Joe Tsai, a co-founder of Alibaba, has stated that the Chinese e-commerce behemoth is once again poised to dominate the market following a period of strain.

After a number of internal reorganisations, a cancelled cloud computing IPO, and competition for its primary e-commerce business, concerns about Alibaba’s future have grown.

The long-standing titan of Chinese e-commerce has seen more competition in recent years as budget-conscious shoppers have shifted to PDD Holdings’ less expensive products and as livestreaming sales on Douyin, ByteDance’s Chinese equivalent of TikTok, have become more popular.

“Now with the restructuring and with the new management in place, we feel a lot more confident in placing as one of the top e-commerce players in China,” Tsai said.

“Where we didn’t feel as confident as before, we felt the competitive pressure, but now we’re back.”

Additionally, he projects that e-commerce penetration in China would rise from the current 30% to over 40% in the next five years.

Tsai joined Alibaba at the company’s inception in 1999. of September, he was appointed chairman of Alibaba as part of a change of leadership.

At the same time, Eddie Wu took over as the company’s CEO, succeeding Daniel Zhang, who had also served as chairman. Wu succeeded Trudy Dai as CEO of the Taobao and Tmall e-commerce businesses in December.

The management reorganisation came after Alibaba’s business was reorganised into six business units last year with the intention of listing each entity publicly, beginning with the cloud division.

Alibaba, however, abandoned its plans for a cloud IPO in November due to restrictions on US chip exports. Zhang abruptly left the company in September, even though he was initially expected to continue as the head of the cloud business.

Tsai stated that in a more optimistic investor environment, a cloud IPO would have made more sense.

He stated, “Markets haven’t been great.” Regarding Alibaba’s Cainiao logistics subsidiary’s IPO, he stated that the company was holding off until a more favourable moment.
Although Cainiao has not yet listed, the company filed for a public offering on the Hong Kong Stock Exchange in September.

Tsai and fellow co-founder Jack Ma have purchased Alibaba shares totaling more than $200 million over the past few months.

Alibaba’s U.S.-traded shares are currently selling at roughly $76, hardly changing from their November 2020 stock price of roughly $300.

Chinese regulators abruptly postponed the IPO of the company’s financial unit, Ant Group, in the same month. Alibaba was later penalised by Beijing for allegedly engaging in monopolistic activity.
Since then, as China’s economy has grown more slowly, the corporation has had to contend with more competition. PDD Holdings, the company behind Temu and Pinduoduo, briefly overtook Alibaba in market valuation.

Regarding the success of Chinese-affiliated e-commerce companies in the United States, such as Temu, Shein, and TikTok, Tsai stated that their “high quality” products and “reasonable prices” made them “a great consumer proposition.”

“They’re doing it very aggressively, and we’re going to watch and figure out what we want to do,” he stated, adding that Alibaba already has international sales through Trendyol, which is centred on Turkey, and AliExpress.

Regarding tensions between the United States and China, Tsai stated that in spite of intense competition, the two governments have come to the realisation that they must cooperate in some sectors, something Alibaba would need to learn how to handle.

Alibaba still intends to develop its artificial intelligence skills and generate revenue from cloud computing, even though it no longer intends to split off its cloud division.

Tsai claimed that when it comes to use cases for utilising AI technologies, e-commerce provides “one of the richest use-case scenarios, or brings the most variety.”

He continued, “They include the capability to rapidly create product catalogues for customers as well as virtual clothing dressing rooms.”

(Adapted from PrivateEquityWeekly.com)