must receive official
permission from the State Council. On September 1, any company without a payments
license would no longer be permitted to carry out payment services.
On August 6, Alipay transferred the remaining 30% of Alipay shares to Zhejiang Alibaba.
对 这 转让，孙 杨 远“ ”（ 说） 毕 ， 协议
证 资 ，2011 1 26 ， 传
协议 ， 态 转 终
该 ， 过 记 访， 负责 证 们 过该 ，
According to Jack Ma, board members Sun Zhengyi and Yang Zhiyuan “both agreed”
with these two transfers. At the end of the day, common practice in the industry is that a
VIE can guarantee the rights and benefits of foreign shareholders. But on January 26
2011 when the BoC sent a fax requiring Alipay to declare whether or not it had a VIE, the
situation changed. Alibaba has never shown China Entrepreneur Magazine the
correspondence, but according to interviews carried out by this magazine, others in the
payments industry confirmed that they had received similar correspondence, and that
such an event had happened.
， 这 传 ， ， 们 ：
审 顺 ， 协议 ，
Alibaba maintains that according to the fax and subsequent verbal communication, it
became clear that if it was to avoid examination by the State Council and receive one of
the first payments licenses, they would need to terminate their VIE, and stamp an official
declaration.
，摆 ： 维 协议 ，报 ；
维 协议 ， 协议 ； 终 协议 ， 谈 偿办
Three paths lay ahead of the board of directors. One, maintain the VIE, and be subject to
the State Council’s approval; two, maintain the VIE, but state that there was no such
agreement; three, terminate the VIE, and discuss compensation with its shareholders.
说，软 孙 “ 办 ， 资
（协议 ）， ？”

3. According to Jack Ma, Softbank’s Sun Zhengyi wanted to take the second route.
“You’re a capable guy, Jack. I’ve had VIEs with all the companies in China that I’ve
invested in, why can’t I have one with you?”
杨 远“ ” 对 记 ，“ 对( 终 协议
议) ， 觉 ( ) 责 ； ， ( )
， 态 ”
Yang Zhiyuan was sitting on the fence. Ma picks up the pen and cigarette on the desk,
and gestures at me: “If he opposed [Ma’s proposal to terminate the VIE], he thought he
would be responsible if the company [couldn’t get a license and] failed; if he agreed, he
would go back to Yahoo empty handed, so he may as well stay quiet.”
“ 们讲 ， 这 ， 们， 办 ” 坚
议 ， ： 协议 ，
续 偿
“I told them very clearly: ‘Guys, this is how it is. We’re out of luck.’” Ma insisted on taking
the third path. After fruitless negotiations, Ma made a decision based on his own wishes:
to get rid of the VIE, and to inform the other two shareholders that they would be entering
into compensation talks.
：杨 远 孙 (
CFO) 话说，“ 论 讲，这 组
， ， 为 ”
The Alibaba board of directors is made up of four people: Yang Zhiyuan, Sun Zhengyi,
Jack Ma and Cai Chongxin (Alibaba’s CFO). To quote Professor Ning Xiangdong of
Tsinghua University’s research company, “In theory, to have a four-man board of
directors is a very strange setup, because it can very easily come to a deadlock.”
这 “ ” 2005 8 ， 10 资产换购 40%
时 约 ， 35% ， 队 31.7% ，
5%，“还 约 ” 泽 资 鹰
说 ， 队 进 时 ，2010 10 ，
， 该约 ，
临
This “deadlock” began in August 2005, when Yahoo exchanged one billion US dollars
and Yahoo China’s assets for 40% of shares in Alibaba Group. The agreement at the
time was that Yahoo would only have a 35% voting right, and although Jack Ma’s
management team held a 31.7% share, they had an extra 5% voting right.
“Also, there was a stipulation that Ma could not be fired whenever they felt like it,” said
Zhongze Jiameng Investments Limited chairman Wu Ying. So, Jack Ma and Cai
Chongxin joined Ali Group’s board of directors. However, it was set down that after
October 2010, Yahoo’s voting rights would increase to be in proportion with their share

4. holding, and a chairman of the board could be added. If this agreement had come to
fruition, Ali Group’s board would be facing a new balance of power.
访 ， 认 这 “难 ” 这“难 ”
论 话语 ， 现 CEO (2009 )对
态 ，还 孙 员 问题 畅(详 访谈
录 )
In the interview, Ma didn’t deny that over the past two years, his relationship with the
shareholders had seen “difficulties”. These “difficulties” included the theoretical increase
in Yahoo’s voting rights on the board of directors, as well as a lack of understanding of
and stiff attitude towards China on the part Yahoo’s CEO Carol Bartz (who took over in
2009), and Sun Zhengyi’s poor communication on worker incentives (see the following
article).
说孙 孙 韩 ， 1980 创 软 ， 资
VC， ， 产 态，软 30
时 为 说：“ ， 们 约800
， 30 这 5000 ， ”
First, Sun Zhengyi. Sun, a Korean of Japanese descent, established Softbank in 1980.
While it may seem like an investment-happy VC, it’s actually a bold technology company
with an industrialist heart. Sun recently stated his hope that within 30 years, Softbank
could become one of the top ten market-valued tech companies in the world: “Right now,
we have about 800 tech companies worldwide, and I hope that within 30 years we can
take this up to five thousand, with the majority of those in Asia.”
，软 欢 ， 时还 营
营 宽带 络 ，软 阔 ，
2000 资 ，软 对 进 战 资，
SNS 频 颇 领
In Japan, Softbank has a very popular web portal, search engine and e-commerce
website, as well as Japan’s fastest growing mobile operator and its largest broadband
network. However, the company’s biggest explorations have actually happened in China.
Since its investment in Alibaba in 2000, Softbank has carried out strategic investment in
many well-known Chinese internet businesses, covering e-commerce, social networking
sites, video, mobile internet and several other promising areas.
“传 资 钱， 软 孙 钱 这 孙 资时
阔绰， 竞 ， 钱， ，
报， 战 ” 创 对
说
“Traditional investors use other people’s money, but Softbank uses Sun Zhengyi’s own.
This makes him very bold in his investments, and very competitive on price. But once
you’ve got his money, if you want out, it’s not that easy. What he cares about isn’t one-
time payoffs, but his overall strategic arrangement,” said an anonymous Chinese industry

5. insider to CEM.
这 ， 软 资 2000 10 ，孙 资给 时
传 2000 ，2004 2 6000 ， 现
钱， 29.3％
This is obviously one small item on the grand scale of Softbank’s investment in
Alibaba. In October 2000, Sun invested 20 million US dollars in the then-unknown Alibaba,
and another 60 million dollars in February 2004. To this day, Sun has never pulled out
one cent, holding 29.3% of shares in Alibaba today.
饰 对孙 资 钦 ， 贯“ 员
” 逻辑 为孙 陈 孙 层 对
“ 负责 讲， 队 30% 孙 产 营
，这 议 资 ”孙
队 问题 责孙 “ 鸡 ”
Ma doesn’t hide his great respect for Sun’s investment, but he certainly did not plan to
have his unwavering “Customer first, worker second, shareholders third” logic derailed
by Sun Zhengyi. He lays out flat that he and Sun had a difference of opinion at board
level. “I can reliably say that if Ali Group had listened to more than 30% of Sun’s advice
on business and operation, this company would have died a long time ago. A lot of his
advice was stupid. Investors can’t be entrepreneurs.” Sun and Ma’s core conflict was on
how to encourage the team. Ma has called Sun “the world’s biggest cheapskate”.
，对 ， 资产
， ， 购 绝，
35 购15% 360
鸿祎( CEO) ：“ 过
”， 购 ， 购 ， 说，
这 ，“ 购 ， 过 ？” 显 顾
， 访谈 这归 “ ”， 诸 杂
， ： 软 ，
As for Yahoo, it’s common knowledge that China’s Alibaba has become one of the sinking
company’s most important assets, at one time propping up Yahoo’s share price. In this
situation, Ma’s numerous propositions to buy back shares were all rejected. Forbes once
revealed that when Ma attempt to buy back 15% of shares in Yahoo with 3,500,000,000
US dollars, he met withrefusal. Outsider Zhou Hongyi, Yahoo’s former China CEO and
chairman of the board at China’s biggest provider of free anti-virus software 360 Qihoo
said: “The shares Yahoo has in Alibaba are perhaps worth more than all of its own
shares.” Buying back shares wasn’t as worthwhile as directly buying shares in Yahoo,
and becoming a large shareholder.
According to Ma, it wasn’t that he hadn’t had the chance: “Any company that wanted to
buy Yahoo had all approached me at one time or another.” But he let the opportunity pass
by. In the interview, Ma puts this down to “kindness”, but this may not be the case. There

6. are many subtle, complex factors, one of which is the fact that Softbank, which had so
many differences of opinion with Ma on the subject of Alibaba, is a large shareholder in Ali
and Yahoo.
论 ， 3 时， 访时说，“
( 结 )， 对 ？”
Whichever way you look at it, in March of this year MY in an interview with CEM, Ma said
“If I could change [the shareholding structure], I’d be an idiot not to, right?”
观 ， 纯 资 “ ”，
Objectively, Alipay obtaining a license purely on its own money is a golden opportunity to
change that structure.
对 认 为 “ 脏”， ，现
“ 脏” ，让 “ ”，这 ! 该 为对 队显
， 贵 资产， 队 软
码
Naturally, Ma won’t admit to this. He likens Alipay to Taobao’s “liver”, saying that to pull it
out in order to get a license and make it into an independent “person” is a very risky thing
to do! But the obvious benefit of this action to Ma’s team is that in taking hold a precious
part of Ali’s assets, Ma’s team has bulked up its bargaining chips in the next round of
negotiation with Yahoo and Softbank.
： 槛？ 们 ？ 过 ——
， 满 暧 ， 还 ， 给 员带
时 ， 预 ，
夺 戏 时
The license. Is it Alipay’s stumbling block? Or perhaps an opportunity for Ma and his
team? Because the entire licensing process and communication between Alipay and the
BoC has been full of uncertainty, rumours and plotting, payment licensing has brought
many different, constantly changing risks and opportunities to the Ali board of directors.
In a situation where it’s impossible to know clearly in advance about licensing policy,
every player in the game has to be flexible.
， 规 ， “
”
In the cracks between regulations and real-life operation, Ma made an “imperfect, but the
only correct” decision.
Part 2
专访 录
CEM’s Interview with Jack Ma

7. 这 创 议 ， 给 “证词”
The testimony of Alibaba’s founder on the debate over Alipay, left for posterity
访/ 记
谈
Talking about
： 刚 记 ， 软 协
码 2009 ( 转让 ) ， 态 转 吗？
CEM: According to what you just said at the press conference, your dealings with
Softbank and Yahoo began in 2009 [the first transfer of shares]. Did the turning point
come in the first quarter of this year?
： ， 预测 标 们 额，
标 ， ( )这 过 这
须 讲 ： 们 ， ， 们 绕
过 ( ) ， 说： 说 ，
MY: Actually, from the first day I started Alipay, I predicted that the government would
[eventually] control it. I don’t mean to boast about our proportions, or about the country’s
security, but the [payment] industry is something that no government in the world would
let pass by. I have to let the shareholders know these things clearly: if we were a tiny
company right now, it wouldn’t matter, but we’re a big one, so we can’t dodge these
things. But [the shareholders] don’t believe me, or they say “we’ll talk about it another
time”. If they don’t agree with something, you’re stuck.
： 让 场 额 50% 这 吗？
CEM: Could the BoC allow a company like yours, one that has 50% of the market, to
miss out on getting one of the first licenses?
： 说这 艰难 5 时 ， 说
？ 过 虑 ， 说
则， 结 这，这 ， “
”， 给挤 ，
MY: That’s why this matter is so tough. The BoC have taken 5 years to go from talking
about licenses to actually giving them out. They said they’d distribute them last year, but
they didn’t. What are they doing? The BoC has been through a lot of tough thinking, and I
can understand their inability to stand up and talk about it. The government has its
reasons, and the BoC is wise, too. But the result is that I’m standing here with the BoC on
one side, and these two bastards on the other side, and they’ve squeezed me out and
made me out to be the bad guy.
： 应该 过

8. CME: You must have had some sort of special, private communication with the BoC?
： 们
MY: We’re often in touch.
： 资问题 ，应该为 ？
CME: On the question of foreign investment, should they make special allowances for
Alipay?
： 为50%，
MY: Precisely because it’s 50%, it’s impossible.
“单 ” 产
Where did the decision to “fly solo” come from?
： 们 终 协议 ， 该 过
这 ？
CEM: You cut off the VIE in the first quarter of this year. According to process, shouldn’t
that have been approved by the Alibaba board of directors?
： 们 这 6 ，
讨论， 协议 们 这 ， 协议 过 协议
对， 议纪
MY: We established the board of directors 6 years ago, and since then, not one decision
has been approved by the board. A lot of things have been discussed outside of the
board, and the board have come to an agreement. It’s always been this way; there’s
never been any mess of approval or opposition on the board. It’s all decided in the
minutes of our meetings.
这 说， 给 时 （ 过），为 ？这 脑
孙 ( ) 软 ( )， ( ) ( )， 谁 为这 负
责 ， 孙 资， ， ， 对 ， 对
们 对 说 这
， 说： ， ， 态 这 时 证
， 进 ……
I’ll tell you, this matter wouldn’t have even been approved with ten times the time. Why? It
has to do with the ass-brains of these two. Sun wants to benefit Softbank, and Yahoo
wants to benefit Yahoo, and they doesn’t care who’s going to take responsibility for this
company. Sun has countless investments. If Alibaba were to die, sure, he’d be sore, but
to him it’s one of many. To us, it’s everything. Yahoo is a similar situation. So, if it has to
do with their short-term gains, everyone will oppose. When we talked about this, he said

9. “I only have two minutes, I have to go,” and he didn’t give an opinion. The documents
needed to be given to the BoC the next day, and if they weren’t, everything would have
been automatically shut down...
：这 为 ？
CEM: So it’s an inactive board of directors?
： 时 为， 资产 ， 脑 杨 远 错，孙
错， 们 ， 为难 ， 资 ？
们 态，这 这 谁违 约 ？ 孙 杨 远违
约 ! 为 ， 为这 责 说， 营过
， ， ，
临 这 办
MY: Usually it’s active, but in terms of decisions on the handling of assets, it decides with
its ass. Yang Zhiyuan isn’t wrong, Sun Zhengyi isn’t wrong, they represent the
shareholders. If I was a big shareholder, I’d find it tough too; what are you supposed to
say to your investors? So they simply abstained, and the whole thing ground to a halt. So,
who violated the spirit of the contract? It was Sun and Yand! As a director of the
company, you have to take responsibility for the company. So, as people who have run
businesses all know, there is no perfect system, and there are no perfect people;
systems have to be made according to people. The situation in front of me is one that
systems are unable to make perfect.
： 为 规则， 为 “ ”， 换
“领导 ”， 责 转 资产，这 岂 ……？
CEM: But why should everyone believe in the rules? Not everyone is a Jack Ma. If it
were some unscrupulous “leader” shifting a company’s assets around in the name of
“taking responsibility”, how wouldn’t this company...?
： 说 ， 们 则 话， 为 们
还 这 讨论 态问题？ 这 ， ， 5% 场
MY: I’m not saying my behaviour was good, but if we weren’t going along transparent,
legal principles, do you think we would be able to sit here talking about shareholders’
opinions? Alipay would be long dead, or it would have less than 5% of the market.
： 觉 时 ？
CEM: When do you think you will be able to enjoy some immunity?
： ， 领导
规则 ， 误 ，认为 挣钱 ，认为 现
这 为 ， 为 诞 ， 终 协议

10. ， 脏 ，让 谁 请 ， 烦
转让70% 协议 ， 时 ， 办 们
终 ， 给 谁 认这
， 这 说 对 ， 觉 认为 对
评 ， 给 ， 违 约 ，
请问 ？ ， ， ， ， ， ， 说 ，
转 ， 进 谈 ， ；
， ， ； ， 协议，
责 请问 选择 ？
MY: It’s not a case of immunity, it’s just an anomaly. Anomalies test your leadership
capability. I can do it whilst completely following the rules. Plus, everyone’s made a huge
misunderstanding, thinking that Alipay is making money today, and that I’m doing this for
profit. Actually, Alipay was born to perform a new function on Taobao. Today, terminating
Alipay’s VIE, it’s like taking someone’s liver out, and making it into an independent person.
Who would want to take it out? It’s so much hassle. When we first transferred 70% of
shares, it was a VIE, then when the VIE was cut off, there was nothing anyone can do
about it. We had no choice.
The most important thing about today is that I can finally be myself, instead of pretending
I’m something I’m not. I admit that this decision isn’t the most perfect one, but it’s the only
answer. I’m not saying I’m correct, I’m just saying I think I’ve done what I believe to be
right. You can criticize me, but don’t try to jazz it up, like I’m violating the spirit of the
agreement. If you more or less understand the truth, I’d like to know how you think I
could’ve done otherwise. Three options: one, close the company; two, lie; three, follow
the law—first transfer Alipay out, then negotiate. The first option would have been certain
death, there’s no way I could have chosen it. The second is a big risk; the BoC could
leave you alone one day, then tie you up within an inch of your life the next. If you don’t
have a board agreement, you have to take even more responsibility. Tell me, which one
would you choose?
： 这 ， 说 们让 们 转 ？
CEM: Aside from these three options, couldn’t you convince them to agree to transfer the
company out?
：说 为孙 说 这 ，
？
MY: They wouldn’t be convinced. Sun really wanted to take the second route. He said
that everyone takes this route, so why wasn’t I taking it?
：杨 远 ？
CEM: Did Yang Zhiyuan also want to take the second option?
：杨 远 ，这 时 孙 ， 们
键

11. MY: Yang sat on the fence; this time it was Sun who jumped first. Whether or not the
second option could be taken, was our biggest key difference.
： 孙 ， 觉 ，
CEM: Many people, maybe even including SZY, thought that with your capability, Alipay
could control the risk from policy.
：记 ， 讲过， 欢 ， ， ， ( )这
， 讲 讲 则 这 线， 5
， 还 违 ？
MY: Remember, I’ve said before, I don’t like politics, I don’t play at it; I’m not on the left or
the right. If I liked it, then I wouldn’t be doing business today. If you want to do business
you have to follow the law, and have principles. That’s my bottom line, I’m almost 50, am I
supposed to go and do something illegal?
： 协议 ， 时 们 层 ？
CEM: About stopping the VIE, how was it discussed amongst the few of you?
： 们 ， 为 对
： 们 过 “终 ” 缓 ？
MY: Just about all of the upper management of Alibaba were there. There were no
differing opinions, because everyone knows China well.
CEM: Did you think about using a more moderate policy than “the cutoff plan”?
： 选择， 选择： 资， 资
态
MY: There were only two options, no others: you have foreign investment, or you
don’t. But the shareholders abstained.
： 们 ？ ，孙
损 ， ？
CEM: The way you’re describing them is very illogical though, right? If Alipay couldn’t get
a license, Sun would be the biggest loser, would he sit by and watch Alipay fail to get a
license?
： 键 ， 觉 “ 办 ， 骗 ， 这
， ， ？”

12. MY: The key is, he thought “Ma, you’re really capable, you’re cheating me - the central
government isn’t like that, so many of my Chinese businesses do it this way, why can’t
you?”
： 说 转让这 ， 说 话吗？
CEM: Yahoo announced that they didn’t know about the transfer of shares, are they
lying?
： 说 ？ 纪 说，“这
责 ， ”， 给 谈 压 码 为
转让 ， 现 讲话： 为 ，
为 杨 远还 ， 给 尴 ， 这
， 还 给 严
MY: What do you think? Every time we have a board meeting there are minutes taken.
Them saying that is so they can say to their shareholders: “This is Ma’s responsibility,
don’t blame me.” In reality, it’s giving me more pressure and bargaining chips in
negotiations. Why Yahoo only revealed the Alipay transfer in May, I don’t know that either.
Now, I can only speak like a politician: I don’t know why, nor do I want to. Yang Zhiyuan is
still my friend, and I don’t want to embarrass my friends. I don’t want this thing to become
a low-brow argument—I still have to give them my respect.
： 终 协议 时， 虑 责
吗？
CEM: When you cut off the VIE, did you consider the responsibilities and risks you would
need to take on?
： 虑 3 4 ， 这 归 这 时 ，
为CEO 责 让 ，还 让 ， ( )
讨论 —— 时 这过 责？
MY: Of course. I thought about it for 3 or 4 months, and I knew that this day would have
to come sometime. When this thing really arrived, I had to take responsibility for it
because I’m the CEO. Do you let the company fail, or keep it alive, then talk [to the
shareholders] about their interests—whilst being blamed by others in the process?
： 责
CEM: You knew you might be blamed by others?
： ， 这 责 约 ， 这
MY: Of course, but I didn’t expect that this thing would point out morality, or violation of
the spirit of the agreement. I didn’t expect it to be taken in this direction.
： 责 ？

13. CEM: What type of blame did you expect?
： ： 软 们 ， 获
计 这 说： 们 应该 办 绕过
现 应该绕 觉 ， 谓 约 (
)， 违 ， 现 ， 规 ， 办
这 谓 时 ， 贴
诚 讲 约 标签 诚 ， 对 问“
资” 时 ，说 资
MY: My original analysis was that Yahoo and Softbank would point out that their
interests were [being treated unfairly], and would try to retain them. I guess that’s what I
was expecting. I didn’t expect that the domestic media would rise up and say we should
have thought of ways to get around the law. Right now, everyone is telling me to
circumvent the law. I believe that if I acted by the ‘agreed-upon spirit’ that they were
talking about, I would have been breaking the law. So, my problem now is the situation
with the board of directors, add to that the BoC’s regulations, I can’t make a perfect
strategy. But what saddens me the most is that after making such a so-called tough
decision, I’ve been labelled as dishonest, and that I have no respect for agreements. I
could have been totally dishonest; when the BoC asked “Do you have foreign
investment?”, I could have said “No.”
谈协议
About the VIE
： 协议 这 ，
CEM: But having a VIE is not illegal in China.
： 这 ： ， 问这 问题： 协议 还
协议 ， 协议 这 报 ， 协议
证 这 协议 问题， 问题，这
？
MY: It’s like this, those two letters from the BoC in the first quarter of this year asked the
question very clearly: do you have a VIE or not? If you do, then you don’t need to report
to the State Council today, but if you don’t, you need to make a declaration and guarantee
it. So there’s no question of whether or not a VIE is legal or not, it’s whether or not you’re
going to declare it. How would you deal with that?
： 刚 说 这 虑 协议
？
CEM: But you just said that in the three or four months before this letter came, you had
been considering terminating the agreement control.
： ， 们 认为这 严 ， 协议

14. 过 ， 为领导 ， ，这
为CEO 职责 ， 须 虑
MY: Before these two letters arrived, we thought this matter wasn’t such a big deal, and
we were proceeding based on the VIE. But when you’re dealing with the BoC, as a leader
you have to decide how you’re going to change your tactics in case there’s a change in
policy. This is my responsibility as CEO; there are certain things that you have to
consider.
： 预 ？
CEM: Were you always warning the board?
： ， 们 ， 责 现 这
讲 ， 则 ？杨 远 孙 这 还 ，还
MY: Of course. They are one-hundred percent aware of that. But until today, everyone
has been avoiding responsibility. Now, I’ve been forced to tell the truth, otherwise what
does it have to do with me? Yang Zhiyuan and Sun Zhengyi are still my friends; there’s
still affection there.
： 诉 们 们单 终 协议 时， 们 讶吗？
CEM: When you told them you were going to unilaterally cut off the control agreement,
were they surprised?
： 讶 杨 远3 31 这 报 ， 应该 汇报
给 ， 5 报 现 ， 们
MY: Of course they were. When Yang received the forms, he should have immediately
told the Yahoo shareholders, but he waited until May to tell them. So now, Yahoo’s US
shareholders blame Yahoo, not us.
： 终 协议 软 军
CEM: Cutting off the agreement control was pitting yourself against Yahoo and Softbank.
： 这 ， 们 说话， ，现 给 们
MY: Before, this fireball was in my hands, and they said nothing. I was falling all over the
place, not knowing what to do, and now I’ve given it to them.
：现 为 这 ， 闹
CEM: And now it’s a big deal.
：问题 这 ( ) 举报 ，说 协议 ，这

15. 为 给
试 100 ， 证 ( ： 证 协议 )， 现
为 85 ，还 骂？ 则 认为这 现
，谁诚 谁 诚 们 说： 错 ，让 们 讨
对 对 对 对 ， 讲这 对 对 们 评论 ，
毕 订
MY: That’s the problem. In the past, there have been people in the industry who have
reported me to the authorities, saying Alipay has a VIE. That’s why the BoC sent me that
letter in the first quarter. So I had to confess. I don’t really care if someone else cheats on
an exam and gets 100 percent, but I can guarantee that I didn’t cheat [note: declare that
Alipay did not have a VIE], but why am I now getting 85 percent without cheating, and
getting cursed? I’m just acting on my principles. I believe that now this matter has blown
up, people can see it clearly, see who’s honest and who’s dishonest. You can’t say:
“Following the law is wrong, let’s discuss the rights and wrongs of the law.” That’s a
different matter, and I don’t want to discuss it. Whether or not the law is correct is for you
to discuss; I’m not a lawmaker.
谈 责
Process and Responsibility
： 过 错误吗？
CEM: Were there any mistakes in the process?
： 觉 错误 ， 觉 ， 这 ，应
该 ， 习
MY: I think there were definitely mistakes, but I think that making a decision in the
situation that I find myself in, will probably provoke the world’s businesspeople to think a
little, and learn from it.
： 习？
CEM: Learn?
：应该 习 这 ，
， 继续 责 认为 艰难 难
这 ， 为 习 ， 过
， 轻 伪评论
MY: They should learn from it. I believe that out of 10 businesses, 9 wouldn’t dare to
make this decision. One route is to lie, one is to not get a license and die, and the third is
to continue to take responsibility. I believe it’s a very tough, extremely hard decision. If a
foreign company did this, it would definitely become an example that Chinese
businesspeople would study. But in China, it’s been dragged out, and some young people

16. will be influenced by false criticism.
： ， 单 终 协议 还 规
则 ？
CEM: But in fact, isn’t it a little suspicious to unilaterally cut off the VIE so quickly?
：这 们刚 说 过 还 结 ，
规 营 键 时 ， ……
MY: This is what I was just saying about whether it’s the process or the result that is the
most important. Big industry dictates that it’s the process that’s more important; without
process or regulation, industry operates badly. But when a special case comes down to
the key moment, you need to...
： 键时 ？
CEM: When it comes to the crunch, process isn’t important?
： ， 键 时 职 ， 责
让 责 ， 错 ，错 错，
责
MY: It’s certainly important. At the key moment, a professional manager wants process,
so he doesn’t need to take responsibility. Process takes responsibility out of your hands;
you can’t be wrong if you’re following process, and if it’s wrong, it’s the process’s fault,
and it has nothing to do with me. But I had to take responsibility.
孙 历
Historical conflict with Sun Zhengyi
： 终 协议 这 ， 软
CEM: You knew that after deciding to terminate the VIE, you’d be completely split from
Softbank.
： 们 闹闹
MY: We’re not really that split. We argue it out in the day, then go for a drink in the
evening.
： 孙 过？
CEM: Have you and Sun been in touch recently?
： ，过 还 给 ( ： 6 25 举 软
连 软 员，孙 “ ，
， 们 ”)

17. MY: Yes we have, and in a few days I’ll be going to Japan to support him. (Note: At
Softbank’s shareholders summit on June 25 in Japan, a landslide vote saw Ma continue
to be a member of Softbank’s board of directors, and Sun Zhengyi stated: “Jack Ma and I
are still good friends, and he is an important business partner, so we have great
confidence in each other. There’s no need to worry.”)
： 现 为 ？
CEM: Why is he so silent now?
： 远 ， 谈 战术 ， ，
现 ， ， 为 (谈 ) 孙
，
MY: He never shows his cards, his negotiation tactic is never to show his cards, and to
force you. He’ll force you into a corner without showing his cards. He still hasn’t shown
his cards, he’s waiting for Yahoo to do it, because Yahoo’s bargaining position is worse
than his. Sun’s thinking a lot harder than Yahoo, he’s a lot more crafty.
：现 软 还 ？
CEM: Softbank hasn’t asked for anything yet?
：这 谈 时 谈，觉 这
问题 ， ， 认为员 时 换 给
轻 ， 们 ， 对 ， ，这
错 ， ，员 ， 员 这 们俩 这
则
MY: This guy is incredibly good at negotiation. Sometimes I see him negotiating with
others at the board meetings, and think that this guy is really something. I disagree with
him on some things; he believes that workers can be switched whenever. I believe in
giving opportunities to China’s youth, to share the future with them. First, I don’t believe
that Japan is definitely right, second, putting this in China is definitely wrong. In China, I
believe in customer first, workers second - if you don’t have workers then you don’t have
a company. Our principles on this matter are completely different.
：这 时 ？
CEM: When did this conflict begin?
： 这 ，这 ， 为 ，
， 释 为 30% ，30% 过
， 释， 给 给员
MY: It’s always been like this, we’ve argued every day for the past few years, look at the
time that’s passed since Alibaba was founded until today; my share holding has got
smaller and smaller, I’ve basically been diluting myself out. Up to today, he’s gone from

18. 30%, and now he has more than that. He hasn’t diluted himself at all. Look at whether or
not he gives anything to the workers.
：这 们
CEM: This is your biggest conflict.
：这 则 说 让给员 ， ， 们 ， 们让
损 ， 1 7 员 ， 们让
， 这 时 还 责 ， 脸
MY: It’s a matter of principle. I said to him, if you don’t want to give anything to the
workers, that’s no problem, we respect you, we’ll let you do as you wish. If I lose out
myself, that’s fine, Alibaba’s 17000 workers all have shares, all of which came from us.
But you can’t go to the extreme; if we’re coming to a situation like the one we have today,
where the company will live or die, and you still don’t want to take responsibility, then I
have to get hostile.
： 让过？
CEM: He never gave anything away?
：问 1%， ， ，
， 谈 ， 鸡
谈 ， 说 ， 给 为 钱
， 码 ， 5 50 ， ， ，
谈 ， 员 这 觉
MY: Asking him for 1% is like trying to pull out a live tiger’s tooth. Every time we argued
he was unhappy, like taking shares from him was like you’d skinned him alive. He has
two world titles, and I respect him for them; the first is that he’s the world’s best
negotiator, the second is that he’s the world’s biggest cheapskate. He’ll start negotiating
with you very aggressively, for example if you only want 20 million, he’ll give you 30
million. Because he has more money than you, his bargaining chips are bigger than
yours, pulling out 50 thousand for him is like you pulling out 50. Then at the next step,
hahaha, you’re under his finger. He has his negotiating skill, but on the subject of worker
development he and I don’t agree.
： 们 过？
CEM: How many times did you bring it up?
： 脸 ， 办 简单， ， 选择
说对 错， 们 们 ， 闹闹
MY: He also knew I was going to get hostile, but the reason I couldn’t do anything about
him was very simple, he’s a shareholder, his choices can’t be called right or wrong, it’s

19. just that we’re different. It’s normal that we have lots of differences, arguing doesn’t affect
our friendship.
： 软 谈 偿 则？
CEM: What kind of principles are your compensation negotiations with Yahoo and
Softbank based on?
： ， ， ，
转 ，让 亏 ， 偿 偿 ，
为这
MY: First, 100 percent legal, 100 percent transparent. The second is that it can’t affect
the development of Alibaba, it can’t transfer benefits onto Alipay, and let Taobao and
Alibaba lose out. Third, there must be compensation today and in the future, as this is
something that the whole world needs to know about.
b
： 偿 额 级 ？
CEM: What kind of figure might the compensation come to?
： 偿 ， 换 话说 觉 观 ， 们 们
， 们 们 则，谈
MY: The compensation will be large, very large. But to put it another way, I think that in
the end it will definitely be impartial. They have their demands, and we have our
principles, and we’ll negotiate it out.
：时 ？ 时 ？
CEM: And in terms of time? When will it be set down?
：现 们这 ! 压 ( ： 给 记 说“
”；6 22 ， 软 ，
谈 “ 质 进 ”， 协议 )
MY: The ball’s in their court now! I’m not under pressure. (Note: The previous day, Ma
told CEM in a text message that “This matter is almost over”, and on June 22, Yahoo,
Alibaba and Softbank made a joint announcement, saying that they had “come to a
substantive and heartening development” in the negotiations over the transfer of Alipay
shares, and that they hoped to reach an agreement.)
： 让 们 ？
CEM: Did you let them quote a price?
：对， 压 这 评 ， 谈，现
这 给 压 现 (给 们) 压 ， 话 这 场

20. 讲 讲， 这 ， 这 ，
办 说 ， 还 ？
MY: Yes, my pressure comes from critics and media on this side. Originally, it wasn’t a
very big deal, we could have talked about it thoroughly, but now it’s become pressured
from this side. Now the pressure on me from the US Government has gone and
increased. There are some things that I can’t say ahere. There are some things that I’ll
be able to talk about in 10 years, because in 10 years’ time it won’t be these
governments, or this situation, and it’ll be easier to deal with. Am I supposed to run my
mouth today, and die tomorrow?
： 传 说 ？
CEM: Two or three years ago there were rumours saying that some domestic
corporations wanted to buy into Alipay?
： ， 这 ， 让
， 谢 谢
18 创 谢 这 诉
， 资， 这 还 进 转让
MY: There were many. Before this matter was eliminated today, I thought it was useless.
Zhejiang Alibaba was the recipient of Alipay shares, and the shareholders were myself
and Xie Shihuang. Xie and I are registered shareholders of more than ten companies. Of
18 Alibaba founders , some would often use Xie’s name to register. This company’s use
is to let the BoC know that Alipay is completely Chinese invested, and that this company
can carry out share transfers.
： 们 ？
CEM: Do you have any thoughts as to restructuring Alipay’s share rights structure?
： ，现 这 还 ，还
MY: No, we haven’t even sorted this issue yet, how could we be thinking about that?
： ？
CEM: In future there must be a state-owned portion of shares?
：现 资 进 ？
MY: Can’t foreign investors come in?
： 资 ？
CEM: What about private investors?
： ， 们欢 资 ，这 讨论 这 这 ： 偿

21. 软 贵 ， 进 贵 满 这 ，
哟， 杂 评论 图 ，说 说 ，
们
MY: Of course, we welcome private investors, this is something we’ll talk about in the
future. Anyway, it’s like this: if we compensating Yahoo and Softbank is expensive, it’ll be
expensive to bring in domestic investors in the future. So today we’ll satisfy this one, and
then in the future there won’t be another. Ayo, it’s complicated. A few [a few quick snaps
of the tongue] from critics have nothing to do with you, they say you’re good, they say
you’re bad, but in the background there’s a lot of tough work.
Relationship with Yahoo
： 们现 问题 ， 现 这 绝， 们 摆
？ 这 ， 们
CEM: On the topic of Alipay now, you appear very determined. Is that because
you’re anxious to break away from Yahoo? It seems like a great opportunity to me,
licensing policy has helped you out.
： ， 测 ， 们 …… 谋诡计
， 们
MY: People are guessing at so many reasons, but we aren’t so...even if we were really
considering those kinds of crafty plots, we couldn’t carry them out.
：这 谋，这
CEM: It’s not necessarily a plot, just an opportunity.
： ， 们还 90 ， 觉 该
该 ，这 则 这 ？
孙 ？ 该 ， 现摇
摇 时 ， 应该 ，
CEM: There are plenty of opportunities in life, we still have another 90 years. We can take
opportunities as they come. I think that principles on what we should and shouldn’t do
need to be clear. How could you have predicted that Yahoo would turn out like this? How
could you have known that Sun would turn into this? Anything is possible. But you need to
know what you shouldn’t do, especially when the boat is rocking, you can’t get fierce. If
he had got fierce I would have long since joined up with others to mess him up.
： 们吗？
CEM: Did no-one come for you last year?

22. ： ， 购 过 ？
MY: Many. Anyone who ever wanted to buy Yahoo came to me.
： 过 ？
CEM: You were never moved?
：
MY: People have a conscience.
： 为 现 资产
CEM: It’s mostly because Yahoo doesn’t have any assets now.
： 们 该 须 ， 吗 换 话说
过 ，孙 过 馊 ， 们 则 ， 们
谐 换
MY: We have too many things we want to do ourselves, why would we go and get
involved in others’ business? To put it another way, Yahoo hasn’t done anything wrong,
Sun just had a few terrible ideas, and our principles are just different, but we can get
along harmoniously. If it were a few other shareholders today, it might be much worse.
：现 问题 进 ？
CEM: To what degree is the question of Yahoo’s shareholding in Ali Group solved right
now?
： 们 ，换 话说，换 杂 们 ( 调
)， 话， 觉 对这 满 ，
难 ， 给 ，
， 脸 ， 责 ， 说孙 “
”， 说 这 讲话？ 这 办？ 们
， 该 ，该 讲话 较
， ，这
MY: We’re in no hurry, or you could say that if it was any other shareholder it would be
more complicated. When we have an opportunity we’ll do it [re-arrange the stock rights],
but if there isn’t an opportunity, I think that as long as our customers are satisfied with the
company, my relationship with the shareholders is my own problem. I don’t have to let the
whole of society know about it. But if there’s conflict with the customers, or with the law of
the land, I have to get hostile, that’s my responsibility. Arguments between shareholders
are completely normal, I’ve called Sun a bastard, and people say “how can you talk like
that?” That’s what I’m like, so what? In private, we get on very well. On the board, we
argue to within an inch of our lives, and afterwards those who need a drink go for one,

23. and those who want to chat, have a chat. I speak directly, people think I’m very sensitive,
but in reality I’m very rational, this huge company isn’t entirely mine.