Monthly Archives: September 2014

Alibaba Investment on Thin Ice

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The Beijing-based company’s initial public offering (IPO) started trading on September 20th, 2014 but shareholders who are buying in are taking a risk with their money that could have serious long-term repercussions.

Because Chinese law forbids foreign ownership and investment in Internet businesses, Alibaba shareholders will not own part of the company but instead own shares from a shell company in the Caymen Islands. This shell company is called a variable interest entity (VIE) and was established for the sole purpose of being the loophole for Chinese internet companies’ foreign investment. This VIE is connected contractually to Alibaba’s profits which exchanges revenue for investment.

Although this partnership is ambiguously legal, the China government has mostly turned a blind eye towards the VIE and their role as a loophole in Chinese law. This means that China courts (and in a recent case, the Supreme Court) can rule to invalidate the contract between the China company and the VIE. For foreign investors, this can cut off future profits; this risk applies to both the experienced investor as well as the novice and creates a bigger loss, the more one invests. Despite warnings from the US-China Economic and Security Review Commission that VIEs are a “complex and highly risky mechanism”, I agree that there is great potential in China’s burgeoning market and the opportunity to take advantage of it far outweighs the risks.

Alibaba IPO

References:

http://online.wsj.com/articles/alibabas-political-risk-1411059836

http://www.bloombergview.com/quicktake/chinas-fraught-ipos?_ga=1.223024733.711348152.1412056375

http://www.bloomberg.com/news/2014-06-26/alibaba-picks-new-york-stock-exchange-as-venue-for-largest-ipo.html

Blackberry Passport: Entry into the Competitive Market

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Blackberry unveils its newest device, the Blackberry Passport, early this month with an unconventional approach relative to other smartphones in the market. From its surprise guest at the launch (Wayne Gretzky) to the subtle snubs at iPhones, Blackberry is recognizing a new era for the company and embracing the original innovations that had first made Blackberry a pioneer for smartphones.

The marketing and operations team at Blackberry have been collaborating to make the Passport the comeback product of the century as executives decided to market the Passport towards their first and most loyal target consumers: corporate and enterprise executives in sectors of health, finance, military, and government in order to bring the company back from the brink of bankruptcy merely a year ago. Blackberry is now focusing on what the professional would need, as opposed to the typical app-infused smartphone user; in fact, CEO of Blackbery, John Chen, states that “the phone is intended to appeal to fewer than one in 10 smartphone users”.

Everything about the Passport is different or even strange compared to the other competitive smartphones on the market; Blackberry is no longer competing with Apple in a predetermined doomed battle but is instead attempting to revolutionize the smartphone market once again. The design team at Blackberry customized features solely for the professional, prioritizing tasks such as receiving and sending emails, editing documents and spreadsheets, and multitasking over more common tasks such as playing CandyCrush or Snapchatting.

As a faithful and loyal Blackberry user, I still believe in the Canadian company and am excited to witness the success of the Passport.

John Chen, CEO of Blackberry, proudly holds up the new Passport - his first product since he took over and revamped the company

John Chen, CEO of Blackberry, proudly holds up the new Passport – his first product since he took over and revamped the company

 

References:

http://www.theglobeandmail.com/report-on-business/top-business-stories/blackberrys-chen-on-new-passport-big-screen-lower-cost-than-iphone/article20718050/

http://www.cbc.ca/news/business/blackberry-passport-why-it-represents-the-crux-of-ceo-john-chen-s-strategy-1.2776759

 

 

“I Agree to the Terms and Conditions”

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Social media giant, Facebook, is known for manipulating users’ privacy, but this time, have they gone “too far”? For a social media corporation, where is the line drawn when it comes to users’ privacy?

Recently, it was announced that Facebook conducted a psychological study on a randomly selected number of users without explicit consent. This invasion of privacy as well as the manipulation of these people’s emotions was justified by Facebook executives who claimed that when users agree to their “terms of service”, they are granting the corporation a blanket consent for company research.

I am, personally, no avid Facebook user; however, I maintain a sense of shock and disbelief that this manipulation of one’s emotions was so blatant and shameless. Many people today consent to terms of service without thoroughly reading them and simply assume that they are agreeing to allow the company permission to access public data or to abide by the law while using the product. Facebook has taken advantage of these users by conducting a psychological study without consent that is justified from clauses in the terms of service. The controversial issue of business social responsibility is varied but one opinion is that of Milton Friedman‘s who believes that the social responsibility of a business is to utilize resources for maximum profit “within the rules of the game”. This behavior from Facebook may be considered immoral, unethical, or dishonorable but is not illegal; should the terms of service that many people blindly agree to hold such legal weight?

References: http://www.nytimes.com/2014/06/30/technology/facebook-tinkers-with-users-emotions-in-news-feed-experiment-stirring-outcry.html?_r=0