Alibaba says largely unscathed by China slowdown

The Alibaba booth at an electronics show last month. Vice-chairman Joseph Tsai said the company's growth will continue to outpace the Chinese economy as digital commerce expands faster than the traditional retail business.
The Alibaba booth at an electronics show last month. Vice-chairman Joseph Tsai said the company's growth will continue to outpace the Chinese economy as digital commerce expands faster than the traditional retail business.PHOTO: BLOOMBERG

SAN FRANCISCO • Alibaba Group Holding vice-chairman Joseph Tsai said the e-commerce giant has experienced limited impact from China's broader economic slowdown, as more and more business moves to the Internet.

The business is delinked from the Chinese economy because "we're in e-commerce and we're digitising the whole sector", Mr Tsai said on Tuesday at the Goldman Sachs Group technology conference.

Mr Tsai said the company's growth would continue to outpace the broader economy as digital commerce expands faster than the traditional retail business.

China's economy expanded 6.4 per cent in the last three months of 2018 from a year earlier.

Alibaba's revenue rose 41 per cent to 117.3 billion yuan (S$23.5 billion), though that was the slowest pace in more than two years.

While the Chinese economic deceleration is depressing the consumer demand it relies on, the company has been spearheading a drive into lucrative new spheres such as cloud services and entertainment, while helping to modernise physical retailers.

Mr Tsai compared Alibaba's situation with Amazon's ability to achieve consistent double-digit sales growth while US economic expansion is projected to slow to about 2.5 per cent this year.

Alibaba is entering lucrative new spheres such as cloud services and entertainment, while helping to modernise physical retailers.

He also praised China's decision to reduce the tax burden for small and micro-sized companies by 200 billion yuan per year for the next three years, to boost those businesses amid the downturn.

"In prior cycles, the Chinese government would use monetary policy to pump a lot of liquidity into the system," Mr Tsai said.

Now, the government needs to use fiscal policy, that is, by reducing taxes, he added. "These SMEs, with more money in their pockets, will be growing their businesses."

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on February 14, 2019, with the headline 'Alibaba says largely unscathed by China slowdown'. Print Edition | Subscribe