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When and where Alibaba.com will launch its IPO has not been announced. But a larger question looms: Will it resemble another Facebook?

Ma Yun
Ma Yun, founder and chief operating
officer of China’s Alibaba.com
Photo: Getty Images

The Chinese Internet sensation has built itself into a diversified e-commerce player in a protected market. Alibaba now works in various ways as an EBay, Amazon and PayPal. So, the question really is, will the underwriter link the company’s IPO share price to actual revenues or to the hyped potential of China’s Internet and economic growth?

That ultimately depends on how China’s new state leaders address systemic macro-economic challenges, specifically the state’s ongoing role in the economy and China’s commitment to globalization on the basis of reciprocity. The Alibaba IPO could be the litmus test for economic policymaking in China.

If the Chinese economy under Xi Jingping and Li Keqiang retains its strong support for state owned enterprises, then Alipay could face ramped-up competition from China’s UnionPay, a state-owned bankcard system that is expanding in the Internet payment market

On the flipside, if globalization is genuinely embraced by the new leadership, then Alibaba will face increased competition from other players of scale as a new wave of foreign investment comes to China’s Internet sector.  Companies like EBay, Amazon.com and PayPal, or next-generation Panjiva, are waiting in the wings to move on alibaba.com’s traditional revenue base.

Meanwhile, Jack Ma, founder and chairman of Alibaba Group, is seeing continuing disruption to his domestic stronghold from a range of local competitors such as 360Buy or Baidu. Alibaba may have to fight a multi-front war against foreign competitors as well as local rivals. That involves heavy spending with the accompanying risks to earnings per share. And history proves that fighting on more than one front usually results in defeat.

There are other risks for Alibaba, such as the management challenges of running a complex e-commerce empire — a good breeding ground for conflicts of interests and corruption.

Alternatively, Ma, the self-proclaimed Vietcong Guerrilla of the Internet, may retain his hold and beat his competitors by being smarter and faster to adapt. If not, the Alibaba IPO could become the Ali-fail — and Ma the next Mark Zuckerberg.

John Gruetzner is the principal and founder of Intercedent, an advisory firm established in Toronto with offices in Beijing, Hong Kong, Singapore and Toronto. The firm executes cross-border trade and investment projects focused on Asia, provides planning and research,  business development strategies  and capital advisory services to its clients. Gruetzner has been based in Beijing for more than 20 years.

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Anji Ringzin
Anji Ringzin Ali Baba and the Forty Thieves - that is hilarious, and true. As a manufacturer of niche electronics for personal use, we were annoyed to see our brand listed for sale on Ali Baba by some company in Indonesia and on several occasions we have attempted to contact Ali Baba to get them to remove the impostor, but never got a response. It would be wonderful if Ali Babi got its act together, but they will have to work much harder at verifying their sellers authenticity.
  • 2013-05-22 15:20:35
Jake Witmer
Jake Witmer Perhaps the unreliability of the "mixed capitalism" of the current Alibaba is why they will smarten up and become the next Facebook. With Facebook, they simply have to be 1) Hungry enough to do things smarter than Facebook 2) Smart enough to do things smarter than Facebook 3) Willing to stand up to snooping by the Chinese government #3 is the only thing that's a real dealbreaker. People in the USA are sick of Facebook, and it's becoming the next "Myspace" (a dead social networking site that was once popular). People really don't like being monitored all the time by snoops who have a perverse incentive to arrest them in order to make themselves look good or get promotions. As America becomes more like China, China's path forward is to become what America should have been: a free country. If China is up to the task (and it might be, since there is so much extra gray matter in China), then it can easily be twenty times larger than FB. It can supplant FB in a matter of a few weeks, and Chinese people can use it to learn English, and come to the USA. Really, the abject failure of governments worldwide to restrain their own political power-seekers is the result for all poverty. As an example, look at how restricted medicine is in the USA, via the following examples: 1) In the USA, it's illegal to market apricot kernels as protective against cancer, or curative of cancer (it's marketed by the FDA and AMA as a debunked "scam" that preys on cancer-sickened). This is in spite of cancer being stunted in petri dishes by a proper, double-blind experiment by Kanematsu Sugiura, and in spite of the Gerson and Richardson cancer clinics outperforming conventional chemotherapy for many years in the 1950s. Still, the law has made it illegal to advertise a B17 (laetrile, active apricot extract) cancer treatment, even with full disclosure that the FDA believes it to be valueless. The FDA doesn't just "advise" it threatens force if its advice isn't taken. Over time, "coercive advice" has a tendency to be bad advice, because nobody needs force to get people to take good advice. So, the FDA trends toward protectionism. (Interestingly, in China, apricot kernels are widely sold and consumed, labeled "bitter almonds." I bought them in the Beijing Airport in two tourist shops.) A doctor who advocates a B17 practice on Facebook would quickly be arrested by the FDA, so it's not just free speech that needs protecting on FB, it's the free market, too. The G. Edward Griffin book "World Without Cancer" was written about B17 regulation in the USA. 2) Adult stem cell therapy. Since 2003, Stephen Badylak's techniques have been able to entirely regenerate and surgically replace entire organs in the human body, anywhere in the body. In 2003, an entire non-cancerous esophagus and all connective tissue, muscles, and nerves were regrown and replaced, successfully. A few years later a calf-muscle and achilles tendon were regrown and replaced, with the nerves. But due to neophyte surgeons panicking and yanking out healthy organs due to the similar look of normal red-tinged regeneration to infection, the FDA has curtailed the practice in the USA. Without any barriers to implementation, China could rapidly pull ahead here, as well. (Of course, restrictions on morphine opiates and cocaine-based anesthetics should also be relaxed, due to the immense pain involved, and because the government has no right to regulate drug use of any kind, recreational or otherwise.) 3) 3-D Printers, decentralized possession of printed weaponry and surgical biotechnology. -Definitely monitored on US and Chinese FB. But why bother? "The cat's out of the bag." Attempting to regulate it, or outlaw it simply drives out the best practitioners, and motivates the dangerous risk-takers to circumvent the law. 4) The FDA "non-approval" (ban) of dca (dichloroacetate) to treat cancer. Since it's a natural molecule and can't be patented, the chemotherapy "death by torture" racket has made using this benign substance to treat cancer illegal. This natural drug interferes with cancer angiogenesis, and kills cancer cells selectively in vitro. 5) After the FDA "approved" propranolol (an early beta blocker) they claimed they would be saving 50,000 lives per year. This technically means they were needlessly killing 10,000 people per year, long after the drug was understood well enough to prescribe by physicians. The fact that physicians are licensed by the AMA, and dependent on remaining in the FDA's good graces to retain that license, places an unelected body above the sellers and practitioners of medicine. Common law courts once protected against egregious fraud alone, but now the FDA prevents against both fraud and competition. Without competition, markets fail. The same is true of social networking sites. If the social network is suitably unregulated, it will attract those who are hungry for knowledge and interested in the world. But it has to be more interesting than what's going on outside their window. And let's not forget: if it carries with it any huge NEGATIVES or things that are actually detrimental to their lives (below the mean of enjoyment), they will abandon it. Outside their doorsteps, in China, right now, the young people have nightclubs, busy streets, meeting places, etc. They have tea, chess, cigarettes, school, work, but very limited "online" computation and interaction opportunities. China could adopt common law jury trials. They could get free at any time. If they bothered to do this, they'd dominate the USA in every way, and the people of the USA would thank them for it, because it would encourage competition for "who has the best jury trials."
  • 2013-05-02 05:37:54
Capt Bill
Capt Bill These previous two comments both adaquately expressed the same concerns/warnings/experiences as I have had. Buyers are well aware of the negative aspects of that website. After having been burned, and learned their tricks, you STILL Never know if you will actually Receive the goods you purchased, Or Not! They simply can't do that to all your customer and stay in businesss! . When competitor sites step up to the plate, they will be flooded with customers FLEEING from "Ali By-By", Buyers are EAGER to use just about ANY website other than that one. Exprect it.
  • 2012-12-22 02:58:39
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Yehuda Braun
Yehuda Braun The answer is... NO, IT WON'T!!! If anyone who writes an article about this company would do some in depth research what they would find is; most of the "companies" that claim to be manufacturers on Alibaba.com are NOT mfg-er's, they are middlemen/traders. Companies and individuals have been ripped off millions of dollars on Alibaba. Most companies on Alibaba do NOT use paypal or any other form of transaction that can be refunded in case of fraud. Don't forget the second half of the book/movie title, it's Alibaba and The Forty THIEVES!!!
  • 2012-11-22 16:15:04
Sal Ciraulo
Sal Ciraulo I totally agree with Ms. Braun. Alibaba does nothing but attempt to control all products made in China and extort money from possible buyers. I have many examples of vehicles purchased through Alibaba from a supplier that I represent in South America. Vehicles are sold without warranty support, using obsolete engines and components and the buyers having no recourse. Alibaba does nothing more than isolate the buyer from the manufacturer, gives false information all in the hopes of making sales. Many Chinese companies are aware of these problems and they do nothing about it because of the various government controls imposed upon them and the demands from the central government to sell, sell, sell no matter the consequences. I have been selling buses and trucks made in China for 7 years in Central & South America and for the most part I am always competing with this stupid Alibaba or the actual company that I represent because they have surrogate sales offices and people scrounging around trying to buy business. This is a unholy alliance sponsored for the most part by the Chinese Government. Also one very important thing that most buyers never realize it is easy to send money to China but it is impossible to get money out of China. Always be sure of who your dealing with.
  • 2012-12-01 12:17:59
Capt Bill
Capt Bill These previous two comments both adaquately expressed the same concerns/warnings/experiences as I have had. Buyers are well aware of the negative aspects of that website. After having been burned, and learned their tricks, you STILL Never know if you will actually Receive the goods you purchased, Or Not! They simply can't do that to all your customer and stay in businesss! . When competitor sites step up to the plate, they will be flooded with customers FLEEING from "Ali By-By", Buyers are EAGER to use just about ANY website other than that one. Exprect it.
  • 2012-12-22 02:58:39
Jake Witmer
Jake Witmer Perhaps the unreliability of the "mixed capitalism" of the current Alibaba is why they will smarten up and become the next Facebook. With Facebook, they simply have to be 1) Hungry enough to do things smarter than Facebook 2) Smart enough to do things smarter than Facebook 3) Willing to stand up to snooping by the Chinese government #3 is the only thing that's a real dealbreaker. People in the USA are sick of Facebook, and it's becoming the next "Myspace" (a dead social networking site that was once popular). People really don't like being monitored all the time by snoops who have a perverse incentive to arrest them in order to make themselves look good or get promotions. As America becomes more like China, China's path forward is to become what America should have been: a free country. If China is up to the task (and it might be, since there is so much extra gray matter in China), then it can easily be twenty times larger than FB. It can supplant FB in a matter of a few weeks, and Chinese people can use it to learn English, and come to the USA. Really, the abject failure of governments worldwide to restrain their own political power-seekers is the result for all poverty. As an example, look at how restricted medicine is in the USA, via the following examples: 1) In the USA, it's illegal to market apricot kernels as protective against cancer, or curative of cancer (it's marketed by the FDA and AMA as a debunked "scam" that preys on cancer-sickened). This is in spite of cancer being stunted in petri dishes by a proper, double-blind experiment by Kanematsu Sugiura, and in spite of the Gerson and Richardson cancer clinics outperforming conventional chemotherapy for many years in the 1950s. Still, the law has made it illegal to advertise a B17 (laetrile, active apricot extract) cancer treatment, even with full disclosure that the FDA believes it to be valueless. The FDA doesn't just "advise" it threatens force if its advice isn't taken. Over time, "coercive advice" has a tendency to be bad advice, because nobody needs force to get people to take good advice. So, the FDA trends toward protectionism. (Interestingly, in China, apricot kernels are widely sold and consumed, labeled "bitter almonds." I bought them in the Beijing Airport in two tourist shops.) A doctor who advocates a B17 practice on Facebook would quickly be arrested by the FDA, so it's not just free speech that needs protecting on FB, it's the free market, too. The G. Edward Griffin book "World Without Cancer" was written about B17 regulation in the USA. 2) Adult stem cell therapy. Since 2003, Stephen Badylak's techniques have been able to entirely regenerate and surgically replace entire organs in the human body, anywhere in the body. In 2003, an entire non-cancerous esophagus and all connective tissue, muscles, and nerves were regrown and replaced, successfully. A few years later a calf-muscle and achilles tendon were regrown and replaced, with the nerves. But due to neophyte surgeons panicking and yanking out healthy organs due to the similar look of normal red-tinged regeneration to infection, the FDA has curtailed the practice in the USA. Without any barriers to implementation, China could rapidly pull ahead here, as well. (Of course, restrictions on morphine opiates and cocaine-based anesthetics should also be relaxed, due to the immense pain involved, and because the government has no right to regulate drug use of any kind, recreational or otherwise.) 3) 3-D Printers, decentralized possession of printed weaponry and surgical biotechnology. -Definitely monitored on US and Chinese FB. But why bother? "The cat's out of the bag." Attempting to regulate it, or outlaw it simply drives out the best practitioners, and motivates the dangerous risk-takers to circumvent the law. 4) The FDA "non-approval" (ban) of dca (dichloroacetate) to treat cancer. Since it's a natural molecule and can't be patented, the chemotherapy "death by torture" racket has made using this benign substance to treat cancer illegal. This natural drug interferes with cancer angiogenesis, and kills cancer cells selectively in vitro. 5) After the FDA "approved" propranolol (an early beta blocker) they claimed they would be saving 50,000 lives per year. This technically means they were needlessly killing 10,000 people per year, long after the drug was understood well enough to prescribe by physicians. The fact that physicians are licensed by the AMA, and dependent on remaining in the FDA's good graces to retain that license, places an unelected body above the sellers and practitioners of medicine. Common law courts once protected against egregious fraud alone, but now the FDA prevents against both fraud and competition. Without competition, markets fail. The same is true of social networking sites. If the social network is suitably unregulated, it will attract those who are hungry for knowledge and interested in the world. But it has to be more interesting than what's going on outside their window. And let's not forget: if it carries with it any huge NEGATIVES or things that are actually detrimental to their lives (below the mean of enjoyment), they will abandon it. Outside their doorsteps, in China, right now, the young people have nightclubs, busy streets, meeting places, etc. They have tea, chess, cigarettes, school, work, but very limited "online" computation and interaction opportunities. China could adopt common law jury trials. They could get free at any time. If they bothered to do this, they'd dominate the USA in every way, and the people of the USA would thank them for it, because it would encourage competition for "who has the best jury trials."
  • 2013-05-02 05:37:54
Anji Ringzin
Anji Ringzin Ali Baba and the Forty Thieves - that is hilarious, and true. As a manufacturer of niche electronics for personal use, we were annoyed to see our brand listed for sale on Ali Baba by some company in Indonesia and on several occasions we have attempted to contact Ali Baba to get them to remove the impostor, but never got a response. It would be wonderful if Ali Babi got its act together, but they will have to work much harder at verifying their sellers authenticity.
  • 2013-05-22 15:20:35