Despite the prudence that the name evokes (approaching 40 thieves doesn’t bode well for the company…), Alibaba is preparing to launch an IPO of impressive dimensions. Negotiations will begin in New York on September 19th, one year after the announcement, following due diligence, road shows, and the expectations for an event that crosses economic boundaries. The IPO share price valuation falls within the $60-66 range, which could raise $24.3 billion for the company. It would be one of the biggest IPOs in history, an apparent contradiction lying between a company from a communist country and the involved hospitality of Wall Street, the temple of capitalism. With a successful IPO, Alibaba could reach a value of $163 billion, which is more than Amazon and inferior only to Facebook and Google among Internet companies. Its capitalization could be greater than 95% of companies listed among the S&P giants. Investors should not be intimidated by Alibaba’s founder and chairman, Jack Ma’s, declarations: “our clients are our priority, then our employees, and shareholders in third place.” It’s only one of the eccentric affirmations the Chinese magnate has made, being a man of great foresight, competence, and managerial skill. An ex-English teacher, he now oversees an ecommerce empire. In China, more than 60% of packages delivered transport goods moved by his site. B2B portals, search engines, and micro-credit financing companies have been added to the list over the years. In search of greater popularity, Jack Ma acquired half of Evergrande, the most important Chinese soccer team, which, under the guidance of Marcello Lippi, became the national and Asian champion. The IPO in New York is an arrival and turning point, a stage and a trampoline.
Despite his strength and power, Ma is now exposed to greater competition, encouraged by Chinese initiatives that bet on market growth and want to grab a piece of the most lucrative segments. In fact, a war has broken out among billionaires because the “three internet kings” launched a joint ecommerce venture. They are three luminous examples of effective entrepreneurship, welcome to the people and government, and capable of creating wealth for companies and country. The leader is the richest man in China according to Forbes in 2013: Wang Jang Lin, real estate tycoon, builder of China’s mini Hollywood (whose inauguration Leonardo di Caprio and Nicole Kidman attended), owner of the Wanda Group, and the American cinema chain, AMC. He’s a member of the communist party, and his name is regularly compared to James Pallotta, from whom he could probably purchase shares of the soccer team, AS Roma. His minority shareholders (each one owns 15%) are Robin Li and Ma Hua Teng, listed at 3rd and 5th places on Forbes’ list, respectively. The former is Baidu’s CEO, the most used search engine, known as the Google of China. The latter heads Tencent, the biggest Chinese Internet Company, active in messaging, video games, social media, and smartphone services. He represents Jack Ma’s greatest threat. Not by chance, Jack Ma has called on his employees to “invade the arctic to kill the penguins,” which are Tencent’s mascot. China’s ecommerce dimensions are striking, just like its expectations for growth. The Chinese market has already surpassed the US’ and is therefore the biggest in the world; online purchases on the most recent Singles Day (11/11) were the most conspicuous ever, making Boxing Day and Cyber Monday pale in comparison. In the middle term, the objective is to control m-commerce, which are mobile purchases made using smartphones and tablets rather nearly obsolete desktop PCs. Its growth trajectory, both recorded and expected, are exponential. It’s the umpteenth proof that consumption in China has been restricted over the years, and is now waiting on liberation to certify the affirmation of the middle class. In the transition among different purchasing modalities, they will play for business domination over the coming years. In the long run, the objective is to secure the consumer, giving him the certainty of the ease of purchasing in any situation. For example, Baidu is launching 020, an online-to-offline service that promotes direct sales in offered locations. The procedure is relatively simple: locate the consumer in supermarket aisles and deliver offers to stimulate purchases. Even more sophisticated—and futuristic for other reasons, too—is a simpler version of Google Glass. The BaiduEye will see an object, convert it into a file, find its availability, and order it at the best price.
The Wall Street IPO can therefore be explained not only by personal ambition or by the defense of interests in China. Jack Ma can return to being the #1 billionaire, but his vision is more expansive, as difficult as it is obligatory: be the first to globalize ecommerce, homogenizing consumers or at least their tastes. For this reason, he has to adventure into international finance. His weapons, as always, are his unconfined ambition, his great abilities, accumulated experience, and an immense mountain of data regarding his customers and their inclinations. He heads a Chinese business that’s out to conquer the world, but, ironically, it will need to watch its back for competition from his own country.