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With foothold in Hong Kong's stock market, Alibaba sets itself lifespan goal of 102 years

Enoch Yiuenoch.yiu@scmp.com

Alibaba Group Holding, returning to Hong Kong's stock market this week after a five-year wait, considers the city a cornerstone of its strategy to globalise and prosper across three centuries, according to its chairman.

This week's successful US$13 billion initial public offering (IPO), the world's largest fundraising of 2019, will swell Alibaba's cash equivalent to almost US$46 billion. That bolsters the financial war chest of Asia's most valuable company, which has grown since its establishment two decades ago in an English teacher's dorm room into a technology behemoth with businesses in e-commerce, big data, financial services and cloud computing.

Alibaba wants to serve 2 billion worldwide customers by 2036, more than double the 960 million that are part of its so-called digital economy. The group also aims to create 100 million jobs and help 10 million small businesses to become profitable on its platforms, including Taobao and Tmall for online shopping and Alipay for e-payments.

"After this IPO, Alibaba will be committed to position Hong Kong as a very important hub for our global strategies," chairman Daniel Zhang said in his first interview since taking over the reins of the Hangzhou-based company. "Hong Kong is a very important financial centre. It is very important for our globalisation strategy. It will be a bridge between China and the world."

Zhang, who turns 48 in January, took over the driver's seat at Alibaba in a  year-long succession plan that involved  co-founder Jack Ma stepping down on his 55th birthday in September. He is also the company's chief executive officer. Globalisation, domestic consumption and big data powered by cloud computing are the strategic pillars of the ambitious long-term targets for Alibaba, which owns  South China Morning Post.

The secondary listing in Hong Kong marks Alibaba's homecoming of sorts, after its US$25 billion New York IPO in 2014, still the record holder for the world's largest fundraising. Its return to Hong Kong lifted the city to the top of the world's IPO rankings, and vindicated the push by the local securities regulator and stock market operator for the biggest reforms in listing regulations in 30 years.

Alibaba's shares rose 6.6 per cent on their debut on Tuesday, creating the biggest listed stock on the Hong Kong exchange with HK$4 trillion (US$511 billion) in market value. The reception underscores Alibaba's confidence in the future of Hong Kong as an international financial centre, Zhang said, even as the city's economy has been hobbled by six months of unprecedented civil unrest, and is in its first technical recession in a decade.

"We are very happy to share our growth opportunities with investors in Hong Kong and mainland China and also investors from mainland China," Zhang said. "For the Hong Kong capital market, we can bring more fresh air and more new economy component, so that Hong Kong can continue to take a leading position in the global capital market."

Alibaba rises in Hong Kong debut, creating city's biggest stock with HK$4 trillion value

The group will deploy the IPO proceeds to further develop its artificial intelligence technology and other capabilities to help sustain its development. Alibaba has stated that it wants to prosper for 102 years, spanning three centuries since its establishment in 1999 in the Zhejiang provincial capital of Hangzhou.

"Our goal is to help our partners to do their business easily in a digital way," Zhang said during his interview in Hong Kong. "That is why we have built this huge digital infrastructure [in] e-commerce, payment, finance and logistic. We do it for good rather than for the size."

That e-commerce infrastructure encompasses e-payment, logistics, big data analysis and the powers of cloud computing, all of which were showcased by Singles' Day, the largest 24-hour shopping event on Earth " a brainchild of Zhang a decade ago.

"This year we have hit a record, but again, it is not just about the number," Zhang said. "It is about the infrastructure of the whole system."

Alipay, China's biggest mobile payment system operated by Alibaba's associate Ant Financial Services Group, settled a record 268.4 billion yuan (US$38.4 billion) of gross merchandise value (GMV) on November 11, a 26-per cent increase from last year.

Cainiao Network, Alibaba's logistics arm, processed 1.3 billion delivery orders involving a record 535 million packages. AliYun, as the world's third-largest cloud service is called, processed 554,000 orders per second on Singles' Day, a 1,000-fold increase from a decade ago, with zero downtime for 24 hours.

While the US-China trade war has stoked global economic uncertainties, Zhang is hoping that the world's two biggest economies can reach an agreement.

Still, he believes that heightened trade tensions will not pose any immediate risk to Alibaba, given its strengths in the marketplace.

"We have good leverage because China has a large consumer market, which our US business partners do not want to lose sight of," he said. "Also, after many years of efforts, our core technology is self-developed to support our platforms."

10 customers of Taobao and Tmall helped Alibaba ring in its stock market trading debut in Hong Kong on November 26, 2019, by striking the ceremonial gong. Photo: Winson Wong alt=10 customers of Taobao and Tmall helped Alibaba ring in its stock market trading debut in Hong Kong on November 26, 2019, by striking the ceremonial gong. Photo: Winson Wong

Zhang, who worked in accounting and banking before joining Taobao as the unit's chief financial officer in 2007, is known as Xiaoyaozi in Alibaba, a nom de guerre that reflects the company founders' fondness for wuxia " Chinese swordsmen " novels.

Since taking over as chairman and chief executive, Zhang has handed over the management of the Singles' Day online shopping festival. It was him and the new management team that took the risky decision to proceed with the world's largest IPO in Hong Kong, even as the city was being rattled by six months of civic unrest. Yesterday, the risk-taking was rewarded by an accelerated admission into the Hang Seng Composite Index, a broader version of the city's benchmark stock index, effective December 9.

Co-founder Jack Ma, who remains a lifelong member of the company's partnership, now spends much time in Africa to help the continent's young entrepreneurs establish businesses to "become the next Jack Ma," Zhang said.

"As a founder [of Alibaba], he will still give us guidance and advice," Zhang said.

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This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.