Alibaba continues to outperform Chinese economy

22 August 2023

“These figures from Alibaba Group are positive, but that doesn’t mean that focusing on TMall is necessarily going to be the best entry strategy for a brand.”

China’s ecommerce and logistics giant Alibaba Group Holdings reported Q1 revenues of US $32.29 billion when it released its latest figures this month – an increase of 14% on the previous year, beating many analysts’ predictions. 

This increase represents the group’s strongest growth in the last two years, and its net profits are also up by 51%, year-on-year.

The figures are the first set of quarterly results for Alibaba since it split its business into six units in March, a move that was at least partly done in order to reduce scrutiny and pressure from the Chinese government.

Alibaba’s domestic consumer ecommerce platforms, including TMall and Taobao, have focussed more on low-cost products in order to attract and retain customers, as the overall Chinese economy remains sluggish, with consumer prices even tipping into deflation territory in July.   The group faces strong competition from other platforms in the retail space - such as cut-price specialist Pinduoduo, as well as the retail activities of live-stream influencers on Douyin (as Tik Tok is known in China) and stores within Little Red Book, the Instagram-like social media platform; Alibaba’s Taobao, however, still managed to grow its follower base by 6.5% in June, strong evidence that, after twenty years online, consumers in China still see it as a relevant and attractive marketplace - even increasingly so.

Because of the close integrations between Alibaba’s sales platforms and its warehousing and logistics arm, Cainiao Smart Logistics Network Group, strong performance in the group as a whole strengthens its position in these areas also.

Chamber International’s China specialist, Matthew Grandage, said:

“These figures from Alibaba Group are positive, but that doesn’t mean that focusing on TMall is necessarily going to be the best entry strategy for a brand.  A working knowledge of China’s huge ecommerce sector is vital for British businesses seeking to enter the Chinese consumer markets, many of whom don’t have the experience needed in order to set a good strategy: which platforms will be most suitable for them, how to find and negotiate with Douyin influencers, and so on.  We’re watching closely to see how Alibaba’s new six-business-unit structure performs in the coming months”.

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