How Do Alibaba's IPO and China's New Nationalism Fit Together?

This article also appears in the South China Morning Post

China's e-commerce leader, Alibaba, celebrated its landmark U.S. $21.8 billion listing in New York on Friday -- the largest IPO in American history -- on the same day that British pharmaceuticals giant GlaxoSmithKline (GSK) was hit by a record fine of U.S. $500 million imposed by the central government in Beijing.

The two stories -- one happy and the other unfortunate -- are perfect examples to showcase the rise of China on both the economic and political fronts on the world stage. Alibaba puts China on par with the United States in the rapidly increasing global competition for technological innovation and economic transformation.

The GSK case reminds me of a popular book "China Can Say No," first published in China in 1996 and which signaled a new era for growing Chinese nationalism.

Don't get me wrong. I don't have any intention to defend GSK. It deserves the huge fine for bribing doctors to use its drugs on the mainland for many years. Such a huge fine would have been unlikely 10 or 20 years ago when Beijing wasn't economically or politically powerful enough to afford to get tough with large, multinational corporations like GSK. In fact, the GSK case is not only about money but also about "face."

Understanding the so-called face culture is essential for any individual or company that wants to do business in China. Besides paying the largest fine imposed by Beijing on a foreign company, GSK also published an official statement of apology to the Chinese government and Chinese people, saying it "deeply regrets the damage caused."

The Alibaba story is also a story about having "face" for the e-commerce firm founded in 1999 by English teacher-turned private businessman Jack Ma Yun as well as the Chinese government.

Ma has said he's had to spend most of his time managing good relations with the government in the hope he can win policy support for Alibaba's different businesses.

Many mainland media claimed the listing of Alibaba signaled a new era in which Chinese enterprises will challenge their American peers. Expectations on when Alibaba can beat its American rival Amazon in global consumer markets have grown rapidly among many young Chinese nationalists. Xinhua described Alibaba's listing as "just a beginning of the next round of bigger and better economic boom in China."

The rise of China is well reflected in the two stories. I'm not sure if Xinhua is right about predicting a new economic boom for China. But one thing is for sure -- the rest of the world will have to get used to greater impact brought about by the Chinese government and Chinese companies in the years to come.

George Chen is the financial editor and a columnist for the South China Morning Post in Hong Kong and a 2014 Yale World Fellow. Follow him on Twitter: @george_chen