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Wednesday, December 6, 2023

Alibaba is doing well despite the slowdown in consumption

Alibaba, the Chinese e-commerce giant, is posting rather solid results against a backdrop of economic slowdown in China, which is weighing on consumption. The group actually reports a turnover up 9% year-on-year over the July-September period. A key player in the digital economy in China, precursor of the generalization of internet purchases in his country, he is considered a barometer of consumption in his country.

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A strong quarter

The amount of sales for the July-September period amounted to 224.8 billion yuan (28.6 billion euros), a figure in line with the expectations of analysts surveyed by the Bloomberg agency. JD.com, one of its competitors, announced a 1.7% year-on-year increase in third-quarter profit to 247.7 billion yuan ($34.2 billion), in a statement to the Hong Kong Stock Exchange.

Alibaba Group delivered a strong quarter, marked by renewed momentum and energy across multiple businesses thanks to our strategic reorganization », Said Eddie Wu, CEO of the group, in a press release published by the company. He refers to the major restructuring plan announced in March. Alibaba then planned to divide the group into six entities, five of which could be listed separately on the stock exchange.

The group is working hard to convince Chinese consumers to put their hands in their pockets. HAS the occasion of the Singles party, a huge sales operation in China, which ends at midnight on Saturday evening, Alibaba was at the origin of a major communication campaign in which other competing platforms are also participating. Total sales during last year’s edition reached 1.1 trillion yuan (141 billion euros), according to a recent report from the American strategy and management consulting firm Bain. But 77% of consumers surveyed by Bain said they don’t plan to spend more this year than normal. For the second consecutive year, however, sales should exceed 1,000 billion yuan, anticipates Vincent Marion, based in Shanghai and co-founder of the consulting company VO2 Asia Pacific, specializing in new technologies.

In China, the “Singles’ Day”, a massive sales operation, is struggling to regain its success

In an encouraging sign, retail sales increased in the country in October

Encouraging sign for Alibaba: retail sales increased in October at their strongest rate in five months, at +7.6% year-on-year after +5.5% in September, boosted by a long series of public holidays at the start of the month, according to official figures published Wednesday.

This increase is announced while other indicators reflect a persistent weakness in demand, notably the continued fall in exports and the return to deflation last month, the world’s second largest economy still struggling to recover from the strict zero-Covid policy. abolished at the end of 2022. But this figure is “ partially due to a weak basis of comparison last year, » said Zhiwei Zhang, chief economist at Pinpoint Asset Management, in a note. “ Domestic demand remains weak » he estimated, adding however that “theMonetary and fiscal policies are becoming more supportive, which will hopefully help boost domestic demand in 2024. » The government has, in fact, recently unveiled a number of targeted recovery measures aimed at supporting key sectors, in particular the real estate sector in great difficulty.

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Cloud Intelligence Group split aborted

Furthermore, Alibaba announced this Thursday, November 16 to cancel for the time being a plan to split its cloud branch due to the “ rrecent tightening of US restrictions on the export of advanced computer chips “. “ We believe that a complete spin-off of Cloud Intelligence Group may not produce the desired effect of improving shareholder value “, Alibaba said in the press release announcing its quarterly results. The United States has been trying for many months to limit the access of Chinese companies to cutting-edge technologies, in particular with restrictions on exports to the Asian giant of semiconductors and the machines used for their manufacture.

(With AFP)