APEC's New Vision
The Beijing Agenda draws a blueprint for an integrated, innovative and interconnected Asia-Pacific
Current Issue
· Table of Contents
· Editor's Desk
· Previous Issues
· Subscribe to Mag
Subscribe Now >>
Expert's View
Market Watch
North American Report
Government Documents
Expat's Eye
Photo Gallery
Reader's Service
Learning with
'Beijing Review'
E-mail us
RSS Feeds
PDF Edition
Reader's Letters
Make Beijing Review your homepage
Top Story
Top Story
UPDATED: November 21, 2014 NO. 14 APRIL 3, 2014
Alibaba IPO Looms
China's e-commerce market leader is planning on a U.S. listing. How will this change the company's future?
By Zhou Xiaoyan

"The three leading Chinese Internet companies—search engine Baidu, Alibaba and Tencent—are in fierce competition to grab as much market share in the mobile Internet arena as possible. After the IPO, Alibaba will raise a large amount of capital that can be used to further expand its territory," said Feng.

"Mobile Internet business layout requires hefty investment. Being listed is just like loading up on bullets to get ready for the fight. The impending IPO will definitely increase the competitiveness of Alibaba so that it can lock horns more aggressively with Baidu and Tencent," he said.

Every coin has two sides, however. A listing in New York means strict scrutiny from U.S. regulators and class-action lawyers. The company also has to live with more pressure from investors in terms of profitability, said analysts.

Feng said Alibaba will face challenges from three areas.

"Firstly, Alibaba will be required to disclose information to investors, which could be used by its competitors against it in future competition. Secondly, getting listed means Alibaba has to face more pressure in profitability. Some strategic plans that are good for the company's long-term development but bad for short-term financial performances may have to be abandoned due to profitability concerns," Feng said. "Besides, the United States has the strictest scrutiny over its financial markets compared to anywhere else in the world."

Alibaba is likely to become a frequent target of class-action lawsuits once it gets listed in the United States.

Alibaba's C2C website Taobao.com was frequently rocked by allegations that some small retailers on its website were selling counterfeits. Although Alibaba adopted various measures, they failed to have the desired effect and negative news reports on the website were a frequent occurrence.

In the United States, class-action lawsuits have a low threshold and can yield high profits. Many institutions and investors that rely on this system to make a living had their eyes on Chinese companies that were recently listed in the United States, said Sun Feiran, a lawyer from the Shanghai-based DeBund Law Offices.

Most startup businesses in the C2C platform Taobao.com lack legal expertise. The small vendors who sell counterfeits or steal other sellers' pictures will be targeted by Alibaba in the near future, said analysts.

"I think the prospectus of Alibaba will mention this risk," said Sun. "Alibaba will impose harsher punishment on sellers that are engaged in any copyright infringement or sales of counterfeits. If it doesn't do anything about those sellers, it will lead to the destruction of the company after it gets listed. Apparently, some small sellers will be weeded out and the good ones will be kept."

Sun also thinks Alibaba's Singles Day online shopping festival may be canceled.

Dubbed Singles Day, November 11 means massive discounts for online shoppers in China and has become the country's biggest online shopping festival, similar to Cyber Monday. On November 11, 2013, Alibaba reported a transaction value as high as 35 billion yuan ($5.6 billion).

"Too many discounts may lead to anti-dumping lawsuits," said Sun. "Alibaba's U.S. lawyers may suggest the company cancel the shopping festival."

Email us at: zhouxiaoyan@bjreview.com

The Alibaba Umbrella

Alibaba Group was founded in 1999 by 18 people led by Jack Ma, a former English teacher from Hangzhou, east China's Zhejiang Province. Alibaba Group's major businesses include:

- Taobao.com—China's most visited customer-to-customer (C2C) online shopping website

Taobao was launched in May 2003. It is currently one of the world's top 10 most visited websites, according to Alexa.com, and was the top mobile commerce app in China in January 2014, according to iResearch.

- Tmall.com—China's leading online business-to-customer (B2C) mall

Tmall was launched in April 2008 as part of Taobao Marketplace and became an independent platform in June 2011. It was the largest B2C online retail platform in China based on the value of goods transacted as of September 2013, according to iResearch.

- Alibaba.com—Leading global wholesale business-to-business (B2B) platform

The original business of Alibaba Group founded in Jack Ma's apartment, Alibaba.com is the leading platform for cross-border wholesale trade serving millions of buyers and suppliers around the globe. Through Alibaba.com, small businesses can sell their products to companies in other countries and source merchandise from abroad.

- AliExpress.com—Popular international e-marketplace for consumers

Launched in April 2010, AliExpress is a retail marketplace targeted at consumers worldwide, many of them located in the United States, Canada and emerging markets including Russia, Brazil and Ukraine.

- Alibaba Cloud Computing (aliyun.com)—Developer of platforms for cloud computing and data management

Established in September 2009, Alibaba Cloud Computing develops highly scalable platforms for cloud computing and data management.

- Alipay.com—Leading online and mobile payment solution in China

Launched in December 2004, Alipay provides an easy and secure way for individuals and businesses to make and receive payments online and on mobile phones. Alipay is the payment solution supporting the online and mobile versions of Taobao and Tmall, and is used by leading online merchants in the retail, digital entertainment, telecoms and travel industries. Consumers also use Alipay for daily activities such as paying restaurant, utility, healthcare and credit card bills. Alipay offers an online payment solution to help retailers in North America and Europe sell directly to consumers in China and supports transactions in 14 major foreign currencies.

(Source: Alibaba Group)

   Previous   1   2  

Top Story
-Alibaba IPO Looms
-Open Sesame
-Slow Down, Don't Panic
-Target 2020
-Oil Prices on the Decline
Related Stories
-Online Shopping Carnival
-Open Sesame
-First-Degree Merger
-A Conflict of 'Interest'
-Private Banks in Sight
-Managing Money Online
Most Popular
About BEIJINGREVIEW | About beijingreview.com | Rss Feeds | Contact us | Advertising | Subscribe & Service | Make Beijing Review your homepage
Copyright Beijing Review All right reserved