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Is Alibaba Comparable To a US Company?
lpress writes Alibaba is this week's hot news — they have had a lengthy PR campaign (preceded by a documentary film) followed by a record-setting stock offering. After a day of trading Alibaba's market capitalization was comparable to that of established tech giants. But, there are cultural and structural differences between Alibaba and U.S. companies. Alibaba is tightly woven into a complex fabric of personal, corporate and government organization relationships. The same can be said of information technology companies in Singapore. Is owning a share of, say, Apple, conceptually the same as owning a share of Alibaba?
Alibaba is tightly woven into a complex fabric of personal, corporate and government organization relationships.
Seems pretty similar to large US corporations to me. I think it's a mistake to consider America a capitalist country these days. I think the US has regressed in to being a corporatist country.
When someone buys a share in Apple, they actually get an ownership share in Apple.
When someone says they're buying a share in Alibaba, they actually buying shares in a VIE called Alibaba Group Holdings Limited which was incorporated in the Cayman Islands. The VIE has contractual rights to Alibaba China's profits, but not anything that resembles ownership.
It's not the same thing as share of Apple at all.
You don't know anything about it, do you?
Basically if you buy "Alibaba" stock you actually bought stock in a Cayman Islands holding company that is somehow related to the actual Chinese company, since China does not allow foreigners to own stock in Chinese companies. It was a weird/complicated enough arrangement that apparently the Hong Kong stock exchange declined to offer it, and the NYSE was the second choice. It's unlikely of course, but if the Chinese government wanted to "close the loophole" investors could be out $20B+ in a day.
So, no, it's not conceptually the same thing at all...
If a US company listed in the US decided to screw its shareholders, it and the board can be held accountable in US courts.
If a foreign company listed in the US decided to screw its shareholders, recourse is far more limited.
It's true. For example, a Chinese company would be far less likely to be held accountable for all but destroying the economy, and receive millions of dollars from the US government as punishment.
If a US company listed in the US decided to screw its shareholders, it and the board can be held accountable in US courts.
LOL, when has that ever happened
It's happened many times; it's called "malfeasance" or "misconduct", and it's punishable as criminal fraud.
This is why corporate board members these days are all about "fiduciary responsibility", even if they have to club baby seals to death in the shallow waters where they are coated in oil from the Exxon Valdez.
You seem to be speaking of Alibaba the Chinese retailer, so you are off on a tangent since that is not what US investors are putting their money into.
What US investors are buying is interest in a Cayman Island “variable-interest entity”. Stockholders won't have the usual influence on corporate governance or management, such as it is. My understanding is that Chinese law doesn't allow foreigners to own a Chinese strategic asset. So this Cayman Island entity was created.
http://www.marketwatch.com/sto...
Referring to state crony capitalism as "socialism" does not make it that.
The current setup in China is more accurately described as "Fascism-Lite".
Il n'y a pas de Planet B.
Unless you are from Tibet or practice Falun Gong, then it's fascism heavy