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Business Management

Alibaba Casts Harsh Light on Globalisation Challenges

The media coverage of the Alibaba IPO has been notably bland. The narrative has swung from ‘my, but they’re big’ then ‘China’s eBay/Amazon’ onto ‘big splash on debut’. So new media veteran John Battelle does us all a favour and confronts some elephants on the table in a blog post yesterday, questioning the nature of how the IPO was carved out, the opaque understanding most outsiders have of the company, and the ethics of investing in a Chinese company.

On the first I plead a state of blissful ignorance although Battelle’s suggestions of manoeuvring and allocations doesn’t sound so very different to those reports of other hot stocks in history. I’m sure there will be profit-takers but there is no guarantee offered of sustained performance for any company and many hyped companies have backed that fact up.

As for the points that many Americans and other foreigners will have little understanding of Alibaba or its scope for growth, IDG Connect contributors have made that point here (including linked stories at bottom of story). This is a Chinese company working in a very different culture. Warren Buffett famously asks some very basic questions before buying stock. But how many of us could claim to have a deep understanding of the management of Alibaba, its direction, its market, its chances of success?

And Battelle’s related point is even better: will well-heeled analysts in Wall Street, London and elsewhere keep the usual tabs on Alibaba by making calls to value-chain partners? Will they appoint people on the ground to do the same? And if those people ask germane questions will they get reliable answers? I don’t know.

Finally, on the ethics of investing in companies, this is made more complicated by the crossbreeding of companies. Some people will feel uncomfortable with any company that has Chinese connections. But if Alibaba is ultimately to be scorned because of those connections, where does that leave Yahoo with its big fat stake in the company, or Japan’s Softbank? Or all the American and other companies that seek to make money in China or manufacture there using lowest-cost labour?

Battelle makes the point that “At least when companies are corrupt in the United States, we have a free and open press, and a democratic rule of law, to keep them in check.” Well, if he’s right that those checks and balances are effective, now they should swing into effect.

My sense is that we are all going to be taken aback by the flowering of globalisation. That we will need to ask some tough questions of the new world powers. But this should be a two-way street and we also need to shine that light internally in the US, across Europe and all the other established nations and regions that consider themselves leaders, ethical, transparent. If we look back at our watchdogs, media, our attitudes to foreign competition, we may learn interesting, sometimes troubling, things about ourselves too.

 

Martin Veitch is Editorial Director at IDG Connect

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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