September the 19th marked a milestone in China’s Internet history, the day the Hangzhou based e-commerce giant Alibaba (NYSE: BABA), raised more than $25 billion in the largest IPO in history. Founder, Jack Ma, became China’s richest individual with an estimated net worth of $21.8 billion and the 17 other partners who invested in the company 15 years ago have made significant gains. As China’s internet economy grows we can expect more Ma`s to grab our attention.
Alibaba is the last of the big three Chinese Internet giants to IPO, but arguably has the most diverse collection of businesses with: Taobao, Tmall, Aliexpress and Aliyun amongst others. Its flagship C2C portal Taobao, features nearly a billion products and was one of the 20 most-visited websites globally in 2103. The complimentary Tmall is also a C2C platform but focusing on both domestic and global brand sales. Alipay is a third-party online payment platform with no transaction fees. It also provides an escrow service
Economist’s estimates internet related businesses will add between 0.5% and 1% of GDP growth to China’s economy every year till 2025. As the country re balances its economy away from real estate and manufacturing towards the domestic consumer the IT sector is flourishing: helped by the rapid growth of smart phones and a comprehensive nationwide communications network just currently expanding onto a 4G platform.
Recruitment is a vital area for new IT companies where attitudes are changing. Gone are the days when the brightest looked to the SEO`s to provide a stable career path. New graduates want to be part of companies such as Alibaba, Baidu and Tencent where they attract new talent not only with their flexible, youthful corporate culture but with the allure of stock options: just ask the 20,000 Alibaba employees who are eligible for shares.
The question now for companies such as Alibaba is whether, with their new found global exposure and deep pockets to match, they will continue to look toward the Chinese consumer to provide growth or if they will start to take tentative steps to becoming global companies where they remain marginalised. Traditionally Chinese IT companies have localised international ideas for the domestic market and performed well against International competitors, however it’s a whole new game outside of China. Their success is possible, but the process of becoming an established global business requires both strong institutional support as well as an internationalised corporate culture.
Of all China’s internet companies Alibaba stands the best chance. With its dominant domestic market position: not only limited to online retail but also in online payment processing and cloud services it has a diverse infrastructure and knowledge base. It must be on the prowl for acquisitions in Silicon Valley to bring it an international edge to its possible expansion plans. As its first foray internationally the company is currently in talks with India’s Snapdeal.