Beijing, China – Chinese e-commerce giant Alibaba announced an unexpected 14 percent on-year increase in quarterly sales on Thursday, following several difficult years and in spite of a broader economic slowdown.
Alibaba is a key player in China’s expansive digital economy and the operator of a major online shopping platform.
The Hangzhou-based group’s performance is therefore considered a barometer of domestic consumption, which has flagged in recent months.
China entered deflation Wednesday for the first time since 2021, the latest in a long string of indicators reflecting a slowdown in the world’s second-largest economy.
In the first quarter of its financial year starting on April 1, Alibaba’s revenue amounted to 234.1 billion yuan ($32.5 billion), higher than analyst forecasts.
Alibaba’s net profit was also up 51 percent on-year, reaching 34.3 billion yuan during the April-June period.
Solid
The latest financial results come as Alibaba embarks on the biggest restructuring in its history.
Announced in late March, the plan involves splitting the group into six distinct entities that will be able to separately pursue funding through public listings.
“Alibaba delivered a solid quarter as we continue to execute our Reorganization, which is beginning to unleash new energy across our businesses,” CEO Daniel Zhang said in a statement.
Zhang, a key figure in the company’s early development, is on his way out as CEO, but will remain with the group to lead its lucrative cloud computing branch, on which Alibaba is betting heavily.
The personnel change will take effect on September 10.
Zhang has been at the helm of the Alibaba empire since the 2019 departure of founder Jack Ma.
In addition to cloud computing and e-commerce, the group is a heavyweight in the broader Chinese tech ecosystem, with major operations across logistics, media, entertainment and artificial intelligence.
Regulatory crackdown
The company’s restructuring comes after a long rough patch for the country’s tech industry, with authorities seeking to assert control over a leading sector that had once enjoyed lax regulation.
In 2020, Alibaba became the country’s first tech giant to bear the brunt of increased oversight, when authorities called off what would have become one of the most valuable public listings in history — valued at $34 billion — for its former subsidiary Ant Group.
Ant Group is the owner of Alipay, a mobile payment application that is widely used in China.
One month after officials hit the brakes on its IPO, Alibaba was investigated for alleged anti-competitive practices, then issued a heavy fine of $2.8 billion.
And last month, authorities fined Ant Group 7.1 billion yuan for breaching banking regulations.
Alibaba competitor Tencent, also a core provider of payment services in China through its WeChat mobile app, was fined nearly 3 billion yuan.
The crackdown now appears to be waning as Chinese officials voice renewed support for the digital economy, an important source of growth and potential jobs at a time when the broader economy is under pressure.
But the sector has not yet regained its former dynamism.
A sign of persisting challenges, Alibaba has shed more than 17,000 employees in the past year, according to a comparison of its workforce with the same quarter of 2022.