阿里巴巴为何在美国上市(英文版)

Dear Ma Yun,

In your email of April 6, you asked me whether it was better to carry out the Initial Public Offering (IPO) of Alibaba in China or in US. And you specifically requested an assessment of the advantages and disadvantages of the IPO requirements of the both countries from the perspective of the chairman of Alibaba. So I present some of the critical differences between the two countries’ IPO standards related to your corporation as follows:

1. Cost: There’s no doubt that compared with a US stock market, a domestic stock market for IPO usually costs a Chinese corporation less money. Since most of the corporation’s leaders are familiar with the domestic language and cultural background. So it won’t take too much time to do research, to find competent lawyers and accountants, or to bargain with underwriters. Besides, the subsequent regular cost is lower in China. Because the China Securities Regulatory Commission (CSRC) has lower requirements of companies’financial transparency, meaning that companies don’t have to pay too much to ensure that they perfectly meet all the legal requirements. By contrast, American listed corporations may suffer a lot in this aspect.

2. Basic Requirements: Though IPO in China costs less, there are higher basic requirements for IPO companies. For example, the CSRC requires all the IPO companies register in China. But Alibaba registered in Cayman Islands. In addition, in China, IPO companies are also required to achieve a net profit of more than 3000 million RMB for the three consecutive years before IPO. While Alibaba, like other developing Internet companies, remains a huge deficit. On the contrary, there are no such strict basic requirements in US and Alibaba can easily meet most of its IPO standards.

3. Speed: The average speed of IPO in US is far much faster than that in China. The stock issuance system of US is approval system. Consequently, on average, it only takes less than half a year for a company to pass all the necessary procedures. By contrast, attributing to the examination system of stock issuance in China, Chinese companies generally spend one to five years on the procedural trivialities and on waiting. In fact, now there are 685 Chinese companies on the waiting list of IPO.

On balance, I suggest an IPO in US from the standpoint of the chairman of Alibaba. Though the cost may be higher, you can enjoy a faster procedure. As we all know that time is money and the significance of efficiency in business can never be exaggerated. Furthermore, IPO in China is simply unfeasible and impractical for Alibaba. Because it cannot meet the basic standards set by the CSRC. Taking all of these factors into account, we can draw the conclusion that an IPO in US is a better choice.

Please do not hesitate to contact me if you would like further information.

Yours sincerely,

Hank