The Chinese e-commerce company Alibaba Group has been in the U.S. news quite a bit lately; the company has filed paperwork to sell its stock to the public for the first time in an initial public offering (IPO). But for many Americans, the questions are what exactly is Alibaba and why is this company so important?
Started in 1995, Alibaba is the fastest growing Internet company in the world and is located in one of the largest economies in the world – China. The company’s IPO filing stated it intends to raise nearly $1 billion, but experts put the value at closer to $15-$20 billion, which would make it the largest IPO since Facebook in 2012. The company has been described as the Chinese equivalent of a combined Amazon, eBay, and PayPal. Consider this: online shopping in China is growing at an annual rate of 27%, and last year, the value of products sold on Alibaba were more than $248 billion – this is greater than the volume sold on eBay and Amazon combined. And perhaps more importantly, roughly 20% of purchases on Alibaba were made using mobile phones.
So, what is Alibaba? In short, it is arguably the world’s fastest growing, highest revenue, Internet company and is based in the world’s largest economy. Watch out, world.
Group Activities and Discussion Questions:
- Show the New York Times video about the company: http://nyti.ms/SxPHEm.
- Discuss various market strategies used by companies. What strategy is Alibaba following?
- What are the implications of Alibaba for U.S.-based Internet companies?
- How can U.S. companies partner with Alibaba?
- A movie is available that discusses the founding and growth of Alibaba – “Crocodile in the Yangtze”: http://www.crocodileintheyangtze.com
Source: New York Times, Wall Street Journal, other news sources