Alibaba bets on foreign e-commerce unit amid sluggish growth in China

Chinese tech giant alibaba group It is betting on its overseas business while domestic consumption growth remains sluggish.

One bright spot in Alibaba’s latest earnings report was its international e-commerce business unit, which reported revenue of 28.5 billion Chinese yuan ($4 billion) in the December quarter, up 44% from a year earlier. Alibaba International Digital Commerce Group includes platforms such as AliExpress, Lazada, Daraz and Trendyol.

“This strong performance was driven by solid growth across all of AIDC’s retail platforms, particularly the crossborder AliExpress Choice business,” the company said.

Meanwhile, revenue at the company’s core e-commerce businesses Taobao and Tmall Group was $18.1 billion, growing just 2% year-on-year.

“We will increase investment in Taobao and Tmall Group to improve users’ core experiences to drive growth and strengthen market leadership in the coming year. We will focus our resources on developing public cloud products and expanding into international commerce business. “We will also focus on maintaining the strong growth momentum,” Alibaba Group CEO Eddie Wu said earlier this month.

Despite AIDC’s strong sales growth, losses also widened year-on-year, primarily due to “increased investments in businesses including AliExpress Choice and TrendYol’s international business, partially offset by improvements in monetization. “

The quarterly results come after a series of management reshuffles at Alibaba and its sub-units. Pakistan e-commerce platform Daraz replaced its CEO Bjarke Mikkelsen on January 24. James Dong, CEO of Southeast Asian e-commerce giant Lazada Group, was named as acting CEO of Daraz. The company said he will “work on deeper integration between Daraz and our affiliates.”

In early January, Lazada conducted mass layoffs across Southeast Asia, affecting employees at all levels, including senior management. The cuts affected all departments including commercial, retail and marketing.

People at Alibaba International familiar with the matter told CNBC that the Lazada layoffs were intended to “streamline decision-making and boost organizational and business efficiency.”

“These latest management shake-ups have their roots in the Alibaba split last year, largely as a strategy to navigate regulatory developments in China that have long put pressure on the tech giant,” said Yinglan Tan, founding managing partner of Insignia Ventures Partners. Have inserted.”

“The nature of AIDC as a portfolio of diverse and individually complex businesses, from Daraz to Lazada, also plays an important factor. The strengthening of the vessel will potentially help strengthen the growth trajectory, reducing the uncertainties of operating in multiple, competitive markets.” Is designed to … ,” Tan said.

In March, Alibaba said it would split itself into six business units and pave the way for individual stock listings. Zhang told investors the move would make Alibaba’s businesses “more proactive, enhancing their business decision-making and responding faster to market changes.”

“Keeping their organizations agile and adaptable has always been at the top of the agenda for Chinese tech leaders,” Momentum Works said in a January report titled “Understanding,” which has become even more urgent with the rise of competitors and changes in the external environment. Has gone.” “Alibaba’s most revolutionary transformation in history.”

Mirroring its parent company’s moves, Lazada’s leadership team has also seen its fair share of changes in recent years.

Dong took over as CEO of Lazada Group from Chun Li in June 2022, after running the company’s Thailand and Vietnam operations. Previously, Dong was head of globalization strategy and corporate development at Alibaba Group and a one-time business assistant to former CEO Zhang.

In 2020, Li took over the position from Pierre Poignant, who replaced Lucy Peng in December 2018, who had been in the post for just nine months.

The e-commerce business that once propelled Alibaba to success faces challenges with emerging competitors such as PDD, while consumption growth in China remains sluggish.

China-based PDD Holdings reported revenue nearly doubled in the third quarter, far outpacing Alibaba’s 9% growth during the same period. PDD said revenue in the quarter was $9.44 billion, up 94% from $4.99 billion in the same quarter of 2022. Alibaba reported 9% year-over-year revenue growth in the third quarter to nearly $31 billion.

Alibaba’s Hong Kong-listed shares have fallen from an all-time high of 309.4 Hong Kong dollars ($39.59) on Oct. 28, 2020, according to LSEG data. Shares closed at Hong Kong $71.50 on Monday.