Alibaba’s IPO and the Catch 22

There is in my humble opinion only one problem with Alibaba’s IPO; the products they sell. A Catch 22 story.

I’ve been posting about Alibaba’s IPO a couple of times recently. It’s more covered than Sina Weibo’s IPO which is closer to my daily startup Surround App.

The reason I post about Alibaba is to show China is converting from a manufactoring economy to a consuming economy and so Chinese people are “in the market” for marketing.

But if you look at the products Alibaba sells (very, very cheap), you will see a lot of this is oversupply from factories producing for western brands / companies.
Example: Lamaze original website / Alibaba’s Chinese website
And I know this product because we bought one, from the Chinese site. We also bought this from an official retailer in Hong Kong. And I can tell you, the fabric is exactly the same, the labels are the same, the way it’s stitched is the same.

But what if China becomes a real consuming economy, where the Alibaba’s IPO price is mostly based upon. Then the production of this product is moved to India, or Bangladesh. The product will still be available in western countries, but the Chinese factories will come to a stand still, no oversupply, no products to sell on Alibaba. A bit of a Catch 22 I think.

Let me know your thoughts on twitter.

Comments are closed.