Not to replace the noise of my fellow bloggers on this one, I thought I would just write a quick one. It seems absurd that many are attributing mediocre $7.8 billion evaluation to Alibaba based on its 17% IPO release of 1.3 billion shares of stock. Why? For one, Alibaba has a closer correlation with Western pricing due to its primary function as a b2b export platform - i.e. higher revenue margins. And judging by Baidu’s market cap (NASDAQ:BIDU) of 10 billion, the calculations are simply absurd. After all Baidu’s revenue is still 100% tied to Chinese yuan and China’s online advertising growth (which is behind U.S.), thus valuing each click at about 10-15 less that of Google’s. Moreover, whereas Baidu’s revenue for 2007 only reached around 400M, Alibaba already surpassed 1 billion–with Goldman Sachs’ prediction for 3.13 by the end of 2008. Finally, what is Alibaba? Alibaba is a b2b platform with over 1 million business customers that charges a base of $5,000 in addition to a range of other services (ranging from document translation to on-site photo shooting, etc). It is a leading SB2C/C2C platform in China through Taobao. And of course, it is a future PayPal of China with its new AliPay system.

Oh well, I always knew those stock guys are full of.. - I digress.

On a second note, 247RealMedia is making attempts to show how big it is on a China scene. All of this is nice but if they were really serious about that I would think their new office would be openning up in Beijing not in Seoul. Don’t they know better? They do–in fact know quite well how big (revenue-wise) search marketing will be in China within the next 5 years (everyone knows it). So why aren’t they there? Simply because the money they would like to be making now are not there yet. Unfortunatelly (or otherwise), by the time they money is there it might be already too late.

Update: Just found out about this: Alibaba.com Opens European Office In Geneva - right before IPO, interesting

Update 2 (Nov 06): at the close of trade Alibaba.com stock was HK$39.50 ($5.09). Market cap is now $25.17 billion.

Filed under: China Market | »

I’ve written on Chinese payment companies before, and noted the vast advantage Alibaba’s child company, Alipay, has over its competitors. Well, today my friends at Maverick China Research released a report outlining the current state of third-party payment services and Alipay’s current dominance of the market.

A brief summary follows:

• Companies Profiled: China UnionPay, Union Mobile Pay, Alipay, Smartpay, Yeepay, IPS, Chinapay,
  99Bill , Tenpay, PayEase
• Multi-channel payment options are available to Alipay users, including online bank transfer, cash, and direct debit solutions.
• Alipay has signed partnerships with over 300,000 merchants in China.

But, of course, AliPay’s true advantage is Jack Ma - who could argue otherwise?

The report can be found here

Filed under: China Market Trends - Daily Online Usage Trends | 1 Comment »

From a press release earlier today:

YeePay, a leading payment service provider in China, announced today that it has partnered with EachNet to provide payment solutions for its newly re-launched consumer-to-consumer online marketplace. As the sole payment provider working with EachNet[NTES], YeePay manages the money flows for EachNet’s escrow payment service, which allows buyers and sellers to send and receive payments. YeePay also provides user identity verification service for EachNet.

So what does mean? Not much other than that eBay is increasingly aiming to build partnerships with local companies thus hoping to establish a better relationship with China’s market and goverment. But with Alibaba (TaoBao owner) competing with its own Chinese PayPal system, it’s hard to imagine eBay[EBAY] achieving any reasonable progress. Why? Simply put, TaoBao is the eBay/market place of China - wherever TaoBao goes, the market goes.

Filed under: China Market | »