Directors' Report - Alibaba

Upholding Alibaba values is something that our Company takes absolutely seriously because our management believes our values
are fundamental to our long-term success. We will revamp the human resources management processes and policies, including the
recruitment process, training process, incentive and performance review process, as well as the sales management structure in order to
ensure proper checks and balances, and to align incentive towards building long-term customer value.
Integrity of our employees
One of our most important values is Integrity, which covers the integrity of both our employees and our online marketplaces as trusted
and safe places for our small business customers.
Although the investigation described above in relation to fraudulent suppliers on our marketplace did not create any direct material
financial impact on us, nor was any senior management involved and we have been making good faith efforts to address the problem,
our former chief executive officer and chief operating officer rendered their resignations to take the ultimate responsibility for not being
able to uphold our value system. Their resignations have delivered a very clear and strong message that we will not tolerate any behavior
that compromises our culture, values or principles.
Additional process applied for identifying, evaluating and managing the significant risks faced
Operation and emerging risks were brought to our audit committee through corporate governance meetings in addition to the regular
audit committee meetings. Audit committee members are invited to comment on the agenda and may submit proposals for inclusion
into the agenda for consideration.
In 2010, we organized three corporate governance meetings for members of our audit committee with a view to enhancing their
understanding of our Company’s new strategy and business risks faced. Topics covered, among other areas, customer service, insurance
coverage, technology and intellectual property were presented in these meetings for review and discussions.
As an oversight of our internal control procedures, our audit committee also considers the findings of major investigations on internal
control matters as delegated by our board, on our management’s invitation or on its own initiative. For example, in mid-January 2011,
one of our independent non-executive directors, KWAN Ming Sang, Savio, with the assistance of our internal audit team, formed a
special task force and conducted an internal investigation to identify the circumstances and root causes leading to the existence of
fraudulent suppliers on our marketplace, and proposed recommendations for improvement in our operations to our management.
Internal Audit Function
Our internal audit team formulates the annual internal audit plan based on a top-down risk based approach to ensure the projects are
aligned with our corporate strategies and objectives. Audit results are reported to our audit committee and senior management. Our
internal audit team also performs remediation reviews to ensure outstanding issues are properly addressed. In addition, it maintains
regular communications with our external auditors so that both parties are aware of the significant factors that may affect their
respective scopes of work. We will continue to have an internal audit team which provides independent assessment on the existence and
effectiveness of our internal control system, mainly through conducting annual internal audit and audit on various operational projects.
OTHER INITIATIVES
Our board recognizes the importance of using our annual general meeting as a forum to communicate and share the Alibaba.com
objectives and developments with our shareholders. Shareholders are encouraged to attend the meeting and raise questions with our
board and management and exchange their views candidly in an open and friendly atmosphere. To enhance shareholder understanding
of Alibaba.com’s business developments, operations, management philosophies and latest initiatives, our chairman and chief executive
officer each designated a separate session of sharing during our 2010 annual general meeting in addition to the standard meeting
agenda. In addition, in order to give our shareholders and investors in mainland China an opportunity to attend our shareholder meeting
and exchange views and opinions with our management, we held our 2010 annual general meeting in Shenzhen, China.
We plan to continue enhancing the use of our corporate website as a channel of communication with our shareholders. Relevant
information including press releases, formal announcements and principal corporate governance policies are available on our website:
http://ir.alibaba.com.
Hong Kong, March 17, 2011
59
By order of the Board
wong Lai Kin, Elsa
Company Secretary
Alibaba.com Limited Annual Report 2010