Thursday, July 14, 2016

Like Alibaba's domination over Amazon, Line's social media platform could soon dominate Facebook

There was an interesting statement made back in the 19th century during the industrial revolution that went, I would rather sell 100 shirts at $1 apiece to the Chinese than 10 shirts at $10 apiece.  This is because the potential for profit using the price elasticity of demand model, where by lowering the price you gain much more consumers, is a powerful tool when dealing with the massive populations residing in Asia.

And to date we have seen how this model works in the 21st century, as the e-commerce business known as Alibaba has emerged not only as one of the top 5 companies in the world, but it is also bigger than both Amazon and Ebay combined.

On July 14, the newest Asian powerhouse went public with their own IPO, and already it has the potential to soon dominate Western social media platforms like Facebook.  This is because the Japanese social media company called Line is based on appealing to customer demands and desires, and they have a population potential of several billion users to service.

It took Facebook five years to reach 200 million active users, but only three years for Line to achieve that same number.  And Facebook would have to wait another three years before launching itself as a public IPO, and at a value several dollars less than Line did today at $42 per share.
Line users per quarter

The bottom line is that so far in the second decade of the 21st century, the potential for growth is far greater in Asia than it is in the West, and especially within the United States economy.  And perhaps this is also why China now has the world's largest bank, and in reality the world's largest financial system, and where the future of economic growth no longer resides in companies coming out of the West.


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