Alibaba actively assisting probe by US regulator: Ma

Mr Ma told Xinhua news agency that "the best way to settle questioning is transparency and communication". He added that some US investors struggle to understand Alibaba's business model.
Mr Ma told Xinhua news agency that "the best way to settle questioning is transparency and communication". He added that some US investors struggle to understand Alibaba's business model.PHOTO: AGENCE FRANCE-PRESSE

Founder of e-commerce giant welcomes SEC's inquiry into its accounting practices

BEIJING • Alibaba's founder Jack Ma has said the New York-listed Chinese e-commerce giant is "actively assisting" an investigation into its accounting by the United States stock market regulator, China's state news agency reported yesterday.

In an interview with Xinhua, Mr Ma said that Alibaba has provided requested information to the Securities and Exchange Commission (SEC) and welcomed the inquiry.

Alibaba said in a regulatory filing last month that the SEC had opened the probe "into whether there have been any violations of the federal securities laws".

Among other things, the US regulator sought information into Alibaba's accounting for its Cainiao logistics network and its reporting practices for "Singles Day", China's biggest online shopping event.

"The best way to settle questioning is transparency and communication," Mr Ma told Xinhua, adding that some US investors struggle to understand Alibaba's business model. The company - often described as China's equivalent to eBay - dominates online commerce in the country.

Little-known Cainiao is at the heart of Alibaba's push into rural areas in China and overseas markets as it develops giant hubs around the country's biggest cities.

Created in 2013, Cainiao does not own the trucks and vans that ship Alibaba's packages. Instead, it provides a centralised information system to marshal trucking, shipping and delivery firms to get products from seller to buyer.

In some ways, Cainiao is Alibaba's answer to Amazon.com's investment in logistics and warehouses.

The SEC probe appears to be aimed at improving transparency and getting Alibaba to include all the earnings and losses from affiliates, said accounting professor Paul Gillis from Peking University's Guanghua School of Management.

Cainiao's Taobao platform is estimated to hold more than 90 per cent of the domestic consumer-to-consumer market, while its Tmall platform is believed to have over half of the country's business-to-consumer transactions.

Separately, Alibaba's biggest shareholder SoftBank said this week it will sell at least US$7.9 billion (S$10.9 billion) worth of its stake in Alibaba, as the Japanese firm looks to pay down a massive debt load.

Alibaba itself is buying back at least US$2 billion worth of the shares while the "Alibaba Partnership", which consists of 34 management partners, is buying US$400 million, according to SoftBank.

"Alibaba has ample cash and is optimistic about its earnings in the future," Mr Ma said, according to Xinhua. Alibaba's net income rose 85 per cent year on year in the quarter to March to US$832 million, according to the company.

AGENCE FRANCE-PRESSE, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on June 04, 2016, with the headline 'Alibaba actively assisting probe by US regulator: Ma'. Print Edition | Subscribe