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Alibaba's rivals start to gather

Frank Sieren / jpSeptember 30, 2014

Even though Alibaba broke records with its spectacular stock market debut, its rivals in China are already gathering momentum. They might well give it a run for its money, writes DW columnist Frank Sieren.

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Alibaba China Konzern Gruppe Marketing
Image: picture-alliance/dpa

In recent weeks and months, Alibaba and its founder Jack Ma have generated more media interest in the west than any other Chinese company ever. It was clear from the get-go that its initial public offering (IPO) in New York would be a record breaker. The stock market debut of the e-commerce giant didn't disappoint, with shares up by 30 percent in its first week of trading.

Now worth an estimated $230 billion (180 billion euros), Alibaba is dwarfing US rivals Amazon and eBay, and the biggest winner of all is Ma himself, whose $27 billion fortune makes him the richest man in China.

But the Chinese Internet company's rise on the stock market didn't last too long. The shares saw their main surge on the first day of trading, with the company slumping throughout the rest of the week. Perhaps Wall Street realized that the fairytale legend of Alibaba, Ma and the billions wasn't necessarily going to end well, especially given the prospect of a new rival on the horizon back in China. Its founder is none other than 60-year-old entrepreneur Wang Jianlin, now knocked off the top of China's rich list, and most likely highly unwilling to accept second place. Hence his determination to see his Wanda Group, a dinosaur of the Old Economy, give Alibaba a run for its money.

Looming competition

Together with Alibaba's immediate competitors Baidu and Tencent, Wanda is readying to launch its own e-commerce platform in China. The plan is that Wanda's 100 or so shopping malls and department stores, Baidu's search engine and mapping services, WeChat's social networking platform and Tencent's payment service Tenpay, will team up to create a seamless consumer experience.

Frank Sieren (photo: Frank Sieren)
DW columnist Frank SierenImage: Frank Sieren

Within the next five years, the three partners will be investing $20 billion yuan (2.6 billion euros; $3.3 billion) in a new service that will enable customers to buy online as well as offline, via the Wanda Group's hotels and malls.

The combined clout of the three partners might indeed lure customers away from Alibaba and its e-commerce platform Taobao. Especially given that Wang will be permanently on hand to supply financial injections whenever necessary. His empire is vast, and vastly successful. Dalian Wanda Group, which he founded in 1988, is one of China's leading private companies which has seen annual growth of at least 30 percent for eight years in a row. Turnover is currently 186 billion yuan (24 billion euros; $30 billion).

Strategic investments

Wanda's rapid growth is due primarily to its foreign acquisitions. In 2012 it paid $2.6 billion for the US cinema chain AMC, also acquiring British yacht maker Sunseeker International the same year and investing 868 million euros in a luxury hotel and a property development project in London. In June 2014 it spent 266 million euros on the Edificio Espana, one of the tallest buildings in Madrid, and 662 million euros a month later on a building in Chicago's port district. The company has announced its intention to own 5-star hotels in 12 to 50 cities around the world by the year 2020.

Wang's business is flourishing and he can in all probability beat Jack Ma back to the top of China's rich list regardless of whether or not his new Internet company succeeds. Possibly even this year. Last week, Wanda submitted an application for a Hong Kong IPO, which is expected to make the company around $6 billion. That hardly matches Alibaba's spectacular stock market debut, but if all goes well for Wanda, Wang Jianlin will once again be wealthier than Ma. Competition is healthy, it seems, even amongst Chinese biggest companies.

DW columnist Frank Sieren has lived in Beijing for 20 years.