BizChina

Jack Ma is furious. It's been two weeks since the lead founder of Alibaba Group, China's largest e-commerce enterprise, told the world about the scandal at his company. Now, in his first interview since, he's leaping out of his chair, still worked up about the 100 salespeople he fired for cheating thousands of foreign merchants--or looking the other way. Their crime: knowingly setting up fraudulent sellers and certifying them as so-called Gold Suppliers, who accepted payments for but never delivered popular consumer electronics like laptops and flat-screen monitors. "What I'm angry about is [the salespeople] suspect--they know, probably--the [dealer] is probably not right, but they just assign the contract," says Ma, speaking rapidly and emphatically. "This is the trust issue."

And by far the biggest setback to rock Alibaba, a family of Web operations--including business-to-business sales, a consumer marketplace, e-payments and data services--in its 12-year history. Ma is tiny (5 feet, 3 inches), slight (he weighs just over 100 pounds) and full of coiled energy. He says he first learned of the skulduggery from a Jan. 22 e-mail from Jane Jiang, a cofounder who late last year took over the trust and safety unit of Alibaba.com, the group's business-to-business platform. Her missive shocked him and a small group of executives. "Ta ma de," she wrote (rough translation: "F---!"). Ma called her immediately and asked, "What happened?"

Late that night Ma called together senior colleagues at a bar near the company's headquarters in Hangzhou, his hometown. "Then we had a long talk, and I said, 'Wow, we've got to pay attention to this.'" So began an internal investigation and the most painful month of Ma's career. "I'm thinking, 'What am I going to do if that is true?'"

Despite China’s status as the world’s largest auto market, Nissan Motor Co. said its new Beijing design studio doesn’t want to just cater to Chinese consumers, but rather it hopes to propel Chinese design on a global scale.

“Most people think we’re opening a Beijing design studio because we want to create China-specific cars that cater to Chinese consumer likes and wants,” Nissan design chief Shiro Nakamura said in an interview. “But we think we can tap China’s growing competitiveness in design to come up with something unique that can make a global impact.”

An opening ceremony had been scheduled for Tuesday in Beijing, but the Japanese auto maker postponed the event amid the earthquake and tsunami devastation in the country’s northeast.

One of the studio’s tasks, Mr. Nakamura said, is to follow design trends within China.

A decade ago, China wasn't the top trading partner for even one of the Group of 20 economies. Today, it's the biggest trading partner for six (Australia, Japan, Korea, India, Russia and South Africa), has replaced the U.S. as the top export market for a seventh (Brazil), and risen in import for the rest.

"When somebody writes the history of our time 50 or 100 years from now," says Lawrence Summers, the Harvard University economist and former Obama aide, "it is unlikely to be about the Great Recession of 2008…or about the fiscal problem that America confronted in the second decade of the 21st century. It will be about how the world adjusted to the movement of the theater of history toward China."

China's growth is felt in nearly every corner of the globe—in ways not always welcome. Its rise as a trading power is reshaping other economies, shifting national business models from manufacturing back to raw materials, pushing currencies in sometimes unwanted directions and prompting worries about wages in the U.S.

China, which reported a trade deficit for February in part because of the timing of the Lunar New Year, said exports for the first two months of this year ran 21.3% above year-ago levels; imports were up 36%. The U.S., meanwhile, said Thursday it ran a bigger trade deficit in January with China than with any other country. In January, at current exchange rates, China's global exports were 35% greater than U.S. exports; its global imports 14% smaller.

While China's official statistics may inflate the value of exports by underestimating the value of imported components, signposts of its trade heft are plentiful.

There can be little doubt that last fall’s gambit of halting exports of rare earths to Japan as punishment for arresting Chinese seaman has spectacularly backfired on China. The recklessness of that action sent shock waves through the boardrooms of every Japanese company that has come to rely upon China not just for raw materials, but for intermediate parts and, of course, for finished goods.

It is hard to imagine anything more detrimental to the continuing development of Japan-China trade, as well as for Japanese investment in China in ventures producing for overseas markets. In the months following the rare earths “shock,” the Japanese press carried numerous reports of companies planning to reduce sourcing from China, reconsidering investments, and even of selecting new product technologies that do not rely on rare earths. Several sogo shosha (general trading companies–the swashbuckling global “special forces” of corporate Japanese) opening talks to invest in rare earths mining in Vietnam and other countries. Even the Japanese government responded by initiating discussions with some countries for bi-lateral sources agreements.

At the same time that the Chinese government halted rare earths shipments, a number of Japanese companies manufacturing in China, notably the auto markers, began to experience labor troubles. Workers’ representatives demanded high wages and threatened strikes. Local officials seemed eager to support the workers against their foreign, particularly Japanese, employers. Not to be outdone,Wen Jiabao, the Chinese premier, weighed in with a statement about how foreign firms should be sympathetic to the demands of local employees.