Why Alibaba, the Amazon of China, Is Coming to America

China's top e-commerce company wants to go public on the New York Stock Exchange. It's a reminder that, while global politics might be frozen, global commerce is not. 
Reuters

Washington may once again be careening toward an abyss of its own making, but it is not the only story worth attending to. It makes good theater, but for now we don’t know how or if it will fundamentally shape our lives.

So what will? Half a world away, a Chinese company is considering a public offering. That would seem of even less import, but this is no ordinary company. It is Alibaba, which is to China what eBay and Amazon are to the United States. It is the leading e-commerce company in the Middle Kingdom, and it is led by a visionary entrepreneur named Jack Ma who has transformed that space in China as surely as Jeff Bezos has in the United States. And now, Alibaba wants to go public. The IPO could value Alibaba at as much as $75 billion. 

That would be noteworthy in and of itself, for sheer size and scope. More intriguing is that, according to reports, it is increasingly likely that the company will sell its shares not in Hong Kong, which is part of China, but instead in New York City, which is decidedly not. Only two years ago, Alibaba made a serious play to buy Yahoo, which was an early investor and is still a substantial shareholder. Now, Alibaba may soon join Yahoo and a host of other competitors as a publicly-traded company listed on a U.S. exchange.

While shares on any exchange can trade electronically anywhere in the world, where you list shapes what information you must report and how a company both communicates with and is perceived by the public and by investors. But listing in the U.S. versus Hong Kong is also a powerful symbol, because it shows where Alibaba believes its best interests will be served.

Jack Ma and his partners do not want to cede as much control of the company as Hong Kong rules would demand. Like many media and Internet moguls, they want to be able to determine the strategy of the company rather than relinquish those decisions to shareholders. The wisdom of that thinking may be debatable, but it is hardly unique. From Barry Diller and IAC to Larry Ellison and Oracle, many powerful publicly-owned American companies enshrine special rights and controls to those who created and run the companies.

This is more than a “business” story. It is a potent example of the continued intermingling of the Chinese and U.S. economies, and of the globalized nature of business and finance. The expansion of Alibaba and its possible decision to list on a United States exchange is one element of a powerful story, namely the continued evolution of e-commerce and information technology that is facilitating the emergence of a global middle class.

What’s particularly striking is that this story appears to exist in a completely separate world from the political narrative that is unfolding in many countries. Read about politics in the United States and you would understandably assume that the tracks are warped and the train is about to go off the rails. Read about politics in China and you’d think that corruption is everywhere; scandal is inevitable, and no tycoon is safe from unpredictable government crackdowns.

But the world of technology and dynamic companies exists in a different realm, one that only serves the multifaceted needs of a burgeoning middle class. I recently spoke at a conference where senior executives in the room were asked if they felt positive about the economy going forward; almost unanimously they said yes. Asked if they felt positive about Washington, they said no by a similar margin. Go to the Beltway, and you will get an earful of cynicism and prognostications of imminent doom. Go to Silicon Valley, and you will hear about the transformative power of the next wave of innovation.

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Zachary Karabell is Head of Global Strategy at Envestnet, a financial services firm, and author of The Leading Indicators: A Short History of the Numbers that Rule Our World. More

At River Twice Research, Karabell analyzes economic and political trends. He is also a senior advisor for Business for Social Responsibility. Previously, he was executive vice president, head of marketing and chief economist at Fred Alger Management, a New York-based investment firm, and president of Fred Alger and Company, as well as portfolio manager of the China-U.S. Growth Fund, which won a five-star designation from Morningstar. He was also executive vice president of Alger's Spectra Funds, which launched the $30 million Spectra Green Fund based on the idea that profit and sustainability are linked. Educated at Columbia, Oxford, and Harvard, where he received his Ph.D., he is the author of several books, including Superfusion: How China and America Became One Economy and Why the World's Prosperity Depends on It (2009), The Last Campaign: How Harry Truman Won the 1948 Election, which won the Chicago Tribune Heartland Award, and Peace Be Upon You: The Story of Muslim, Christian, and Jewish Coexistence (2007), which examined the forgotten legacy of peace among the three faiths. In 2003, the World Economic Forum designated Karabell a "Global Leader for Tomorrow." He sits on the board of the World Policy Institute and the New America Foundation and is a member of the Council on Foreign Relations. He is a regular commentator on national news programs, such as CNBC and CNN, and has written for The Wall Street Journal, Newsweek, Time, The Washington Post, The New Republic, The Los Angeles Times, The New York Times, and Foreign Affairs.

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