In a period that’s been characterized by rapid innovation in China’s high technology sector, Alibaba’s IPO—potentially one of the largest public offerings of all time—has been one of the most widely-anticipated events of the year. The IPO is expected to raise $20 billion, making it bigger than Facebook’s $16 billion IPO and Visa’s $19.1 billion IPO (the largest IPO in US history thus far). Many are watching this IPO closely. Some are intrigued by the “mystique” and complexities offered by the explosive growth of internet and ecommerce in China, while others are attracted simply by the tangibility of Alibaba’s crown jewels: the C2C (consumer-to-consumer) retailer Taobao and the B2C (business-to-consumer) portal Tmall.
Regardless, it’s quite obvious that the behemoth company that Jack Ma founded, which is now technically the world’s largest ecommerce company, has attracted attention from every corner of the world—from industry practitioners and institutional investors, to academics eager to study the Alibaba phenomenon. Yet with all the hype surrounding this mega-event, there have been numerous questions and concerns raised: from the sustainability of Alibaba’s current and future business model in the context of broader industry trends, to its ultimate IPO valuation and how various factors will impact its value. CKGSB Knowledge, the online research journal of the Cheung Kong Graduate School of Business, had the opportunity to sit down with Teng Bingsheng, associate professor of strategic management at CKGSB, to discuss these very questions.
Teng, widely acknowledged as an expert on China’s ecommerce sector, has followed Alibaba and its evolution very closely since its inception in 1999, having published several articles, case studies, and interviews on both Alibaba and ecommerce in China. His academic background and expertise on the company offers a fresh perspective on Alibaba.
In the video below and the interview at CKGSB Knowledge, Teng explains the various issues involved in the Alibaba IPO, such as disclosures, the company’s structure and the valuation.
[box] This article has been reprinted with permission from CKGSB Knowledge, the online research journal of the Cheung Kong Graduate School of Business (CKGSB), China’s leading independent business school. For more articles on China business strategy, please visit CKGSB Knowledge. [/box]