Chen made golf carts, which he sold to his only customer, a Shanghai exporter. He couldn't afford to travel to trade shows to establish his company further.
[ Podcast:: Interview with Alibaba executives.]
"We didn't have the money. We couldn't go abroad," the stocky 43-year-old entrepreneur said.
So Chen turned to the one computer the business owned and its dial-up connection to the Internet. Now Chen, who has a junior high school education, is on his way to becoming a millionaire.
Chen and his company, Repow, demonstrate the growing influence of Alibaba.com, the Chinese e-commerce company that on Tuesday will list shares on the Hong Kong stock exchange in the largest Internet initial public offering since Google.
Alibaba.com, part of the larger Internet company Alibaba Group, has raised $1.5 billion from investors for the IPO, including $100 million from Sunnyvale's Yahoo and $17.5 million from San Jose's Cisco Systems. In 2004, Google raised $1.67 billion in its IPO.
The success of this business-to-business Web site is the most visible sign that the Internet is opening entrepreneurial opportunities in a way never before seen in China. And it links the fate of businessmen like Chen to the superstardom of Alibaba Group founder Jack Ma.
Once an English teacher, Ma founded Alibaba in 1999. The stratospheric rise of his company, and the success stories it has helped write, reflect a rapid economic shift unfolding in China - a new paradigm giving rise to an emerging middle class of people taking the unprecedented chance at chasing the new "American" dream.
The potential is vast.
With more than 162 million Internet users, China is close to surpassing the United States - and that's just a dent in a country with a population of 1.3 billion.
Add to that the fact that China is known as the manufacturing arm of the world, with millions of small- and midsize factories like Chen's Repow, churning out all the handbags, toys, electronics and other goods stamped "Made in China." Combined, these manufacturers contribute nearly 60 percent of China's gross domestic product, according to the National Bureau of Statistics of China, a government agency.
Alibaba.com is making it easier for these manufacturers to run their businesses.
Repow, for example, uses Alibaba.com to publish a company profile, or, as Alibaba.com calls it, an online storefront.
Companies from around the world looking to partner with a low-cost manufacturer can search Alibaba.com to find about 2.4 million suppliers of everything from beach balls to karaoke machines.
Repow, which also has a separate corporate Web site, draws nearly 90 percent of its business leads from the Internet, with 600 customers in 50 countries, Chen said. In return, Alibaba.com charges Repow and others for services such as advertising.
During the first half of the year, Alibaba.com made nearly $130 million in revenues.
"You can be in the middle of nowhere in China, but (with Alibaba.com) you can start a Web site and start trading," said Fariborz Ghadar, director of Global Business Studies at Penn State University. "You've got a market that's open to the world."
Alibaba.com is just one unit of Ma's growing empire. His Alibaba Group also includes Taobao, a consumer-to-consumer site like eBay, and Alipay, an online payment system similar to PayPal.
In 2005, Yahoo invested $1 billion for a 39 percent stake in Alibaba.com's parent company. It also turned over Yahoo China to the Alibaba Group, which is trying to revive the online portal.
"For someone like Jack Ma and Alibaba, situated in the heart of this growing giant, it is only a matter of time before Alibaba is mentioned in the same breath as Google, Microsoft and Yahoo," said Joseph Chan, a securities attorney with Pillsbury Winthrop Shaw Pittman in Shanghai.
Ma's main concern is making sure Alibaba is part of China's growth. "Many times you have the wave, but you don't catch the wave," he said. "That is the challenge we are facing."
This year, Chen's factory will roll out about 100,000 golf carts, scooters, wheelchairs and treadmills that will end up anywhere from a golf course in Europe to Costco.
In his corner office, Chen runs his hand over the smooth surface of a marble coffee table - a long way from the marble-processing factory where he once labored.
Once, he recalled, he polished a single slab for the entire night, finishing it as his boss walked in the next morning. Until then, no one had been able to turn out a perfect piece.
He tells the story to explain how he came to run the assembly line rather than work on it. "I found that I could do better than the boss," Chen said as he puffed on a cigarette, answered calls on two mobile phones and sipped tea.
"I started to think if there was an opportunity, I would start my own business."
Chen said he was inspired to build golf carts after seeing them on a trip to Europe in early 2001. He knew little about golf at the time. Now, he breaks away for an hour a day to practice at the company's driving range.
Outside, a new company campus sprawls across what was farmland not long ago. It includes a hotel, showroom, fine dining hall and the private driving range.
A giant bronze statue of a golfer in midswing greets guests at the front of the campus. Surrounding it, a series of small, manicured hills mimic the terrain of a golf course. Factory workers use it to test drive golf carts.
Inside a row of warehouses, uniformed workers in protective visors and gloves weld metal parts and assemble the pieces for the latest order. It is a noisy and smelly affair, the sound of metal clanging and machinery mixed with a burning odor.
Repow pays these workers about $200 a month, the area norm. The wage may seem low, Chen said, but the cost of living in the region also is low. Transient workers live in Repow's simple cement dormitories, and the factory serves lunch and dinner in a cafeteria.
This region is known for producing motorized products such as electric scooters. Repow is one of many factories here, along with other suppliers that produce the raw materials to feed the manufacturers. Elsewhere in China, cottage industries have sprung up around other products, from rice cookers to cigarette lighters.
"In the last 20 years, little towns developed a full chain, the most integrated (supply) chain in the world," said David Wei, CEO of Alibaba.com. "No one can copy it."
But it also creates intense competition. A few years ago, at least 30 nearby factories started challenging Repow in manufacturing golf carts, Chen said. Most of them have since moved on to focus on other products, but the threat remains.
About an hour away in Yongkang, an entrepreneur with a different background is building a factory called Easy Vehicle. There, Sam Yu and his partner are manufacturing all-terrain vehicles, scooters and motorized "cruising coolers."
Yu, an entrepreneur in his early 30s with a business management degree from Nanking University, recognized from the beginning that the company needed to utilize the Web. Even as the company was getting started in 2001, it was already creating a presence on the Web. Now, Yu is expanding the factory and hopes to reach sales of $50 million in the next three years.
"I think the Internet gives us (all) the same opportunities," he said. "It's up to you whether you succeed or fail."
Beneath its high-tech sheen, the success of Alibaba.com relies on the old-fashioned shoe leather method of door-to-door salesmen.
The company employs an army of foot soldiers stationed throughout China and other parts of the globe who call on local businesses and teach their owners how to upload product photos, manage customer inquiries and maintain their online presence.
Because labor in China is cheap, Alibaba.com can afford to deploy a field sales staff of about 1,900 people to recruit new factories to join the Internet revolution.
Alibaba.com's basic service is free, but companies like Repow and Easy Vehicle pay $5,000 to $8,000 a year for the elevated status of "gold supplier." A prominent gold supplier logo appears on their page, and they're listed in a special directory. Among other perks, an Alibaba.com staffer helps gold supplier members create a promotional video, which is featured on their company profile.
The idea for Alibaba.com grew out of Ma's first trip to the United States in the 1990s, when he encountered the Internet.
Ma, a small man with a larger-than-life presence, returned to China, and after one attempt started Alibaba eight years ago in the three-bedroom apartment in Hangzhou that he shared with his wife. He founded it with 18 employees, and as the company grew, the shoes that the employees would remove before entering the apartment stacked up ever higher on the landing outside.
The apartment, like the Mountain View garage where Larry Page and Sergey Brin started Google, is part of Alibaba's legend. It continues to be used to hatch the latest Alibaba project. Currently, that's Alimama, an online advertising network that the company started publicly testing in August.
Four years ago, it was Taobao, the eBay-like consumer auction and retail site. Employees launched the site despite being quarantined in the apartment because of the outbreak of severe acute respiratory syndrome, or SARS, in China.
To entertain themselves, the Taobao employees did handstands against the wall, a practice that's now part of Alibaba's orientation ritual.
Ma, who tends to wax poetic, even came up with a philosophy for the acrobatics: It helps employees see the world upside down, making them think more creatively - and hopefully, more competitively.
It seems to be working.
Taobao, which began as a free service, held nearly 83 percent of the online auction market share in China earlier this year, according to a report by Analysys International. San Jose's eBay, which had made an aggressive push to establish itself in China, said in December it was retreating and taking a 49 percent stake in Beijing's Tom Online instead in a new joint venture.
Even as he gleefully trounces eBay, however, Ma said he welcomes competition. China needs it, he said, because it is still developing the necessary infrastructure for online trade. Ma plans to spend a portion of the funds from the IPO to improve the e-commerce community in China, including through acquisitions.
Despite the rabid interest in Alibaba's stock, some experts caution that investing in the company is a gamble. Calculated against Alibaba.com's expected earnings this year, its IPO price overvalues the company - even more so than Google was overvalued at the time of its IPO, said Ghadar of Penn State University.
"It's much higher than many of our premium companies," he said. "You're betting on the stock going up, up and away. It has to go up really rapidly for that multiple to be justified."
Some fear China's Internet companies are heading into a bubble that is bound to pop. But Rob Sanderson, an analyst with American Technology Research, said, "There's more risk, but there's a lot of growth opportunities."
There are additional risks. With the recent negative publicity surrounding lead-laced toys and poisonous pet food, Western businesses may not want to use Alibaba.com to find Chinese manufacturing partners. Critics have also questioned the quality and legitimacy of the goods on the site. And environmentalists have criticized the site for facilitating the shark fin trade.
The Alibaba Group also faces competition on all sides, from Google and eBay to Baidu, the so-called "Google of China." It also operates in a country known for controlling the flow of information and imposing strict and bureaucratic rules on Internet businesses, though e-commerce companies such as Alibaba largely have been left alone by the government.
"People have high expectations for us," Ma said.
Ma, known for being brash and flamboyant, exudes confidence. Just look at this year's Alifest, he said.
In September, some 30,000 entrepreneurs descended on Hangzhou for Alibaba's annual customer conference, representing the largest turnout yet. A year ago, 10,000 people attended Alifest. The year before that, it was 7,000.
Some participants traveled thousands of miles. They all wanted to learn from the master entrepreneur himself, Ma.
Inside the city's Great Hall of the People, they packed the auditorium's three floors. A diminutive figure on stage, Ma's supersized image was projected onto a screen behind him.
"I am rich because I have dreams," Ma told them during his opening presentation.
He spoke. They listened and took notes. He encouraged them to stick with it. To travel. To seize opportunities, if not for themselves, then for their children.
He also offered this advice: "If you think you are getting rich, then you have a problem. You have to think that it's small, with more room to grow."
Chen, who attended the conference, took Ma's advice to heart.
"I don't think I am already successful," he said. "I shall say I am walking toward success."
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