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The Biggest Risk For Investing In Alibaba Is...
Submitted by George Chen via The South China Morning Post,
What is the biggest risk for investors in China's e-commerce giant Alibaba? In one word: politics.
Jack Ma Yun, English teacher-turned entrepreneur, is already a legend in China for the incredibly fast growth and remarkable success of the e-commerce firm he founded in 1999. I have no doubt about Ma's business experience and leadership skills, but there is one thing Ma - and many of his rivals - may be worried about. Politics.
The Alibaba success story is not just about Alibaba itself. It is about the inevitable trend of globalisation, the rise of China as a country on political and economic fronts, and also about how eager Beijing is to support and build up a crop of new national brands that can compete with the likes of Google and Amazon in the United States.
"To have political connections in Beijing ... isn't necessarily bad. Many companies try to do so"
Beijing's support - directly or indirectly - is a key factor in Alibaba's success. Without the government's support, Ma would not have felt confident enough to speak in New York in front of hundreds of Wall Street investors during the recent roadshow for Alibaba's initial public offering on the New York Stock Exchange.
Ma understands the importance of the government's backing for Alibaba and most of the time he has been good at lobbying Beijing for policy support.
However, in at least one case he had a setback and was honest enough to tell the public how he felt about that.
"Sometimes, what can beat you is not technology, but just a document," said Ma at a technology conference in Beijing in March this year, in response to a question about what challenges Alibaba would face in the next phase of its business expansion.
Ma didn't elaborate, but many industry watchers believe his comments were in reference to increasing domestic policy uncertainties related to internet finance and online payments in the world's No2 economy.
Internet finance is completely new in China. Chinese regulators have been back and forth when dealing with some new policy issues, such as whether e-commerce companies can issue credit cards for their online customers as commercial banks do.
On a more personal level, Ma is widely believed to be well-connected to Beijing's political circles. Let's be fair - to have political connections in Beijing or Washington isn't necessarily bad. In fact, many companies try to do so. But it is also a challenge in how you play in an opaque regulatory environment.
That is to say, you should be extremely careful not to cross the line in Chinese politics. Otherwise, the story may turn out very differently. Indeed, we have already seen the rise and fall of Chinese businessmen, including many on the Forbes list, in the past decades.
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Forty million thieves?
No different than USA, UK, Canada, EU..so what? It is all good over here??? and a sin and crime elsewhere? It is a reality. Alibaba insiders will pump and dump. Just another overpriced internet stock due to fall.
You means like dey no gibe us as many ObiePones?
ISIS, gotta' be ISIS , then Ebola.
my co-worker's step-aunt makes $76 /hour on the laptop . She has been fired from work for nine months but last month her payment was $16491 just working on the laptop for a few hours. Get More Information... www.payvalt.com
Alibaba-Mart. A sustainable model?
Drop the Ali and give it some cool factor. BabaMart. Baba bruh.
It could give ebay a run for their money, but it has many hurdles before this. We will see.
On a side note: Isn't it interesting that almost all "growth" is simply the stealing of someone else's customers.
"Isn't it interesting that almost all "growth" is simply the stealing of someone else's customers."
More than that. It's labor arbitrage. If anyone in the Western world still believes that the key to middle class prosperity and security is to build all of our manufacturing plants overseas, I've got a Red Team and Blue Team to sell you (and they are for sale to the highest bidder).
Upvoted. Now, what is your solution?
The solution is easy and in keeping with today's theories and structures. China and its likes are not in keeping with WTO and other international strictures. Pollution standards, slave labor, manipulated exchange rates are all not allowed in free trade clubs. So apply stiff tariffs. The manufacturing then comes home. Worldwide pollution is reduced, the CO2 problem is properly addressed by addressing its true source (China plants with 1950s style pollution and efficiency). Tariffs are the proper policy tool.
Used to be the only way the government got funded, pre-Rothschild days. Now it's a bad word to the "free" trade crowd.
They will eat ebay. Management at ebay is shortsighted...they were handed a free money machine and the have proceded to break it.
Not a tool for this NSA like google or ripyourfaceoffbook. So it' doesn't have the .gov covering its back
I disagree actually. When you list with theives you become a ???? Ah Well.
Like Springsteen says " Poison snake bites you and you are poison too. Face deep in the the big muddy. You start off standing and end up crawling honey."
I think Pete Seeger may have written this actually but the sentiment stands all over the place.
"The Big Muddy"
Billy had a mistress down on 'A' an 12th
She was that little somethin' that he did for himself
His own little secret didn't hurt nobody
Come the afternoon he'd take her wadin'
Waist deep in the big muddy
Waist deep in the big muddy
You start out standing but end up crawlin'
Got in some trouble and needed a hand from a friend of mine
This old friend he had a figure in mind
It was nothing illegal just a little bit funny
He said "C'mon don't tell me that the rich don't know
Sooner or later it all comes down to money"
And you're waist deep in the big muddy
Waist deep in the big muddy
You start on higher ground but end up crawlin'
Well I had a friend said "You watch what you do
Poison snake bites you and you're poison too"
How beautiful the river flows and the birds they thing
But you and I we're messier things
They're ain't no one leavin' this world buddy
Without their shirttail dirty
Or their hands bloody
Waist deep in the big muddy
Waist deep in the big muddy
You start on higher ground but end up somehow crawlin'
Waist deep in the big muddy
.
For 'american' investors, honesty to the public is a strange, foreign concept. They will be confused by such bizarre business practices, which could frighten them away from the IPO.
I had a set back once, when I tinkled in my tightie whities and I tried to tell the public how I felt about it but nobody gave a shit. It was really nice and warm and then got uncomfortably cold.... wait, listen to me.... damn it!
Just another dot in the over priced com bubble #3
But, nonetheless, many people are going to make many buckaroos off this stuff.
I just do not comprehend the valuations placed upon these electronic media companies... it's not like there are so many insurmountable barriers to entry .... aside from Burn Rates....
Biggest risk?!
It's not physical.
An American, not US subject.
"If you can't bury it under the garden, you don't own it."
Why invest in arms-length businesses when you can invest in local businesses and build social/community capital at the same time.
Wall Street is so 20th Century.
Yawn.
I see a sock puppet!
http://www.pinterest.com/pin/4222193371827587/
If Alibaba will help rid the world of Wallmarts, Targets and Home Depots then I'm all for them.
They CAN help, yes. But the shipping time takes FOREVER.
3 problems: Language, Min. quantities, and Shipping.
What Ali Baba needs to do is take a covert trip to the US, buy up a shit ton of the failing shopping mall real estate, do some modest renovations then fill the stores to the rafters with Ali Baba junk. The junkier the junk is the more better and faster American consumers will learn to love the Ali Baba. Because everyone especially the Chinese knows Americans are addicted to buying fuckloads of useless junk. Put Wallyworld and Tarjay out of business overnight.
alibaba doesn't ship or warehouse anything. alibaba serves as a portal to manufacturers and wholesalers as well as acting as the payment processor. once you're dealing in volume, shipping is a minor cost of doing business. I fail to see why alibaba or the manufacturers should bother exposing themselves to that level of risk really. let others take on the risk and in turn they get to cut wallyworld and the like out of the picture. it's simply not worth their time to do anything else.
Yes, I thought wisely as I read the heading, there would be a Political risk that you don't get in the US, and then I thought of the sanctions that have effectively cancelled many energy companies contracts with Russian companies and the FED's constant interference in the markets and I realized that there is probably more political risk now in the US market than China.
I thought the biggest risk was my immortal soul but that's what I thought when I cut all those trees in the AMAZON or when I threw everbody's shit in the E Bay or when I put a picture of my ex-girlfriend's ass in the Book of Faces and sold them at the Wall Market! Now I got more chicks in my harem than racehorses in my paddock or Lambos in the warehouse! The Doc says with that stemcell shit using "the little people" I could put off the reckoning for a long long time. He was obliged to tell me there's only so much he can do to save my face, however.
Last year, the review on Alibaba is that the products take FOREVER to ship.
And the fact that international investments in US stocks are either embezzled by politicians like Joop Bollen- or China keeps a barrier to the US financial sector.
Otherwise, the market for fakes is pretty strong in the U.S. of A.
We've got counterfeit IPO valuations?
Before counterfeit M&A valuation.
The American subsidized counterfeit subprime market, the counterfeit market volume can handle a counterfeit product market. Heck while they're at it- why don't the taxpayers just finance Alibaba since our market rules are "lax" compared to Hong Kong's market? Since we need the Chinese to buy our shares instead of vice versa (when Joop Bolllen isn't embezzling EB-5 inventments in American products, which this country needs VERY badly)...
Why not sell counterfeit housing values while they're at it.
Heck, stick the NYSE, commodity exchange, our judicial branch and the Climate Carbon Exchange on Alibaba.
Then we can stick fake internet people sock puppets on Alibaba and buy them in bulk.
Speaking of which, I'm wondering how much fake tatas and lips cost...
http://money.cnn.com/2014/09/11/technology/alibaba-counterfeit-ipo/index...
Fake IPOs for fake hedge funds to invest their fake money so their fake genius CEOs can impress all their fake friends with what big fakes they are.
Alibaba feels like the IPO bubble circa 1999.
Alibaba didn't IPO in Hong Kong because the rules were not "lax enough"... which makes sense since the Hong Kong Dollar is backed by the US Federal REserve that prints fake value.
You might as well let the U.S. Federal Reserve and REPO 105 distribute fake value from Alibaba itself.
I wonder how cheap U.S. Treasuries can get.
Not really. They didn't IPO in HK because they wanted to maintain control over the board and HK IPOs don't have as much access to dumb money. Dumb money is important because there's a lot of it. An Alibaba that goes public is an alibaba that opens itself to risks of buyouts and whatnot. Low market caps have been the bane of quite a few Chinese companies in the past as they were undervalued and bought out by international companies for basically nothing. Wall street is corrupt as all hell, might as well take advantage of that now rather than be taken advantage of later.
Ali who? And more importantly, when does Ali G. IPO?
http://en.wikipedia.org/wiki/Ali_G
Politics as black swan and the great war WW1 floating in the breeze of history, across the tops of cities comtemplating control.
Yes, nothing 'unusual' about connections, however why has the M of T censored all weibo searches delving into the princling shareholders of Aladdin's cave? The list is impressive. In English a summary was written in the NYT 20 July.
http://dealbook.nytimes.com/2014/07/20/alibabas-i-p-o-could-be-a-bonanza...
We all know a massive revolution will happen in China to throw out the communists. Then what ??
Another period of chaos, another revolution, and then all over again until someone finally realizes that China is too big to be a centrally run country
Stay far away from that POS site. Mast are liars and cheaters that sell, they sell fake crap or just general crap. Search the site and there will be thousand of stories of people getting ripped off and Alibaba doing nothing and they are gold sellers too far worse than the scammers on ebay.
The biggest risk with investing in anything these days is that you are dealing with the scumbags known as the financial sector. Over the past decade or two (likely much longer) they have proven to be absolute human excrement through and through at every level.
The 'American' corporations might have something to say about this as well. Unless the Chinese government backs this guy up, I think it will be smashed to bits.