The China Game has some interesting news to share:
Alibaba shares have fallen to below their IPO price. It took a few months, but, as we suggested, it was inevitable. This IPO was the largest of its kind, and it was promoted heavily by the media. At the very height of the hype – when everyone was asking how Jack Ma did it – we asked whether the company was really worth US$7.8bn. Never mind the run up that followed the stock issue; the price put on the initial offering was itself too rich.
Given the recent rash of negative publicity and subsequent sentiment towards China, this news will no doubt embolden some (particularly in the States) to remark “ah hah!” Unfortunately, there is a high probability and at least some correlation between this and the current market woes facing the world financial markets, not least of which is sub-prime hell America. Therefore, any nationalistic rejoicing should be tempered with such in mind.
That said, the criticisms lodged against Alibaba from many circles are certainly legitimate. For entrepreneurs and small-business owners looking to source from China, Alibaba’s promises cost-savings that can’t be found at home…or getting your ass fleeced so bare you come out of it with razor burn.
Having previously used Alibaba to do some price research, I was consistently amused with how often suppliers tried to pull fast ones on me quoting absurdly high prices only to immediately “correct” their quotes the moment I call them on it. The same products by many manufacturers even often had different prices, depending on whether you were reading the Chinese site or the English site.
No doubt, buyers sourcing through Alibaba, or from China in general, owe it to themselves to do their own due diligence. While many Chinese businesses or individuals will still try to take advantage of someone at every opportunity, not doing your research only rewards such unethical behavior. What amount of due diligence is required often depends on what you’re trying to source and how much money is involved. Good deals and good suppliers can certainly be found on Alibaba but, in many cases, the cost savings will come from the time you save comparing prices over the internet and not from the cost of airfare to China.
Oh, and Jack Ma looks like an alien Doogie Howser. There, I had to say it.
