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Is Alibaba Comparable To a US Company?

Posted by timothy on from the well-the-name-is-magical-to-start dept.

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?

3 of 126 comments (clear)

  1. What a question? by bogaboga · · Score: 5, Interesting

    Is owning a share of, say, Apple, conceptually the same as owning a share of Alibaba?

    How can this be the case? In a few instances: -

    If one is looking for return on investment, then it's probably the same.

    If on the other hand, one is looking for an avenue to influence company direction, owning shares in Alibaba and startng this effort is almost a guaranteed exercise in frustration, for Alibaba is a company with capitalist "genes" which have a tinge of socialist, heavy-handed characteristics.

    I should add that this isn't bad at all.

  2. Re:Comparable? Not really. by phantomfive · · Score: 4, Interesting
    I read an article recently on exactly that topic, which is probably worth quoting:

    The market is fully capable of pricing the fact that Alibaba stockholders don't actually own a direct claim on Alibaba's Chinese assets and can't elect its board. Truth be told, shareholders don't "own" any company; they own whatever rights are specified in the share agreement........

    True comfort for shareholders comes not from legal boilerplate, but from incentives. Alibaba founder Jack Ma could take the $22 billion raised Friday and stiff his foreign partners. That's a risk. But his self-interest is otherwise. He wants a strong stock as a currency for acquisitions. He wants stock options to motivate his increasingly global management team. He wants easy liquidity for himself and other insiders. .....

    when investors begin to worry about the actual rights specified in a share agreement, it usually means something has already gone seriously wrong.

    Alibaba is probably as good as any stock. If things go wrong, things go wrong.

    --
    "First they came for the slanderers and i said nothing."
  3. Re:US investors don't have shares in Alibaba ... by khallow · · Score: 4, Interesting

    I agree. Asking the question indicates ignorance of this arrangement. My view is that owning a share of this would indicate poor investment judgment and be a strong signal to me to stay clear of the entity in question.