China´s economic growth might no longer be double digits, the internet industry keeps on booming, says financial expert Paul Gillis at Aljazeera. Successful IPO´s contributes, although the companies did not really need money, says the accounting professor.
“2014 was probably one of the best years for China’s internet industry,” said Paul Gillis, co-director of the international MBA programme at Peking University’s Guanghua School of Management.
“You’d have to go back to 2007, which was sort of the previous peak. 2014 was so huge because of Alibaba, it kind of dwarfed everything else,” said Gillis, a long-time Beijing resident well-versed in China’s internet scene.
Hangzhou-based e-commerce colossus Alibaba Group made history in September this year after it raised $25bn in New York in what became the world’s largest initial public offering ever recorded in the United States…
China’s internet titans are not short on cash – and the irony is that this year’s wave of IPOs was not triggered by a need to land more financing.
“The companies actually didn’t need money,” said Gillis from Peking University.
Rather, he said, overseas listings were meant to give an “exit” to the companies’ current investors – mostly foreign private equity and venture capital – and provide further room for start-up acquisitions.
Acquisitions have become more and more important for China’s internet companies as the pool of web users expands and usage diversifies.
By the end of June 2014, China had 632 million internet users, an increase of 14.4 million from last year, according to the China Internet Network Information Center, an official body set up in 1997 that provides regular statistical reports on online developments.
More noticeable, however, is that for the first time mobile internet use (83.4 percent) overtook traditional PC (80.9 percent) usage in 2014. The number of mobile internet users reached a record 527 million, an increase of 27 million compared to the end of 2013.
“This explains the success of China’s internet companies pretty much completely,” said Gillis. “They were at the right place at the right time.”
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