BC Expert: Alibaba I.P.O.
Greg Stoller is actively involved in building entrepreneurship and international business programs at Boston College. He is the director for the core M.B.A. business planning course, the Asian International Management Experience Program, and the Asian International Consulting Project and routinely travels to Asia with MBA students who get a first-hand look at businesses there. Stoller is author of the book Strategies in Entrepreneurial Finance with Accompanying Case Studies and business articles detailing the successful practices of U.S. and international firms. He is a reporter, contributor and periodic co-host of the broadcast "Radio Entrepreneurs" and co-creator/host of the nationally aired television show, "The Language of Business." Stoller also regularly works with the press providing commentary and analysis on domestic and international business issues. He speaks, reads and writes fluent Japanese, Mandarin Chinese and French, and basic Cantonese Chinese, Korean and Spanish.
It’s been buzzed about for months – Alibaba, the Chinese e-commerce giant - will go public on Thursday in what’s expected to be the biggest IPO ever. A Boston College expert who visits Chinese businesses every year says it’s very prestigious and strategic for Chinese firms like Alibaba to co-list themselves on stock exchanges outside of China.
“Given the Renminbi's inconvertibility comparatively to the U.S. dollar, it could be much easier and much more beneficial for a Chinese company to go public on a U.S. exchange, in order to raise capital,” says Greg Stoller, a lecturer at the Carroll School of Management and expert on the Asian economy. “The U.S. dollar is far more widely traded all over the world than the Chinese Renminbi is."
Stoller, who runs the university’s Asian International Management Experience Program and Asian International Consulting Project, says the excitement among U.S. investors for the Chinese behemoth stands in stark contrast to how the communist country receives new companies.
“Over the past six to nine months foreign firms in China have suddenly gotten an unwelcome reception from the Chinese government – they’ve been fined, they’ve been prosecuted, you name it,” says Stoller, who has visited China more than 40 times since 1991. “I just find it ironic that we’re so welcoming in the United States of other companies outside of our borders, but that doesn’t necessarily translate in reverse to the world’s second largest economy, right now.”
While the IPO may push Alibaba’s valuation to more than $150 billion, Stoller says China’s past accounting history may offer a cautionary tale.
“We have unfortunately seen a number of Chinese companies melt down due to accounting fraud,” says Stoller, who speaks, reads and writes Mandarin.
“China has gotten some bad press for having non-GAAP accounting practices, and there have been a lot of companies that in theory look like they are going to be profitable and ended up being a shell game or a ruse. I have absolutely no indication to believe that Alibaba is headed in that direction but when you start seeing IPO’s of this size, your mind can’t help but wonder.
“However, if this works as intended, it’s a real feather in China’s cap that they have produced a company of this magnitude so quickly comparatively speaking, and that it’s going to be so successful in terms of the U.S. IPO, it really speaks positive volumes about China’s development in the international business world.”
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