Alibaba Is Making Like Bandits in China's Online Shopping Frenzy

Monday, September 12, 2011

Alibaba, China's home grown eBay sales platform will handle US$157 billlion in sales this year, according to the company's chairman, Jack Ma.

Makes you kind of wonder whether China will be the world's future manufacturer or future consumption engine. I defend the notion that we need to rethink how China operates in the context of a globally tapped in world.

Rather than think of the country as a nest of threats to our jobs, we could think of them as a lucrative market of people who would like to buy things.

In a report in the Wall Street Journal, Ma announced the figures as part of a series of challenges to local and state-owned enterprises in China.

Ma also said that Alibaba had state-owned enterprises in its sights, saying that his group Alipay would be a threat to banks that were not changing as fast to fulfill consumer needs as web enterprises.

The company is launching a series of aggressive investigations into Alipay users who are suspected of fraud, in an operation that looks as much like a public relations cleaning up as it does something any business owner would want to do to make sure the company is healthy.

The string of Alibaba news comes at the same time as an intriguing China finance ministry announcement that the central government has changed its opinion on funding VCs to advance high tech ambitions in the country.

The Chinese Ministry of Finance announced early Sunday it would allow the central government to contribute up to 20 percent as a minority investor in local venture capital funds if the purpose of those funds was to bolster startups in innovation sectors, including technology and internet, according to Reuters.

The 20 percent devoted to a central fund would be supported by financing given through local governments and other investors, the report said. Funds that receive government money must invest at least 60 percent of the money into small start-ups in designated industries.

The finance ministry's list is said to be extensive, but it was unclear how many of those verticals contained web-based enterprises. However, given the massive growth of innovations like Sina's Weibo service and the Alibaba news, a compelling case could be made that china VCs are whetting their appetite for greater web growth in 2012.

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