Alibaba needs think big on world stage
IF it is to emerge as a genuine global company it is essential that large overseas targetsare acquired Once again Alibaba, never far away from front page news, is the subject of intensespeculation. Right now it is the recent takeover of South China Morning Post, the Hong Kongnewspaper, that has set tongues wagging again. The talk appears to center on the latest acquisition and how this fits with Alibaba's overalldirection and continued emergence as a potential global corporate brand. But is this particular takeover that significant for Alibaba's future? Or is this focus actually anoversight which misses the real issues and challenges facing Alibaba? If Alibaba is to emerge as a genuine global company capable of dealing with competitivethreats from anywhere in the world, it is essential that larger targets are acquired but thesetargets have to be overseas companies, preferably large, established European and/or UScorporate global giants.
Such an audacious strike is the only path to sustainable, global expansion and seriousinternational market credibility. In so doing Alibaba will join a growing list of Chinese companies in their quest tointernationalize and modernize. It is only recently that China's household appliance giant Haier announced a $5.4 billiontakeover of General Electric's appliance business. It is difficult to see how Haier's penetrationof the lucrative US market could have followed any other strategy than growth via overseasacquisitions. Alibaba's SCMP takeover, which appears to make sense in this digital media era, doesrepresent advancement and should strengthen the company's reputation but it also begs thequestion: When is this internationally-aspiring giant going to make an announcement similarto Haier's GE takeover? Haier's announcement is not an isolated case and should Alibaba finally land a major US orEuropean corporate catch it will join a sizeable list of Chinese companies that have leapt tointernational prominence using the same route. In 2005, computer giant Lenovo announced an agreement to take over IBM's PC division,news that shook the global computer industry at the time. A few years later, Chinese autoindustry player Geely bought out the Volvo brand. More recently world-famous overseas brands such as London's toy store Hamleys and UKbreakfast cereal brand Weetabix were also the subject of Chinese company takeovers. A similar move by Alibaba will contribute considerably to establish a credible reputation as aglobal brand. Certainly, listing on the US stock exchange not that long ago represents a major step in theright direction for Alibaba. But the investment community need to witness an audaciousoverseas takeover in order to be convinced of Alibaba's intent.