The Alibaba IPO and the business history of the Reform and Opening Period

Alibaba, the Hangzhou based e-commerce goliath, has a habit of keeping the financial world waiting. Last year the question was whether the firm would list its shares in Hong Kong or in New York. For much of April the question was when it would release its IPO prospectus.

Of course, the anticipation of the release had mostly to do with size: Would it be the biggest, or one of the biggest IPOs in history? Maybe not. By the end of the April, in the face of a general decline of technology stocks, one banker surmised that Alibaba’s strategy “was to submit a prospectus with fewer shares and a smaller valuation at the onset.” After gauging investor appetite, the price or supply could be jacked up.

When the prospectus finally came out on May 6, Alibaba valued itself between $96 and 120 billion dollars and sought to raise one billion dollars. Though, as New York Times reporter Michael de la Merced noted, this figure was more of a placeholder. The actually IPO will likely be much larger.

The same week the financial world waited for the release of the Alibaba prospectus, the magazine China Business News Weekly 第一财经周刊, came out with a retrospective on the past thirty years of business history in China. Here, periodization is quite prominent. Though many date reform and opening to the late 1970s, the magazine sees 1984 as the key moment when reform entered urban areas and saw the founding of what would become some of China’a largest and most successful companies: Wanke in real estate and Haier in white goods.  1984 in China, the magazine argues, was like 1886 in the United States, the year Coca-Cola and Kodak got started.

The magazine also interviews author Wu Xiaobo, whose book, 激荡三十年, examines the different waves of businesses that opened up, succeeded and failed in Reform and Opening Period . In the course of the interview, Wu makes an interesting observation about the different characteristics of entrepreneurs in the 1980s and 1990s. Wu argues that the first generation of entrepreneurs, like the founders of Wanke and Haier, have traditional Confucian ideas about how elites relate to the state. (老的这一拨人的国家意识更强,承袭了中国的式答覆传统和儒家的传统). Making the same point in a different way, Wu thinks this first group, compared to later entrepreneurs like Alibaba founder Ma Yun, act more like intellectuals (知识分子). Ma Yun and Ma Huateng, the founder of Tencent, another internet behemoth, are much more like American-style capitalists (美国式的企业家).

Wu’s book is probably the best attempt yet at writing the business history of the reform and opening period. There are plenty of economic histories but these often appear static, with an excessive focus on productivity levels rather than, as Ramon Myers put it, capturing “examples of individuals and groups, struggling in the market-place, agonizing over policy discussions and playing a complex role in economic life.”[1]  Work produced by journalists is often excellent but perhaps lacks a larger scope in terms of time; case studies produced by business schools are interesting snapshots but cannot, by their nature, add up to more than the sum of their parts.

It is possible that we might not get a good history of individual firms and business in the Reform and Opening period because access to materials and records might be hard to come by. It is the nature of businesses to be quite secretive with their records, especially while they are still a going concern. Even if there was easy access, the sheer number of documents and emails might be overwhelming. This thought is a worrying one because scholars working on the history of enterprises in the first part of the 20th century have produced a number of important and interesting works.

The victory of the Chinese Communist Party might have been a bad thing for entrepreneurs and merchants in the 1950s, but the PRC’s need to collect and categorize the records and assets of firms proved to be a boon to later historians. Sherman Cochran, a recently retired historian from Cornell, made a career out of taping these sources to produce wonderful books on sino-foreign competition in the cigarette industry during the early 20th century, a comparative history of management practices and the history of a pharmaceutical company. Elisabeth Koll of Harvard looks at textile production while Christopher Reed examines the publishing business. These books are so interesting because they are about more than just business; they touch on technological, politics, sociology and consumer culture.

One wonders, and worries, that historians might not be able to access a similar reams of documents for the enterprises of the Reform and Opening period. There is likely a very detailed story of Alibaba’s IPO strategy that is waiting to be written but at the moment it is hard to imagine a historian being able to tell it. The future of researching Chinese business history might not be as fruitful as its past.


[1] Ramon Myers, “How did the Chinese Economy Develop—A Review Article,” The Journal of Asian Studies Vol.50, No. 3 (Aug., 1991): 628.


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