Posted on 09/21/2014 7:46:33 AM PDT by Citizen Zed
THE lone US senator who was urging the Securities and Exchange Commission to investigate the gaping governance holes in Alibaba must have felt like some stray tourist caught up in the middle of the annual bull run in Pamplona.
On Thursday, Senator Bob Casey looked as though he was about to be charged down by an excited herd of bulls desperate to invest in ... well, that's the thing, it's difficult to know exactly what they're investing in.
Alibaba is described as a Chinese technology company.
It is 15 years old, and in recent years has pumped out good profits from linking buyers with sellers of almost everything.
But that is not what US investors were pouring their money into on Friday, the first day of Alibaba's listing on the New York Stock Exchange.
What US investors are buying into is a Cayman Island shell company that has contractual rights to the profits of Alibaba's China-based profits but no economic interest in them.
The extremely complicated structure created around Alibaba partly reflects controlling shareholder Jack Ma's determination not to dilute his control over management. This is reasonable enough, given his success in building the company from scratch. But, more critically, the structure also reflects the Chinese government's restriction on foreigners investing in sectors, such as technology, which are deemed sensitive. To avoid these restrictions, Chinese companies set up what is called a variable interest equity (VIE) structure. This is what is at the heart of the Alibaba pyramid - as it is at Tencent.
What should be causing some restraint from investors is that the validity of the contracts underpinning these structures is determined entirely by the Chinese courts and government.
Beijing is probably keen to see a "national champion" thrive on the world stage. However, the reality is Alibaba represents a bet not on the company's technological capacity nor on its growth prospects, but on the Chinese government's acceptance of foreign investors.
Does it bother anybody that “Alibaba” is the leader of the 40 Thieves?
Don’t only concentrate on Alibaba but pay attention also to the 40 thieves.
I can’t believe anyone would invest even a dime in this company!
WHAT DO THEY EVEN DO!?!
Never heard of them prior to a week ago, and will probably never use them in my life for anything.
Bunch of freaking lemmings need to use their brains!
What the hell is Alibaba, and how is it suddenly worth billions of dollars? I never even heard of it until last week.
think $(EBAY + AMAZON + GOOGLE) X 10
They’re described as combination of Amazon, Ebay, and Paypal.
It means not only do they sell any and everything, if they don’t have it, they’ll line you up with someone willing to make or provided it.
And they also have their own payment provider.
Wadda ya live under a rock!
While the 40 thieves are first to come to mind when hearing ‘Alibaba’, Alibaba wasn’t the leader. He’s the one who scammed them.
Hmmm...
He would go in very heavy because he is a poltroon.
If the Chinese have no compunction about adulterating their food exports why does anyone think they would stint at their accounting practices.
I predict that a whole bunch of people are going to get hosed big time.
Someone who helps the Chi-Coms gets what he deserves, IMO.
Been using them for about 6 years or so importing product from different suppliers into the US. It’s a giant Craig’s List (of sorts) for manufacturing companies. Lots of good deals on quality products, but the majority of the things to be found there are very substandard and you have to be careful.
“but the majority of the things to be found there are very substandard and you have to be careful.”
Sounds a lot like Walmart
lol
good luck getting your money back when you order something from someone in China and you get ripped off.
I never order ANYTHING being shipped from outside the US.
Alibaba is meaningless to me
What would Jim Cramer do?
Yeah, similar concept but on Alibaba you generally have to buy 500 of something to get a reasonable price. It’s useful for small business sourcing products that can’t be found locally.
His day is coming.
Most definitely. He and the Chi-Coms are buds from way back. They gave him cash, and he gave them military secrets. Cozy.
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