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Alibaba's Taiwan Entrepreneurs Fund

The ECCT's Tax committee held a lunch on the topic "Innovation today leads to commerce tomorrow" with guest speaker Andrew Lee (Chih-ping), Executive Director of Alibaba's Taiwan Entrepreneurs Fund. The speaker gave an overview of how Alibaba's Taiwan Entrepreneurs Fund is working to discover and support the companies and ideas that will drive future innovations in commerce. Alibaba set up the Taiwan Entrepreneurs Fund in 2015 with capital of US$300 million to invest in growth stage companies founded by Taiwanese entrepreneurs.

Lee began by introducing the concept of micro-business loans being offered by non-financial institutions, which is a growing trend. Unlike traditional banks which need to pay a lot of attention to risk control, spend a lot of time in the review process, require substantial collateral and use a lot of manpower to conduct reviews, the new business model is open to any type of business, does not require reports, financial statements, credit checks or collateral. As a result, the process is much faster and cheaper, which makes it especially ideal for small, start-up companies.

The secret to the success of this type of model is that it uses the applicant's own data to analyse his/her habits and behaviour. Using a sophisticated model for analysis, it is able to assess: 1) the ability of the applicant to pay back the debt; 2) how much risk the applicant is willing to take and 3) how much the applicant is willing to pay. The beauty of the model is that the potential client's data is updated constantly based on their behaviour. Companies like Google and Facebook also analyse data in a similar way in order to target advertisements.

The focus of e-commerce in the past was either business-to-business (B2B) or business-to-consumer (B2C). But there is an inherent risk in the B2C model. While there have been numerous cases of brilliant CEOs and companies that are able to produce products that everybody wants, there are a lot more cases of failure. Bosses often don't get it right because they are not in tune with the needs of consumers. If you just listen to what consumers really want, you can take the guesswork out of the equation. What smart businesses should really be adopting then is a consumer-to-business or C2B approach.

The dominant business model of the 20th century was to standardise products, streamline production and mass produce on a large scale. However, the trend emerging in the 21st century will cater to personal needs and be much more flexible. According to the speaker, there are already factories in China that are taking orders for made-to-order clothing. Lee predicts that corporations of the future will tend to be C2Bs, task-oriented and recognise that access is more important than ownership.

Lee went on to give some details of how Alibaba's Taiwan Entrepreneur's Fund is helping start-ups realise their dreams through Alibaba's platform and systems. Once new entrepreneurs are selected by the fund, they are given capital, technical support to set up their systems as well as guidance. To qualify, candidates must be long-term residents in Taiwan, have a company or office established in Taiwan and use Alibaba's network to run their business, which involves logistics, marketing and financial services in processing transactions.

To date, the fund has invested in companies in a diverse range of sectors including artificial intelligence (AI), augmented reality (AR), virtual reality (VR), distance education, medical technology and e-commerce.

Lee went on to describe some of the most successful examples. These included an "i-staging" company which uses AR and VR to simulate things like home decorating, medical services companies and a distance learning programme to train engineers.

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