Ten­cent takes over top slot in Asia

Sharp fall in mar­ket value of Alibaba helps In­ter­net firm gain an edge in wealth stakes

China Daily (Canada) - - BUSINESS - By MENGJING mengjing@chi­nadaily.com.cn

E-com­merce gi­ant Alibaba Group Hold­ing Ltd has con­ceded the top slot in the Asian In­ter­net mar­ket to ri­val Ten­cent Hold­ings Ltd af­ter a slump in share prices sliced nearly $140.7 bil­lion off its mar­ket value in the last 10 months.

TheNewYork-listed Alibaba saw its mar­ket value fall be­low $153 bil­lion af­ter its shares closed at $60.91 on Tues­day, com­pared with $162 bil­lion as ofWed­nes­day for Ten­cent.

Jack Ma, founder and chair­man of the Hangzhou-based com­pany, how­ever, al­layed fears over the fall in mar­ket value and said it was “mean­ing­less to care about share prices”.

“Can jump­ing off a build­ing boost share prices? No. So why don’t we fo­cus on the real busi­ness,” he said on Tues­day at a con­fer­ence in Xi­a­men, Fu­jian province.

Ma said rather than fo­cus­ing on share­hold­ers, the com­pany should fo­cus on tak­ing good care of cus­tomers and em­ploy­ees. “Share prices will au­to­mat­i­cally rise once we achieve this,” he said.

Alibaba, which gen­er­ates morethan80per­cent of its rev­enue from online shop­ping, has fallen be­low it­sIPOprice of $68 for six trad­ing days in a row since Aug 24.

The plung­ing share prices have also erod­edMa’s per­sonal wealth.

Ma, who holds 7.8 per­cent of Alibaba, has seen his per­sonal wealth re­duce by $1.4 bil­lion com­pared with Au­gust 21.

An­a­lysts said the hit taken by Alibaba in­NewYork is­more a re­flec­tion of the gen­eral chal­lenge faced by firms in China, rather than a unique sit­u­a­tion faced by the e-com­merce com­pany alone.

Tian Hou, an an­a­lyst with Bei­jing-based TH Cap­i­tal, said most of the US-listed firms have fared badly due to the ren­minbi de­pre­ci­a­tion.

“The slow­down in China’s econ­omy has wor­ried Wall Street in­vestors. The key man­u­fac­tur­ing gauge, PMI, read­ing of 47.1 in Au­gust is the low­est since March 2009, al­most close to the re­ces­sion level. All of these have af­fected in­vestor con­fi­dence on Chi­nese firms,” she said.

The United States-listed com­pa­nies from online search gi­ant Baidu Inc to e-com­merce play­ers such as Alibaba and JD.comIn­chave al­lan­nounced plans to spend bil­lions of dol­lars to re­pur­chase their own shares in or­der to re­store in­vestor con­fi­dence.

How­ever, as the dom­i­nant player in China’s 2.8 tril­lion yuan ($439 bil­lion) online re­tail mar­ket, Alibaba is ex­pected to be the worst hit by the eco­nomic slow­down, said Lu Zhen­wang, chief ex­ec­u­tive of­fi­cer of Wan­qing Con­sul­tancy in Shang­hai.

“If there is no sub­stan­tial in­crease in in­come, it would be very dif­fi­cult for peo­ple to spend more online,” he said.

Alibaba’s re­port for the quar­ter ended June 30 has al­ready shown signs of slow­down.

It showed that the com­pany’s to­tal rev­enue reached $3.27 bil­lion, up 28 per­cent year-on-year, which was much slower com­pared with the around 60 per­cent year-onyear growth in pre­vi­ous years.

“No In­ter­net com­pany can be a cham­pion for two to five years. It’s a tough busi­ness. Good thing is we have so many smart peo­ple. Bad thing is we have so many smart peo­ple com­pet­ing with us,” saidMa at the an­nual meet­ing of the­New Cham­pi­ons 2015 of Sum­mer Davos onWed­nes­day.

Shan Juan and Dai Tian Dalian con­trib­uted to this story.

in

WANG LEI / XIN­HUA

Jack Ma, founder and chair­man of Alibaba Group, at the New York Stock Ex­change on Sept 9, 2014. Alibaba was listed that day at the NYSE. The com­pany saw its mar­ket value fall be­low $153 bil­lion af­ter its shares closed at $60.91 on Tues­day.

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