Amid huge uncertainties, some certainty is needed

As Alibaba kicked off its IPO roadshow in the US, company founder Jack Ma is reported to have said that during his visit to the country 15 years ago, he couldn't succeed in raising $2 million. This time, Ma said he hoped he could take home "some more".

With the market valuation of the company reaching $220 billion at the upper end of market expectations, Alibaba's IPO may turn out to be the largest in US history.

It's such a large company with such a sprawling business (and has been spreading even faster recently), that investors and financial advisers cannot be unanimous on its worth. Nor, perhaps, can anyone be sure about the best way for the company to position its future business - other than what it has been doing. Not even Ma himself.

In fact, Alibaba is a typical case of a successful company in China - that is, from the start, it wasn't quite sure about what its business was. All it had to do is try to cross the river by feeling the stones, as a famous Chinese saying goes. The most important requirements, apart from a vague sense of direction, are tenacity and flexibility.

And having failed to raise a mere $2 million all those years ago, it can only be called a miracle that the company managed to last and kept growing. Of course, one way or another, it did manage to enlist some investors and generate a cash flow.

The turning point was the outbreak of the deadly SARS epidemic in 2003, when people were advised to avoid crowds to reduce their chance of being infected. Big cities were flooded by demand for online shopping and home delivery.

That was a time when other Chinese e-commerce companies of the Internet boom had long folded. Alibaba managed to stay in business only by levying no charge on vendors using its online marketplace.

It is a company that has grown along with uncertainties, as have most of the surviving privately held companies in China. But there is a trick in surviving those times: Past uncertainties don't explain, and practically shed little light on, future uncertainties. Alibaba can remain the dominant marketplace for online retailers in China but will it still be able to do so when technologies, consumer habits or market conditions change?

The rapidly changing Chinese market is full of such "Knightian uncertainties", or uncertainties that are basically beyond calculation. So it is no exaggeration to say that Alibaba's success cannot be replicated by other companies, nor by itself.

If the company is lucky (which would mean, to a great extent, if China's economy continues on roughly the same path), it may continue to ride on its past success a few more years.

If it isn't so lucky, it will have to develop new ways of business, and even reinvent itself. That is more likely to be the case because China has been changing fast and the change is unstoppable.

Mobile-based e-commerce and related services are only in the early stages in China. There may be much potential demand waiting to be met: in health and personal care, in education, in financial services. No company can claim to be strong in all or any of these areas so far.

It must also be pointed out that we are talking about the risk in investing in Alibaba today being not just about the company. The company is a mirror of China - an economy of huge potential and huge uncertainties as well.

At some point, its IPO for instance, a company has to learn to do new things, such as to offer a minimal sense of certainty, and thereby trust, to investors and customers. This is much more important than claims of future market share in a market full of uncertainties.

The author is editor-at-large of China Daily.

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