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Ma Yun – Made in China, Sold Across the Globe

by Matt Fox   - Jan 31, 2015
 
 
Jan 2015 update:
Is Jack Ma being told to keep in line? The stock price of Alibaba Group plummeted 10% recently following a powerful Chinese government regulator report revealing the group had failed to disclose a July 2014 probe into counterfeit goods being sold on its ecommerce platforms. The implication is that Alibaba deliberately misled investors before its record $25bn IPO. Alibaba's stock has proved volatile since it went public at $68 a share. After rocketing more than 40 percent on its first day of trading, it has been gradually falling from its November 2014 peak of $119. But the recent news caused the heaviest drop, wiping RMB 1 billion off Ma’s personal fortune and leaving him as China’s second richest man. There could be further repercussions too. If Alibaba was found to have hidden information from investors prior to the IPO as implied in the government report, it could face the possibility of legal action in the US. Alibaba deny any wrongdoing and the accusation has all the hallmarks of a government warning. As powerful as Jack Ma and Alibaba are becoming, maybe someone felt they needed to be reminded who’s the real boss.
 
 
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Ma Yun, (马云, September 10, 1964), or Jack Ma as he is more widely known outside of China, is an Internet entrepreneur and the richest man in China. The founder of the Alibaba Group, Ma is a charismatic and popular business leader who peppers his speaking with motivational sound bites and homespun wisdom. He may have made his fortune online but in 2010 he revealed that he has never written a line of code and only encountered a computer for the first time in his thirties.
 
Born in Hangzhou, Zhejiang Province, in 1964 to musician-storyteller parents, Ma developed a desire to learn English when he was very young. To do so, he would ride his bike for 45 minutes each morning to a nearby hotel and practice conversing with the foreign guests. There he would offer to guide them around the city free of charge in order to further his English.
 
Desiring to be an English teacher, Ma failed the entrance exam twice before finally being admitted to the Hangzhou Teacher's Institute. Although it was a struggle getting in, while at the school Ma was elected student chairman. He graduated and became a lecturer in English and International Trade at the Hangzhou Dianzi University.
 
Ma understood the promise of the Internet before most people in China did. In 1995, he founded China Pages, a Yellow Pages for China which is considered one of China’s first Internet-based companies. 
 
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Jack Ma (left) at the reception desk of China Pages (中国黄页) in 1995.
 
 
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Ma and his wife Zhang Ying (张瑛) in their small China Pages office in 1996.
 
 
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The little baby is said to be Jack Ma’s daughter. He actually has a son who has never been exposed to the public.


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Ma’s business card at China Pages.
 
Then from 1997 to 1999, Ma was involved in an information technology company established by a department of the Ministry of Foreign Trade and Economic Cooperation. It was here he learnt of the true potential of ecommerce. It also provided a pivotal meeting for him when, in 1997, Jerry Yang, co-founder of Yahoo, took his first trip to China. Ma was assigned by his ministry to take Yang on a tour of the Great Wall.
 
 
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Ma and Yahoo co-founder Jerry Yang (left) hiking the Great Wall of China in 1997.
 
The two hit it off as they hiked, and a photo of the two of them (above) hangs with historic pride in the Alibaba headquarters in Hangzhou. Yang later recalled, “He was very curious about what it’s like on the Internet and what the future might be.” A few months later Ma began building a startup based on the rather nebulous notion of connecting Chinese companies with the rest of the world.
 
As Ma himself said, “My dream was to set up my own e-commerce company. In 1999, I gathered 18 people in my apartment and spoke to them for two hours about my vision. Everyone put their money on the table, and that got us $60,000 to start Alibaba.”
 
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January 28, 2000. One of many meetings with co-workers held at his apartment which doubled as an   office.
 
He chose the name Alibaba because it was internationally known and easy to spell. In typical Ma-style he actually tested it himself by approaching strangers on the street of different nationalities and asking if they had heard of it. The site connected small-to-medium businesses in China directly with customers anywhere in the world. Over the next couple of years they managed to raise investment totaling $25 million, but the company didn’t make a profit until the end of 2001.
 
The founder of Softbank, Masayoshi Son was one of these early investors. He recalled liking “the look in [Ma's] eye” and his “animal smell.” putting $20 million into the company.
 
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Ma and Softbank founder Masayoshi Son (right).
 
Inspired by eBay and emboldened by their lack of understanding of the Chinese market, Ma established Taobao a consumer-to-consumer ecommerce platform aimed at Chinese users in 2003. Taobao’s escrow service, Alipay (think: China’s PayPal), was also established to facilitate payment. 
 
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Alibaba logo
 
 
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Taobao logo
 
 
 
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 Alipay logo
 
 
 
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Tmall logo
 
 
 
At a summit in California in May 2005, Ma met with Jerry Yang once more. They slipped away from the crowd ahead of dinner and headed for the beach. Within 30 minutes they had mapped out a deal that would change both their companies.
 
 050 
Ma and Yang returning from the stroll which set the wheels of the Alibaba-Yahoo partnership in motion.  (September 2005, Image courtesy of HYSTA)
 
The deal would put $1 billion in cash plus the assets from Yahoo China (worth $700 million) on Ma’s table, in exchange for 40% of the Alibaba Group. Son’s Softbank and the existing management would each retain 30%. The deal was complex and risky. Both sides were hesitant. Half of Alibaba’s value was attributed to Alipay and Taobao, both of which were losing money. But Yang says he was struck by Ma’s belief. “Once you meet an entrepreneur like Jack Ma, you just want to make sure you bet on him,” he said. “It’s not a hard decision.”
 
Ma had noted eBay insisted on a 3% charge for listings and a standardization of technology which slowed the site down. Emboldened by the new investment, Ma decided against charging for listings. As a result, Chinese users flocked to Taobao. By spring 2007 Taobao had taken 82% of the online auction market, leaving EachNet (eBay’s Chinese subsidiary) with just 7%.
 
There are multiple other businesses, acquisitions and offshoots since then (including Tmall - a B2C platform with rigorous selling conditions, Junhuasun – a flash sale and group buying platform, and Aliyun – cloud storage), and some of the numbers involved are quite staggering. Collectively, the Alibaba Group's websites accounted for over 60% of the parcels delivered in China by March 2013, and 80% of the nation's online sales by September 2014. Alipay currently accounts for roughly half of all online payment transactions within China. By allowing customers to receive their goods first before releasing the funds, Alipay has proved an immensely popular payment method and helped solidify consumer trust.
 
An example of his eye for opportunity, Ma and his team took the concept of Single’s Day (November 11), which first emerged at Nanjing University in the 1990s, and turned it into the biggest online shopping day of the year. In 2014, Alibaba Group made over US$9 billion worth of sales in one day. In 2009 Ma went so far as to trademark the phrase “双十一" (meaning “double 11”), which has given them a further competitive advantage over other ecommerce platforms.
 
The group finally floated to international fanfare in the New York Stock Exchange in 2014. On the date of its IPO, September 19, 2014, Alibaba's market value was measured as US$231 billion. It was the biggest flotation in history, eclipsing that of Facebook in 2012.
 
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Jack Ma striking the bell to commence trading at NYSE.
 
With a personal wealth estimated at over US$20 billion, Ma himself has remained grounded throughout his meteoric rise and proved eminently quotable, sounding like a hybrid of philosopher and motivational speaker:
 
- Never give up. Today is hard, tomorrow will be worse, but the day after tomorrow will be sunshine.
 
- You should learn from your competitor, but never copy. Copy and you die. 
 
- A real businessman or entrepreneur has no enemies. Once he understands this, then sky’s the limit.
 
- If you’re poor at 35, you deserve it.
 
- Giving up is the greatest failure.
 
 
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Alibaba Headquarters in Hangzhou.
 
 
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Alibaba Headquarters, Hangzhou.
 
 
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Inside the Alibaba workplace.
 
 
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Ma shows off his Tai Chi skills.
 
 
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Ma and famous Hong Kong actor Stephen Chow (周星驰) practicing Tai Chi.
 
 
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In 2012, on national TV, Ma made a 100 million yuan bet ($16.3 million) with fellow Chinese billionaire   Wang Jianlin (chairman of real estate developer Wanda Group) that online purchases will overtake   traditional retail shopping by 2020. Wang later indicated the bet was a publicity stunt suggested by TV   producers, but it has served to highlight the personal competition which exists between China’s two richest people.
 
 

Jack’s Life in Pictures

 
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Ma (center) with his elder brother and sister outside the family home in Hangzhou.
 
 
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Ma (left) with elder brother and younger sister at West Lake, Hangzhou
 
 
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Ma (left) with a pair of unknown foreign girls.
 
 
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A young Ma in Hangzhou.
 
 
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Ma as a college student (standing far right). He’s the only one not wearing a shirt.
 
 
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Ma (second from left) working as a part time tour guide during his college years.
 
 
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Ma ran an evening English class in the Young Men's Christian Association on Jiefang Rd (解放路), Hangzhou. It has now been turned into a café.
 
 
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Ma’s first TV appearance was in 1995 when he was randomly asked by a reporter if he would interfere if he saw somebody stealing a manhole cover to sell for money.
 
 
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Ma’s first visit to the States in 1995. He stayed with Dave and Dolores Selig, the Seattle-based relatives of colleague A Huo (阿霍).
 
 
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In January 1994, Ma founded Hope Translation Company (海博翻译社). It was located at 27 Qingnian Rd, Hangzhou (杭州青年路27号).
 
 
d2bd1c7edbadfe170411027dfee8bcc4 
Street view of Ma’s Hope Translation company, Hangzhou.
 
 
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Ma’s business card with Hope Translation.
 
 
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Another of Ma’s business cards from an unknown business.
 
 
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The business card shows Ma’s company transformation from Hope Translation to Hope Internet. It is dated sometime between 1995 and 1996, and precedes China Pages.
 
 
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Jack Ma outlining his Internet dream to coworkers.
 
 
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Ma’s team in early 1999.
 
 
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Ma’s team on the Great Wall in early 1999.
 
 
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Jack Ma’s business card from the early days of Alibaba.
 
 
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Ma’s calligraphy of the saying永不放弃 meaning “Never give up!” Dated May 9, 2002.
 
 
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The same calligraphy inscribed on a roadside stone, Hangzhou.
 
 
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Seldom seen smoking in public, Ma is pictured here holding an unlit cigarette, April 2004. 
 
 
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Ma and Yahoo’s Chief Operating Officer Daniel Rosensweig enjoying themselves at the press conference announcing Alibaba’s takeover of Yahoo China. Beijing, August 11, 2005.
 
 
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Ma meeting Bill Clinton on September 10, 2005.
 
 
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 At a recruiting meeting in Xi’an, Shaanxi Province, December 7, 2005. Ma was the CEO of Yahoo China at that time.
 
 
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Ma’s business card: Director of Softbank; Chairman of Board of Directors of Yahoo China; and Chairman and CEO of Alibaba Group.
 
 
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Ma attending a Kung Fu show in 2006.
 
 
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Alibaba was listed on the Hong Kong Stock Exchange on November 6, 2007.
 
 
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Alibaba’s Hong Kong listing, November 6, 2007.
 
 
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Ma’s ‘punk’ performance at the 10th anniversary celebration of the founding of Alibaba, September 10, 2009.
 
 
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Ma interviewing NBA legend Kobe Bryant during the APEC Summit for SME, Hangzhou, September 11-12, 2009.
 
 
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Ma with former Prime Minister Wen Jiabao, June 30, 2010.
 
 
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Ma with actor and former Governor of California, Arnold Schwarzenegger, September 11, 2011.
 
 
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Ma being interviewed by Diane Sawyer for ABC News, November 15, 2010.
 
 
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Ma with Facebook founder Mark Zuckerberg, December 24, 2010.
 
 
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Ma (right) and founder of Tencent, Pony Ma (马化腾). Tencent owns the popular messaging services QQ and WeChat (May 2011).
 
 
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A bald Ma in October 2012.
 
 
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Ma visiting his former college, Hangzhou Teacher's University on June 13, 2013. He left this calligraphy work for the students:智信仁勇严, which translates as intelligence, belief, kind, brave, disciplined.
 
 
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Ma with Prime Minister Li Keqiang (right), October 31, 2013.
 
 
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Ma was awarded an honorary doctorate by Hong Kong University of Science and Technology on November 8, 2013.
 
 
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UK Prime Minister David Cameron tweeted a selfie with Ma on December 4, 2013.
 
 
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An ‘@’ symbol or a swirl of Tai Chi mysticism? Ma's calligraphic art was bought at auction by a Hong Kong businessman for the price of 2.42 million RMB (US$390,000) on December 21, 2013.
 
 
90fba601871914fa2b8248 
Ma (right) with CEO of Guangzhou Everest Football Club, Xu Jiayin (许家印). The press conference on June 5, 2014, announced Alibaba’s purchase of a 50% share of the club for 1.2 billion RMB (US$ 200 million).
 
 
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Ma preaching to the students of Tsinghua University, June 30, 2014.
 
 
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On the way to the New York Stock Exchange, September 18, 2014.
 
 
 

Another side of Jack?

 
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Ma was a follower of the controversial Taoist lifestyle guru Li Yi (李一, pictured behind), who was accused of sexual abuse in 2010.
 
 
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Ma with the “phony” Qigong master Wang Lin (王林, center) who has since fled to Hong Kong for legal reasons. Movie star Jet Li (right), is the founder of One Foundation.
 
 

Jack Speaks

Note: The following video clips are hosted on Chinese video websites. There will likely be around 45 seconds of Chinese advertising before the content starts.
 
Jack Ma's lecture at University of Columbia (55 minutes, English):
 
Jack Ma's lecture at Stanford Graduate School of Business (56 minutes, English):
 
Jack Ma's lecture at APEC in Peru (38 minutes):
 
Alibaba's Roadshow video by CEO Joseph Cai (蔡崇信) (40 minutes):
 
 
 

The Alibaba Group, in their own words

 
“Alibaba Group’s mission is to make it easy to do business anywhere. The company is the largest online and mobile commerce company in the world in terms of gross merchandise volume. Founded in 1999, the company provides the fundamental technology infrastructure and marketing reach to help businesses leverage the power of the Internet to establish an online presence and conduct commerce with hundreds of millions of consumers and other businesses.
 
Alibaba Group’s major businesses include:
 
Taobao Marketplace (www.taobao.com), China's largest online shopping destination
 
Tmall.com (www.tmall.com), China’s largest third-party platform for brands and retailers
 
Juhuasuan (www.juhuasuan.com), China’s most popular online group buying marketplace
 
Alitrip (www.alitrip.com), a leading online travel booking platform
 
AliExpress (www.aliexpress.com), a global online marketplace for consumers to buy directly from China  
 
Alibaba.com (www.alibaba.com), China’s largest global online wholesale platform for small businesses
 
1688.com (www.1688.com), a leading online wholesale marketplace in China
 
Alibaba Cloud Computing (www.aliyun.com), a provider of cloud computing services to businesses and entrepreneurs
 
Alibaba Group also provides payment services on its marketplaces through its contractual arrangements with Ant Financial Services Group, a related company of Alibaba Group that operates Alipay (www.alipay.com). 
 
Through China Smart Logistics (or Zhejiang Cainiao Supply Chain Management Co., Ltd.), a 48%-owned affiliate, Alibaba Group operates a central logistics information system that connects a network of express delivery companies in China.”
 
 

The Story of Ali Baba

 Ma explained how he came to a decision on choosing the company name:

“One day I was in San Francisco in a coffee shop, and I was thinking Alibaba is a good name. And then a waitress came, and I said, "Do you know about Alibaba?" And she said yes. I said, "What do you know about Alibaba?", and she said, "Open Sesame". And I said, "Yes, this is the name!" Then I went onto the street and found 30 people and asked them, "Do you know Alibaba?" People from India, people from Germany, people from Tokyo and China … they all knew about Alibaba. Alibaba — open sesame. Alibaba is a kind, smart business person, and he helped the village. So … easy to spell, and globally known. Alibaba opens sesame for small- to medium-sized companies. We also registered the name "Alimama", in case someone wants to marry us!"
 
The fact that it can be phonetically pronounced and understood in most languages without difficulty (especially in Chinese: 阿-里-巴-巴 / a-li-ba-ba) has no doubt aided its success.
 
The original character of Ali Baba comes from the Arabian folk tale Ali Baba and the Forty Thieves. The story is one of the most famous in the One Thousand and One Nights collection and it concerns a poor woodcutter, Ali Baba, who happens to overhear a group of thieves visiting their store of treasure in the woods. Their treasure is kept in a cave which is sealed by magic. Ali Baba learns that the door opens when the phrase "open sesame" is uttered, and seals itself on the words, "close sesame". When the thieves are gone, Ali Baba tries it himself, and takes a small bag of gold coins home with him.
Ali Baba and his wife borrow a set of scales from his suspicious sister-in-law so they can weigh the gold. However, to find out what he could possibly need them for, the sister-in-law had dropped a blob of wax in the scales before lending it. She is shocked when Ali Baba returns it with a single gold coin stuck to the wax in the scales, and runs to tell Ali Baba’s brother, Cassim. He forces Ali Baba to talk about the gold and the secret of the cave.
 
Cassim located the cave, and planned to take as much treasure as he possibly could. He entered using the magic words, but in his excitement, forgot the words to get out again. The thieves returned, found him still inside the cave and murdered him. After his brother didn’t return, Ali Baba went to look for him and found his corpse mutilated and left as a warning inside the cave entrance.
 
Ali Baba brought Cassim’s body home and enlisted the help of a slave in Cassim's house to try and convince the village Cassim died a natural death. The slave-girl, Morgiana, first bought some medicine from the apothecary, proclaiming loudly that Cassim was ill. Then she located an old tailor known as Baba Mustafa, blindfolded him, and took him to Cassim's house to stitch the body back together. That way Cassim was given a proper burial without any awkward questions.
 
On finding the body missing, the thieves realized that someone else must know of the cave. When one of the thieves overheard Baba Mustafa mention that he had just sewn a dead man's body back together, the thief asks Baba Mustafa to lead the way to the house where the operation took place. The tailor is blindfolded and made to retrace his steps to the house, where the thief marks the door with a symbol so that the other thieves could return later that evening and slay the entire household.
Morgiana understood what was happening. She foiled the plan by marking all the houses in the neighborhood with a similar symbol. When the forty thieves returned that night, they didn’t know which house was the correct one and the thief responsible for marking the door was killed by their angry leader. The next day, another thief visited Baba Mustafa to try to establish which house it was. This time, a chunk was chipped out of the stone step at the front door. Again, Morgiana helped ruin the plan by making similar chips in all the other doorsteps in the vicinity. The second thief was thus killed for his incompetence also. Exasperated, the leader of the thieves went to see Baba Mustafa for himself. He studied every detail of the exterior of Ali Baba's house, committing it to memory, so as to be sure to recognize it when they returned.
 
Pretending to be an oil merchant in need of Ali Baba's hospitality, he brought mules loaded with thirty-eight oil jars. One of the jars was filled with oil, but the other thirty-seven concealed a thief in each. They planned to murder Ali Baba as he slept. On discovering the plan, Morgiana killed the thirty-seven thieves in the oil jars by pouring scalding oil on them. The leader came to rouse his men during the night, but to his horror discovered them dead and fled. The next morning Morgiana told Ali Baba about the thieves. They buried them and Ali Baba showed his gratitude by giving Morgiana her freedom.
 
The irate leader of the thieves bided his time, meticulously plotting his revenge. He established himself as a merchant, and ingratiated himself with Ali Baba's son who had taken over Cassim's business. The leader was eventually invited as a dinner guest to Ali Baba's house where he intended to murder Ali Baba and exact his revenge. However, Morgiana was also invited to the dinner. When she recognized the thief leader, she performed a seductive sword dance for the crowd before plunging the blade into the thief’s heart. Ali Baba was outraged. But on finding out the thief’s intentions however, became extremely grateful and rewarded Morgiana by forcing her to marry his son.
 
Ali Baba became the only surviving person to know of the cave and its secret treasure. He returned and took as much treasure as he could carry, telling no one about the cave except his son, who in turn told his children. Ali Baba’s descendants were very wealthy.
 
 
 
 
 
 
 
 

 

 
 

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