What will the future bring for Alibaba investors?
- By Li Jingrong
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E-mail China.org.cn, September 19, 2014
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File photo taken on March 25, 2014 shows the logo of Alibaba Group in Hangzhou, east China's Zhejiang Province. Chinese e-commerce giant Alibaba Group Holding Limited on Thursday priced its stock at 68 U.S. dollars, in an initial public offering (IPO) valued at 21.8 billion dollars, a source familiar with the situation told Xinhua. |
As the Chinese e-commerce giant Alibaba Group prepares for a spectacular initial public offering (IPO) on the New York Stock Exchange on Friday, investors are paying close attention to what rewards it might bring them.
Mobile terminals
Alibaba's capabilities in using mobile terminals has always been an investor focus as mobile traffic now accounts for more than half of Internet traffic. If Alibaba is unable to seize the opportunity offered by mobile communications, the e-commerce giant's painstaking work over the past 10 years to build up its business could eventually dissipate.
By the end of June 2014, Alibaba's monthly mobile terminal business had reached an average of 188 million customers. Revenue in the second quarter increased to US$2.54 billion, and in the 12 months to June, the company generated a gross sales volume of US$296 billion, according to figures provided by the Shenzhen Daily.
At the same time, the proportion of Alibaba's business via the mobile platform has also continued to increase, accounting for 32.8 percent in the second quarter of 2014, an increase of 20.8 percentage points from the same period of 2013 and 5.4 percentage points from the first quarter of 2014.
The more significant point is that Alibaba's cash value is continuously increasing, promising a bright business future.
Domestic focus
So far, Alibaba's main business and income comes from within China. Now, for the company, internationalization is a challenge, but there is plenty of room for growth. Compared with the options in China for such American e-commerce giants as Amazon and eBay, locally-bred Alibaba has a huge familiarity with the booming Chinese Internet market that has helped it develop its business knowhow to expand abroad.
According to statistics from TNS, the world's second largest market research institute, monthly visits to AliExpress, a platform of Alibaba, have reached 15.9 million in Russia over the past year, exceeding that of the U.S. website eBay and the Russian site Ozon.ru, making it favorite shopping website of customers in the country. AliExpress has also extended its business to the United States, Brazil and even to Mozambique in Africa.
To find its way through the complexities of the global logistics chain, Alibaba has successively cooperated with Singapore, Australia, South Korea, France, and Italy by establishing logistics backbone and financial payment networks. The series of cooperative projects are also aimed at gaining a favorable position in e-commerce globalization.
Tomas Freyman, a valuation officer from BDO China Shu Lun Pan CPA, an influential accounting firm, said Amazon is known as a book retailer, while Alibaba is positioning itself on a broader front in the global market. The two companies have different operating modes.
Cloud computing
The cloud computing platform is one of the most important infrastructure developments that increases Alibaba's potential.
According to its prospectus for the IPO, the company's cloud computing platform has a processing capability of 3.6 million transactions per minute by the end of 2013.
At the same time, Alibaba has also been actively openning up its cloud computing capabilities. By the end of last June, it had more than 1.4 million cloud computing users. In addition to e-commerce, other industries involving finance medicine, government affairs, and transportation have also begun to use Alibaba's cloud computing service as a basic network infrastructure.
Jack Ma, the famous Chinese entrepreneur and founder of the Alibaba Group, has said on many occasions that Alibaba's cloud computing future will be larger than the companies Taobao, Tmall and Alipay put together and it has endless room to grow creatively.
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