Alibaba.com’s Brief Company Background
On November 6, 2007, Alibaba.com debuted on the Hong Kong Stock Exchange, raising US$1.5 billion to become the world’s biggest Internet stock offering since Google’s initial public offering (IPO) in 2004. On the first trading day, frenzied purchases of the stock pushed prices up to by 193%, the fourth largest first day gain in Hong Kong’s stock exchange in three years. The closing price of US$5.09 per share gave Alibaba.com a value of about US$25.6 billion, making it the fifth-most-valuable Internet company and the largest in Asia outside Japan. Small and medium-sized enterprises (SME) have been a key driving force in the booming Chinese economy. In 2004, SMEs contributed 68.8 percent to the nation’s gross industrial output. iResearch estimated that the number of SMEs in China would rise from 31.5 million in 2006 to 50 million in 2012 (see Exhibit 1).1 Out of these 31.5 million Chinese SMEs, a mere 8.8 million, or 28 percent, utilized third-party B2B (business-to-business) e-commerce platforms. With the Chinese government encouraging SMEs to use third-party e-commerce platforms, however, the numbers were expected to rise to 41 million and 82 percent, respectively, in 2012 (See exhibit 2).2 The implication was that e-commerce had plenty of room for growth in China, at least among SMEs, where the market was expected to almost quadruple between 2007 and 2012. Primary key issue / problem faced by Netflix
The rising popularity of e-commerce among SMEs in China was fueled by several challenges in the traditional trade environment, including first, limited geographic presence restricting SMEs’ ability to develop customer and supplier relationships beyond their immediate vicinity. Second, fragmentation of suppliers and buyers, which made it difficult to find and communicate with suitable trading partners. Third, limited communication channels and information sources through which to market and promote products and services or...
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