Hampered by anti-Covid restrictions and regulatory tightening, Alibaba began its shock financial year with a slight drop in its quarterly turnover, a first for the e-commerce giant, which nevertheless beat expectations.
In the first quarter of its fiscal year, which runs from April to June 2022, the turnover was 205.55 billion yuan, or $30.7 billion, the group detailed in a press release, indicating “declinein commercial activities compensated by those in the cloud. Profit fell again, losing nearly 50% to 22.8 billion yuan ($3.4 billion), from 45.1 billion yuan a year earlier. Profits fell by almost 60% in its full year of operations published at the end of May. “After a relatively weak April-May, we are seeing signs of recovery in our business in Junesaid group CEO Daniel Zhang, quoted in the statement.
Stock market jump
A glimmer of hope reverberated through the stock market, with investors welcoming the announcement better than expected. U.S.-listed stocks were up 4.5 percent in electronic trading before Wall Street opened. Last year, meanwhile, its year-on-year sales rose 34% to 205.7 billion yuan. Since late 2020, Chinese authorities have been cracking down on some of the previously widely tolerated practices of digital giants in terms of personal data collection and competition.
Beijing has thus stepped up its crackdown on powerful Internet companies, barring them from raising money internationally or being fined for abusing their dominant position. These measures have caused the industry to lose billions of dollars in market capitalization.
Supply chains under stress
Long considered a model of success in China, Alibaba was the first to be punished by state authorities. In late 2020, regulators thus derailed the massive IPO of its subsidiary Ant Group. The company, which had seen itself raise $34 billion in Hong Kong and Shanghai, had been allowed to do so in an extreme fashion by authorities, worried about potential financial risks. In the process, Jack Ma disappeared off the radar for two and a half months, a silence that raised many questions at the time, especially of a political nature.
The country’s economy is also being slowed by anti-Covid restrictions, which in turn is making consumers very cautious and punishing e-commerce companies. China has been facing a resurgence of the epidemic for several months, which is affecting several parts of the country to varying degrees. Employing a strict zero-Covid health strategy, several cities were locked down, starting with the economic capital Shanghai, for two months in the spring, with a significant impact on the world’s second-largest economy. Alibaba also states in its publication:restrictions that led to disruptions in logistics and supply chains in April and most of May”, starting the commercial.
Source: Le Figaro
I am David Wyatt, a professional writer and journalist for Buna Times. I specialize in the world section of news coverage, where I bring to light stories and issues that affect us globally. As a graduate of Journalism, I have always had the passion to spread knowledge through writing.