SHANGHAI ― Alibaba has become by far the dominant e-commerce company in China, a country with the world’s greatest number of Internet users, in only 15 years.
The Hangzhou-based company is largely unknown outside Greater China, but a historic listing on the New York Stock Exchange Friday and its recently-launched U.S. shopping website, 11 Main, are expanding its global stature.
By raising $25.02 billion, Chinese online giant Alibaba has broken the record for the largest initial public offering in history.
With ambitions beyond online retailing, the company is guided by Jack Ma, a diminutive yet charismatic onetime English teacher who is now a billionaire entrepreneur.
Billionaire Jack Ma, chairman of Alibaba Group Holding Ltd. (Bloomberg)
“Fifteen years ago, Alibaba’s 18 founders were determined to set up a global Internet company originated by Chinese people, with hopes it would become one of the world’s top 10 Internet companies, a company which will exist for 102 years,” Ma said in May, meaning the company would span three different centuries.
“We have a dream,” said Ma, who was on the floor of the New York Stock Exchange on Friday before trading opened.
“We hope in the next 15 years the world will change. We want to be bigger than Wal-Mart.”
Alibaba had originally planned to list in Hong Kong, thereby staying on Chinese soil, but talks between the company and the exchange broke down last year because listing rules prevented Ma and top management from retaining control over the board of directors.
The controversial structure has proved to be an issue even with a U.S. listing, prompting Alibaba to disclose the identities of more than 20 partners who have the power to appoint a majority of the corporate board.
“Unlike dual-class ownership structures that employ a high-vote class of shares to concentrate control in a few founders, our approach is designed to embody the vision of a large group of management partners,” it argued in a filing with U.S. regulators.
Ma chose the name Alibaba from “1,001 Nights” because it is easily pronounced in both Chinese and English, and the literary work’s “open sesame” catchphrase signifies the company can “open a doorway to fortune for small businesses.”
Alibaba is often described as the Chinese version of eBay. Like the U.S. company, it has its own payments system, though it puts less emphasis on online auctions in favor of instant transactions.
Alibaba bested eBay in China over a decade ago, essentially forcing it to retreat.
“eBay may be a shark in the ocean, but I’m a crocodile in the Yangtze River. If we fight in the ocean, we lose, but if we fight in the river, we win,” Ma is famously quoted as saying.
Unlike another U.S. online retailing giant, Amazon, Alibaba has no product stocks itself, instead connecting buyers and sellers.
Its consumer-to-consumer platform, Taobao, is estimated to hold more than 90 percent of the Chinese market with over 800 million product listings and around 500 million registered users.
Taobao’s presence is so pervasive in a country with more than half a billion Internet users that it has entered the lexicon: “Taobao Villages” are settlements of sellers while “Taobao Girls” are young women who model clothes on the site.
Another Alibaba platform, Tmall.com, is estimated to hold over half the market in China for business-to-consumer transactions.
Domestic competitors include JD.com, which listed on the U.S. Nasdaq market in May, and a newly created upstart backed by property conglomerate Wanda Group ― the company of Wang Jianlin, who is worth $16 billion, according to publisher Forbes.
The surge in Alibaba’s share price following its debut Friday lifted Ma’s personal net worth to about $17 billion, making him the new richest man in China, Forbes said.
Ahead of the flotation, Alibaba has embarked on an acquisition frenzy aimed at expanding beyond its traditional online commerce business, though critics say it is already spending the money it will raise.
Recent deals include buying a 50 percent stake in China’s top football club Guangzhou Evergrande, purchasing domestic mobile browser developer UCWeb and paying $1.22 billion for a stake in top Chinese online video platform Youku Tudou.
Alibaba said it recorded profits of nearly $2 billion on revenue of $2.5 billion for the quarter ending June 30. (AFP)