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Five Things to Know About Alibaba, 'The Hottest Thing in Tech'

Are you familiar with Alibaba? If not, odds are you will be the coming weeks.
Alibaba Group headquarters in Hangzhou, China.
Alibaba Group headquarters in Hangzhou, China. Hong Wu / Getty Images Contributor
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Alibaba, the Chinese internet behemoth that's relatively unknown in the U.S., is preparing to file the prospectus for a U.S.-based initial public offering next week, Reuters reported on Wednesday. Recent estimates value Alibaba between $153 billion and $200 billion and indicate that the IPO could raise up to $15 billion.

John Sculley, the former CEO of Apple, told CNBC this week that the Chinese e-commerce giant is the "hottest thing in high tech right now."

With the IPO - the largest in tech history - just around the corner, here are five things you need to know about Alibaba.

The "hottest thing in high tech right now."

What exactly does Alibaba do?

Think of it as a mix of, eBay and Paypal. Customers use Alibaba to shop online, sell unwanted goods and make online payments. Alibaba has two retail sites: Taobao, which features thousands of non-brand name products sold by smaller merchants; and Tmall, which offers brand-name products. The two sites are hugely popular, and collectively account for more than half of all parcel deliveries in China. According to The Wall Street Journal, their combined transaction volume in 2012 topped one trillion yuan ($163 billion), more than Amazon and eBay's revenue combined.

Alibaba is big

Hangzhou-based Alibaba is China's largest internet company and operates in the world's largest internet market. It also has offices in the U.S., U.K., India, Japan and Korea. China has 560 million internet users - twice as many as the U.S. - who spend an average of 20 hours a week online. With 24,000 employees, more people work for Alibaba than Yahoo and Facebook combined. The site had 36.7 million registered users in 2012, and is one of the world's 20 most-clicked sites, Business Insider reported. On the 11th of November every year, Alibaba conducts a huge online shopping sale which coincides with what is known in China as Single's Day - a day on which young people lament or celebrate being single. On November 11 2013, Toabao and Tmall made 35 billion yuan ($5.75 billion) in the 24 hour period. Meanwhile, Alibaba's mobile payments service Alipay is responsible for 70 percent of all of China's mobile payments in 2013, The Wall Street Journal reported.

Alibaba is profitable

Alibaba Group reported a 66 percent on-year surge in revenue to $3.06 billion in the final quarter of 2013, while net income more than doubled to $1.36 billion. The robust earnings report followed a slowdown in the previous three quarters. U.S. search engine Yahoo's market value is closely interlinked with Alibaba as it owns a 24 percent stake in the Chinese internet giant worth around $30 billion. Yahoo's shares rose 9 percent following Alibaba's quarterly earnings report on Wednesday. Jack Ma, the 49-year old Alibaba founder, is China's eighth richest man and the 122nd richest man in the world, according to Forbes, with a net worth of $10 billion.

Alibaba has struggled with corruption allegations

In 2011, Chinese police arrested 36 people in connection with operating fraud on They were accused of running a criminal gang that used fake personal and business identities to open fraudulent accounts, cheating buyers out of over $6 million, Reuters reported. In 2012, Yan Limin - once the manager of Alibaba's Juhuasuan group buying venture - was sacked for gross misconduct after accepting two large bribes. He was sentenced to seven years in prison in 2013. Several other Alibaba employees implicated in the case were also sentenced.

This is just the beginning

Alibaba made $3.5 billion worth of acquisitions over the past year. Its shopping spree has been concentrated in Asia thus far, but the conglomerate is starting to target the U.S. market. Last month it bought a minority stake in California-based messaging and free-calling app Tango for $215 million. Alibaba already has its own application, Laiwang, which had over 10 million users as of January.