Chinese frustrated over missing out on Alibaba IPO

Alibaba's initial public offering (IPO) on the New York Stock Exchange will be the largest in U.S. history, and while many Chinese are swelling with pride, they're sore that they won't be able to participate.

The company's shares priced at $68 on Thursday, the top of the revised range, and many analysts expect them to jump when they open for trade on Friday.

Read MoreFrom $68 the sky's the limit for Alibaba

However, many Chinese investors will miss out due to capital controls that restrict the amount they can invest abroad. Most mainlanders cannot purchase overseas equities directly, however the very wealthy can buy them indirectly through qualified investor programs.

Alibaba's attempt to list on the Hong Kong stock exchange earlier this year failed after the exchange refused to change its regulations to accommodate the IPO.

"I use Taobao (Alibaba's online shopping website) every week, so often that it seems to be one of my friends," Liu Dongbo, who works in Beijing told CNBC this week. "I would invest if I had a lot of money."

Alibaba offers an online platform to shop, sell unwanted goods and make payments that accounts for around 80 percent of China's e-commerce market. Its popular online shopping website Taobao sells everything from handbags to houses.

"I think that their business model here in China has a lot of potential so if I had the money I would definitely invest," said George Hu, also based in Beijing.

Read MoreIt's like Alibaba cures cancer or something

However, Hu said he would be concerned about the success of Alibaba's U.S. expansion plans.

"As a publicly listed company in the west that operates in China, I think there will be significant cultural challenges as they prepare to do business in a place that they don't have experience in," he said.

A general view of the Alibaba Group headquarters on March 29, 2014 in Hangzhou, China. Chinese e-commerce giant Alibaba has decided to begin its initial public offering (IPO) process in the United States, the company announced recently.
Hong Wu | Getty Images
A general view of the Alibaba Group headquarters on March 29, 2014 in Hangzhou, China. Chinese e-commerce giant Alibaba has decided to begin its initial public offering (IPO) process in the United States, the company announced recently.

This isn't the first time Chinese investors have missed out on home-grown stock market stars. Many Chinese tech high flyers have listed outside of mainland China.

Read MoreFour-star fund manager passes on Alibaba IPO

Internet giant Tencent listed in Hong Kong in 2004, while China's number one web search engine, Baidu, listed on the Nasdaq in August 2005. More recently, China's most popular micro blogging site, Weibo, and the nation's number two e-commerce firm, JD.com, debuted on the Nasdaq this April and May, respectively.

There are concerns that China's stock exchange is not equipped to handle an IPO of Alibaba's size.

Conditions in China's IPO market have been uncertain recently, with some criticizing heavy government interference. The pipeline for domestic IPOs was frozen for much of 2013, but was reopened late last year.

The Shanghai-Hong Kong stock connect is set to launch in October; it will allow Chinese investors to invest in Hong Kong's H-share market through mainland brokers.

Read MoreIs JD.com a better buy than Alibaba?