Alibaba Succeeds In China, May Fail On The Global Stage

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Trip Chowdhry of Global Equities Research is out with a bearish view on Alibaba. Noting the well -accepted practice of "Copy to China", Chowdrhy sees Aliaba as a strong company benefiting from Chinese isolationism. The internet company has copied, very fruitfully, the successes of global firms like Amazon, Google, and PayPal.
Alibaba has succeeded with its imitation of larger business while remaining contained in China. On the global scale for businesses, Chowdhry see's Alibaba struggling to maintain its "imitation" strategy over the clearly more successful global strategy of "innovation". One other benefit Alibaba enjoys in China is the protection granted to internet businesses. Google has struggled to break into the mainland and those firm within China that copy the success of other global firms will surely do well when the remaining world is cut off from accessing China. Now that Alibaba is entering the global stage, it will need to "out-innovate Amazon.com, Google, Facebook, Twitter and other Global companies", and the public has "not seen innovation from Alibaba".
Overall, Alibaba has benefited greatly from the dynamics surrounding indigenous Chinese firms and this mispricing could have potential damaging effects on those who participant in the IPO this Friday".
As a final thought in the note this afternoon, Chowdhry says "Our research currently indicates that Alibaba will very likely struggle with its International expansion, as in International markets the rate and pace of innovation is an order of magnitude different from that in China. The recipe of success in International markets is Innovation and not Imitation".

Alibaba is expected to IPO this coming Friday, Septmeber 19, with a price range of $66 to $68 per share.

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