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Opinion / Xin Zhiming

The next Alibaba in China

By Xin Zhiming (chinadaily.com.cn) Updated: 2014-09-19 09:15

The success of Alibaba, China’s e-commerce giant, is part of the country’s economic miracle and, as the world’s second-largest economy restructures itself to regain growth momentum, there could be more companies in China that turn out to be equally successful as Alibaba in the coming decades.

The company’s white-hot IPO in the US, which is expected to be the biggest stock offering on record, has made the headlines worldwide. Having 80 percent of the vast Chinese e-commerce market, the company has been deemed as a typical success story of how an obscure grassroots company takes the advantage of the Internet wave to become a household name within a short time of 15 years. Now taobao.com, its retail arm, has nearly 500 million registered users, according to the company.

It is miraculous for a small group of people, led by founder Jack Ma, to start from the scratch in a small apartment of Hangzhou 15 years ago, compete head-on with international giant eBay, and stand out to rule the China market. Entrepreneurship no doubt is behind Ma and his team, who have become the trailblazers and rule makers of the e-commerce sector in China.

The surging e-commerce transactions have profoundly transformed China’s economic landscape. It has helped increase consumption, create jobs, and, perhaps most importantly, unleash the business-doing aspirations of millions of Chinese people. Some college graduates, for example, have opted not to find a job but operate their own e-shops at taobao.com and become quite profitable.

While Alibaba and other e-commerce companies have contributed to China’s economic growth, they have benefited tremendously from an ever more open and liberalized Chinese economy. It is no exaggeration to say that without the back-up of the China market, Alibaba should not have become that popular in its pre-IPO road shows in the US. In other words, investors’ zeal is not only built on the profit-making prospects of the company, but the future of the Chinese economy where it is born and grows up.

As a transitional economy, China has had a long history of rigid economic regulation that forbids private economic elements in the pre-reform era. After it opened up in late 1970s, economic regulation has been gradually liberalized, leading to vigorous growth of the private sector, which has become a crucial contributor to GDP, taxes and jobs. Still, only a very small number of private companies have gained international clout.

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