Alibaba's Joe Tsai finally breaks the company's silence to explain why we don't know a good thing when we see it. All hail the Emperor's new clothes!

27 September 2013

If there is such a thing as a corporate tantrum, then it is yesterday's blog by Alibaba Group Holding Ltd Vice Chairman (or is that Vice Senior Partner?) Joseph Tsai Chung. Having given up trying to get special treatment for a listing in Hong Kong, he spits the corporate dummy.

Alibaba, you see, has come up with an entirely new and better way to govern companies, and if HK or the USA does not embrace it then we will all be left behind. Alibaba "never made any proposal" that involved a second-class shareholding structure, he says. So presumably, they won't be proposing that in the USA either. They want US regulators or investors to get their heads around something that even America has never seen before, where a self-selecting perpetual pool of managers gets to nominate more than half the board of directors.

You have to marvel at the breathtaking arrogance and hubris that comes from being a successful e-commerce firm in a sheltered market where foreigners cannot directly own telecommunications companies or payment systems. Mr Tsai tells the world that this "innovation" in corporate governance is to "protect the long-term interests of... all shareholders". This, of course, is because management knows what is best for shareholders, and shareholders don't. If this has a familiar ring to it, then the back of your mind is making the analogy with the Party and the people of China.

Then he gets to the nub of the 28-member Politburo (sorry, Partnership) proposal: "Partners are not just managers but they are owners of the business", he says. Um no, Joe. The shareholders are the owners of the business. Get it right. You are either a partnership where the partners provide all the equity, or a company, where the shareholders do. You can't be both.

Coming soon to a road near you: the innovative Alibaba Wheel.

©, 2013

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