The tech boom of Chinese companies continues:

Last Tuesday, e-commerce conglomerate Alibaba Group Holdings Ltd. filed their initial public offering (IPO) prospectus, aiming to become listed on either the New York Stock Exchange or Nasdaq.

According to Reuters, the potential debut of Alibaba on the U.S. stock exchange market has generated much attention among Silicon Valley and Wall Street investors. China’s online digital technology industry appears to be rapidly booming as internet coverage within the country expands and domestic demand for e-commerce increases.

Alibaba owns China’s largest e-commerce sites, Taobao and T-mall, as well as popular online payment service provider Alipay. It is similar to its counterparts eBay or Amazon,  but the volume of transactions handled by Alibaba is more than eBay and Amazon combined, totaling approximately US$248 billion and 231 million users in 2013.

Although Alibaba’s founders currently have full control over the management and development of the corporation, more than half of its shares are foreign-owned, 34.4 percent by Softbank and 22.6 percent by Yahoo. Given that this IPO is set to be the largest since Facebook’s entry into U.S. exchanges in 2012, the competition for Alibaba’s shares prior to the IPO is expected to be fierce. 

Foreign investors have many reasons to be optimistic about China’s digital technology industry. In 2013, the Chinese government launched a program called “Broadband China” to increase domestic internet coverage, especially in the countryside. The program aims to bring Fiber-To-The-Home (FTTH) to 35 million households, 180 thousands 3G networks, and 1. 3 million WLAN access points. It also plans to establish internet access for 18 thousands administrative villages. This means that the number of internet users is increasing on top of the existing 600 million user base.

The expansion of internet coverage and the deepening of internet usage allows Chinese consumers with increasing disposable income to engage with online businesses, which makes firms like Alibaba very appealing for foreign investors.

See the full article here. Read more about the IPO from the Guardian here.

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