Alibaba's IPO architect lays out blueprint for global e-commerce empire

PUBLISHED : Friday, 04 April, 2014, 1:14am
UPDATED : Friday, 04 April, 2014, 1:14am

Alibaba, the world's biggest e-commerce company, changed how China shops. Now the man driving its blockbuster stock sale in the United States wants to transform the rest of the country's services industry, adding new users to the giant's 300 million customers.

Executive vice-chairman Joe Tsai sees an Alibaba future that stretches from banking to education, travel to entertainment. Customers will buy mutual funds using its mobile applications, safeguard homes with its insurance, and use its virtual credit cards to order goods from US websites that will arrive on China's doorsteps in 10 days.

On March 16, Alibaba said it was planning an initial public offering in the US. Analysts say it could be worth more than US$16 billion. That would surpass Facebook's 2012 listing, valuing Alibaba at more than US$140 billion.

"In five to 10 years, we're still going to be an e-commerce business, but the kind of things we sell on our platform will be a lot more diverse than just physical products," Tsai said before the listing announcement.

"We're going to be selling digital content, there's going to be services that will flow through our platforms. Our vision is to become more a part of people's lives and fulfil all their needs."

Alibaba already accounts for about 80 per cent of all online shopping by individual consumers on the mainland, which iResearch expects to reach 2.45 trillion yuan (HK$3.1 trillion) this year.

If Alibaba has seemed unstoppable in its 15-year rise, a listing could make it one of the world's most important technology companies as the firm faces its most serious challenges so far.

Chief rival Tencent has the upper hand in mobile services, now the most important battleground for the mainland's internet companies. Alibaba's strategy of building a global e-commerce empire with its own financial services is attracting close scrutiny from regulators and resistance from banks.

There is more riding on Tsai's ability to pull off the giant listing than just Alibaba's fortunes. Tsai found out himself, after Facebook's debut flop, that a high-profile failure could turn investors sour on a whole sector. In what he termed a "hairy" experience, an Alibaba plan to raise US$10 billion in private funding that coincided with Facebook's listing nearly went awry as investors backed away from internet companies.

Tsai declined to discuss specifics of Alibaba's listing or finances, but he said last month that Alibaba would "never" change its partnership structure to list in Hong Kong.

Alibaba's revenue climbed 60 per cent to US$4.9 billion for the nine months to September, the latest period for which numbers have been published, according to filings by 24 per cent shareholder Yahoo. Net profit was US$2.2 billion, a nearly eightfold increase.

Tsai, who has emerged as Alibaba's chief strategist and financial tactician, left Swedish investment firm Investor AB's Hong Kong office in 1999 to join what was then founder Jack Ma Yun's startup - Alibaba.