Alibaba’s surge in rev­enue sig­nals China bounce back

The Daily Telegraph - Business - - Technology Intelligen­ce - By Hasan Chowd­hury

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 at­tempt­ing to make a dent in its po­si­tion as China’s mar­ket leader in re­tail.

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