Alibaba to further tap home market: CEO

E-commerce giant woos investors pre-IPO

Alibaba Group will focus on China's domestic market, as half of its potential is still untapped, the Chinese e-commerce giant said during its first roadshow before what could become the largest-ever technology IPO on the US stock market.

The company made the remarks in response to concerns about its alleged lack of experience in international markets, as well as its plans for future growth.

During a roadshow lunch in New York on Monday, the company's founder Jack Ma Yun gave a speech, ranging from concerns over its governance to plans for future growth and acquisitions in the US, Reuters reported Tuesday, citing several investors.

Ma was quoted by media as saying that Alibaba would continue focusing on the Chinese e-commerce market, which contributed $2.15 billion in revenue, or 85 percent of the company's total revenue, during the three months ended June 30, 2014, according to the company's prospectus.

The company believes that only half of Chinese Net users shops online currently, which means there is still massive potential for the Chinese e-commerce market, the Wall Street Journal reported.

Alibaba expected to raise up to $24.3 billion from the IPO, with an expected price range of $60 to $66 per share, which would value the company up to $163 billion, the largest-ever listing for a US-listed technology firm, according the company's Friday prospectus.

Some analysts had expected the company's valuation to exceed $200 billion. Its two-week sales pitch in cities including Boston, Hong Kong and Singapore will help determine whether Alibaba will price above its initial price range, coming closer to that valuation.

Pricing is slated for September 18 and trading is expected to open on the New York Stock Exchange on September 19, according to media reports.

A report by the Financial Times described a line of investors around the block in New York, with some would-be investors waiting for half an hour for the elevator to participate in the first stop on the roadshow at New York City's Waldorf Astoria hotel.

While Alibaba expected about 500 investors to attend its presentation in New York, some 800 would-be buyers overflowed the meeting room at the Waldorf Astoria Hotel, according to Reuters.

Following the expression of investor enthusiasm, the share price of the NASDAQ-listed Yahoo! Inc, a shareholder in Alibaba, surged 5.61 percent, closing at $41.81 Monday. Yahoo would gain up to $8 billion by selling 121.7 million ordinary shares of Alibaba after the IPO, according to Alibaba's prospectus filed on the US Securities and Exchange Commission on Friday.

It is not surprising that excitement is building for the world's biggest-ever technology IPO, said Wang Tingting, an industry analyst with Beijing-based market research firm iResearch

"Since last year, US investors have showed lots of interest in stocks relating to Chinese online retailing industry which is fueled by rising Internet usage and an expanding middle class in third-and fourth-tier cities," Wang told the Global Times.

One of the latest US-listed online retailers, Jumei International Holding Ltd, saw its opening share price surge 23.86 percent on the first trading day on the New York Stock Exchange in mid-May.

Founded 15 years ago, Alibaba rode the boom in China's Internet service industry over the past decade to become the country's largest e-commerce company by transaction volumes.

The company's three online marketplaces - flagship customer-to-customer taobao.com, business-to-customer tmall.com and group sales site Juhuasuan - handled combined 1.8 trillion yuan ($296 billion) in transactions from 279 million active users and 8.5 million active sellers in the 12 months ending June, 2014.

"Investors surely want to know more about the performance and business plans of this Chinese e-commerce giant ahead of the official listing," Lu Zhenwang, founder of Shanghai Wanqing Commerce Consulting, told the Global Times.

But Lu expressed concern that Alibaba, whose market share in the Chinese e-commerce sector is unrivaled, is unlikely to see further rapid growth in its e-commerce operations.

Meanwhile, tmall.com, Alibaba's B2C operation, is also facing a serious challenge from rival JD.com Inc, making Alibaba's future performance in the e-commerce sector hard to judge, Zhang Yi, CEO of Shenzhen-based iiMedia Research, told the Global Times.

"The company needs a new profitable business model to reduce its dependency on e-commerce, otherwise the growth rate of its revenue in 2015 will likely drop to 20 percent from its current 50 percent to 60 percent," said Lu of Wanqing Commerce Consulting.

The company has been ramping up efforts to diversify its ecosystem.

On January 8, Alibaba launched a smartphone gaming platform, while one month later it said that it would build a digital entertainment and gaming development center in South China's Hainan Province.

The company also expanded its portfolio with the purchase of a 60 percent stake in the entertainment company ChinaVision Media Group in March.