Alibaba’s surge in revenue signals China bounce back
CHINESE ecommerce empire Alibaba posted a surge in revenue to 153.8bn yuan (£16.8bn) in its latest quarter, signalling a recovery in consumer spending in China following depleted sales as a result of the pandemic.
In the three months to the end of June, revenues rose 34pc versus the previous year, beating estimates as a boom in online shopping drove sales despite the economic downturn in China. Net income totalled $6.9bn (£5.2bn), beating the $3.5bn expected by analysts.
Alibaba, a Chinese tech giant worth $700bn, faced a significant hit at the start of the coronavirus pandemic as strict lockdown measures knocked its infrastructure. The company depends on a vast logistics network and supply chain to deliver goods to customers.
In February, Daniel Zhang, chief executive of the online retail giant, warned the coronavirus would “present near-term challenges” to the development of Alibaba’s business as the spread of the virus left many businesses unable to operate at full capacity. However in its latest results, Alibaba said its core commerce division in China had seen a bounce back in sales to pre-Covid 19 levels after it hosted a shopping bonanza in June called 6.18, with significant discounts to encourage spending. Monthly active users on its mobile marketplaces reached 874m in June.
The company’s cloud computing division had also seen a boom, with revenue surging 59pc to $1.8bn as an increase in remote working bolstered use of its servers to host software online. The company invested $28bn into the division in April amid a surge in demand for business software.
“We were well positioned to capture growth from the ongoing digital transformation, which has been accelerated by the pandemic, in consumption and enterprise operations,” Mr Zhang said.
The recovery comes at a critical time for Alibaba, which risks facing the ire of a US government growing increasingly hostile towards China, and fierce competition from domestic firms such as TikTok owner ByteDance and JD.com attempting to make a dent in its position as China’s market leader in retail.