A China-based company by the name of Alibaba will offer shares to the public through an initial public offering (IPO) on Friday.
Shares of the company can then be traded by investors in the secondary market under the ticker symbol “BABA.” Untold scores of eager investors, wanting to get a piece of the action, will be lining up worldwide as the world holds its breath to see what will become of the ecommerce giant.
Currently, Alibaba accounts for nearly half of all online transactions within China. Alibaba is a kind of hybrid online marketplace of sorts, mixing aspects of eBay, Amazon and PayPal into one complete package; it has dominated the online market share in Asia and its reach continues to extend. With a track record like this, it is no wonder investors are clambering over each other to get a bite out of its IPO like a pack of rabid hyenas fighting over a pork chop.
With a company such as Alibaba about to go public for investments, a peculiar issue that not many people talk about is being brought into the spotlight.
While Alibaba is definitely a great place to buy wholesale on a variety of goods and functions as an alternative to PayPal in a few instances, it still has the thorn in its side that tarnishes its own image and reputation.
It can serve as a great place to sell knock-off goods in bulk to sellers who can then turn around and rip off unsuspecting customers. While Alibaba’s founder, Jack Ma, has publicly denounced these practices and actively seeks to weed out offenders spending more than $16 million a year on anti-counterfeit efforts the illicit activity continues to be a part of its business.
A quick search of its website reveals fake Samsung Galaxy S5’s that one can buy in bulk: with each costing roughly $10 each when the math is done, albeit with much cheaper components than the product description illustrates.
With this issue of selling counterfeits and hurting potential customers, the ethical issue of investing is brought to the surface. If someone invests in a few shares in Alibaba, then that person is supporting the potential counterfeiting operations that are done using its online venue.
While people are free to invest their own money however they please, as is an integral part of our free market, they should at least be aware of what they might be supporting.
Other examples abound of publicly traded companies whose businesses potentially hurt society as a whole to varying degrees. An obvious one is Phillip Morris (stock symbol “PM”), a tobacco company whose line of products includes Marlboro and Parliament cigarettes.
The ethical dilemma presented from investing in this company is simply due to the nature of the products it produces and sells. As conclusive studies have shown, inhaling cigarette smoke is detrimental to the smoker’s health and causes many medical problems, with cancer as one of the chief examples. By causing so many medical issues, this company and others in the tobacco industry could be seen as a detriment to society because the damage their products cause. By investing in Phillip Morris or any equivalent, an investor is indirectly supporting its activities even those that affect people’s lives in a negative way.
Alibaba, which may not be as bad as Phillip Morris in this aspect, still parallels most if not all of the negative aspects of that its companion, just to potentially lesser degrees.
Despite the view of ethics dictating how to conduct business discussed up to this point, it does not mean that people cannot invest in these companies, as they are legally allowed to in this free market system.
The point is that investors should at least have a basic understanding of ethical implications to do with where and to whom they are giving their money in order to make better-informed decisions. More so, if more investors take into account what is perceived as an ethical responsibility to withhold their financial support from possible companies that can negatively impact society, worldwide landscape of business may change dramatically for the better.