eCommerce heavy hitter, Alibaba, released their I.P.O. on Tuesday and speculation ensued that this will be the largest I.P.O in history. Alibaba has chosen to take an interesting approach to attracting investors. Instead of promising to revolutionize the market, Alibaba wants to insert itself in the middle and compete with other serious players such as Amazon and Ebay. According to the NY Times, Alibaba’s shares are estimated to have a value of $200 billion at the end of their first trading day later this year. Compare that to Google’s $27.8 billion.
For many years American tech companies have tried to infiltrate China but have experienced limited success. Many internationally recognized marketplaces, search engines, and social media platforms have fallen short in China. It seems to be the impenetrable market that the western world can never quite master. As a result, China has released its own technology. Whether it’s because of government restrictions or public preference, Baidu (China’s Google), Renren (China’s Facebook), and Alibaba (China’s Amazon) have a larger presence in China than Western technology.
Whereas many speculate that Alibaba’s presence will threaten other eCommerce giants such as Amazon and Ebay, Alibaba insists they are “not directly competing.” Representatives of Alibaba explain that Amazon China gives consumers access to mostly Chinese goods whereas Alibaba will provide Chinese consumers with US goods. However, many believe this will lead to direct competition regardless of the intention.
Alibaba has been a smashing success among Chinese consumers in part due to a cultural transition taking place throughout the nation. Chinese citizens have an increasing interest and desire for access to Western goods and brands, thanks in part to the prevalence of technology. Although the Cold War is but a distant memory, remnants of the Iron Curtain have remained in place. Yet as American and Chinese technology platforms continue to grow, the traditionally juxtaposed East and West will only become more interconnected.
Traditionally US companies have relied on China for cheap labor and China has turned to the US for technological development. However with companies such as Alibaba entering the game, we’re starting to see a shift. As China steps up as a competitor and a potential thought leader within the tech realm, American companies will have to start innovating fast. Will the West’s reputation as the world’s technology leader be threatened as more companies such as Alibaba go public? Let the games commence.