Coupang – the Amazon of South Korea – went public in a traditional IPO and its shares jumped 40%. The revenue of the firm almost doubled to $12 billion last year. The CEO, Bom Kim, is bullish: “we’re just scratching at the surface”. SoftBank made $33 billion off the South Korean e-commerce firm’s debut in New York.
While South Korea’s population may pale in size to that of the U.S. or China, where e-commerce titan Alibaba roosts, Coupang’s focus still remains on its home front, Coupang CEO Bom Kim said in an interview with Fortune on Thursday.
“If you look at the size of the Korea market, the commerce market is just over $540 billion just in the next three years,” Kim said when asked about any expansion outside of South Korea. “It’s a huge opportunity. We believe we were just three to four percent of the commerce market last year, which is such a small percentage. We’re just scratching at the surface.”
As that happens, another ecommerce conglomerate (Alibaba) is still trying to fix its core double play in Ant Group. Ant Group CEO Simon Hu resigned and has been replaced by chairman Eric Jing.
China’s Ant Group Chief Executive Officer Simon Hu has unexpectedly resigned amid a regulatory-driven overhaul of the financial technology giant’s business, the first top management exit since a scuppered $37 billion initial public offering.
Hu, who was named chief executive of the Alibaba Group Holding affiliate in 2019, will be replaced by company veteran and Executive Chairman Eric Jing, Ant said in a statement on Friday.
Hu’s exit from the company comes as Ant is working on plans to shift to a financial holding company structure following intense regulatory pressure to subject it to rules and capital requirements similar to those for banks.
That pressure abruptly scuttled Ant’s IPO last year, which would have been the world’s biggest
What is happening here is evident: Ant Group will restructure and become to a large extent a financial institution, not a technology company, and if that happens, it loses gains on leverageable factors which will cause its multiples to drop. With that, valuation will follow, going south.
Personally, I do expect many staff of Ant Group to depart as most will not be comfortable running a financial institution which uses technology, over a technology company which offers financial services. But China prefers the former as it fears over-heating the sector with these new species of companies which do not have breaks in their scaling-cars of execution. As Reuters noted, from valuation to compensation, Ant Group will be radically different after this regulatory metamorphosis.
China is building for e-yuan and Alipay cannot be on the way: ‘China is going around the world, creating a network for E-yuan, the digital version of their currency: “China has taken a step further in its quest to boost yuan through its sovereign digital currency. SCMP reported that Beijing has joined Hong Kong, Thailand and the United Arab Emirates (UAE), along with the Bank of International Settlements (BIS), to explore cross-border payments for digital currencies.”‘
Ant will face regulatory pressures from multiple angles in the next phase of its existence. In addition to this redesign forced on them by the government. The Chinese government will be introducing its digital yuan which might all but eliminate the need for consumers to opt for Alipay or Tencent pay. Will be interesting to watch how these evolve. (a LinkedIn commenter here)
In the light of this redesign, we are making this Tekedia Live session video public. It was recorded this month on Tekedia Mini-MBA Live session on ecommerce in China, anchored by Dr. Henry Chan, from Beijing.
---
Register for Tekedia Mini-MBA (Jun 3 - Sep 2, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.
The same system which helped to prop you up could destroy you overnight. For China, you cannot become more popular than the Communist government, it’s an unwritten rule, even when some pretend it doesn’t exist. China is China, not many societies will truly wish to be like it, even with all its advertised successes.
For Ant Group, once you wear the toga of financial institution, everything changes, the aura that goes with tech companies will leave you, and you become ordinary. Tesla is still a tech company, everything about it will change the day it’s classed as automobile company!
With respect to Coupang, the numbers are quite beautiful. South Korea is smaller than Nigeria, this tells you the sort of numbers our local ecommerce and tech companies could be churning out, if we manage to educate our ridiculous population and create economic opportunities at scale. We have a big advantage to shake the world from here, but we first need to do our home work well and get the fundamentals right.
As always, this is the greatest time to be alive, those who are not living now are missing a lot.
I see a Chinese Federal Reserve