Trader works at the place where Alibaba is traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 28, 2023. REUTERS/Brendan McDermid
Brendan Mcdermid | Reuters
The Chinese e-commerce giant Ali Baba is back on track to become a major player in the market after a period of pressure, co-founder Joe Tsai told CNBC’s Emily Tan in an exclusive interview Friday.
Questions about Alibaba’s future have grown after a series of internal changes, a scrapped IPO in cloud computing and competition for its core e-commerce business.
China’s longtime online shopping giant has faced increased competition in recent years as cost-conscious consumers turn to lower-priced goods from PDD holdingsand amid rising live streaming sales on Douyin, the Chinese version of ByteDance-owned TikTok.
“Now, with the restructuring and with new management in place, we feel much more confident in positioning ourselves as a major e-commerce player in China,” Tsai said. “Where we didn’t feel as confident as before, we felt the pressure of the competition, but now we’re back.”
It also expects e-commerce penetration in China to exceed 40% in the next five years, up sharply from the current level of 30%.
Tsai has been part of Alibaba since its founding in 1999. He became Alibaba’s president in September as part of a leadership reshuffle.
Eddie Wu became the company’s CEO at the same time, replacing Daniel Zhang, who had also served as president. In December, Wu took over from Trudy Dai to run Taobao and Tmall’s e-commerce business.
The management shakeup followed a review of Alibaba’s operations last year that divided the company into six business groups, with the aim of publicly listing them starting with the cloud unit.
However, Alibaba withdrew plans for a cloud IPO in November, citing limits on US chip exports. Zhang was initially supposed to remain in charge of the cloud business, but in September he suddenly left the company.
Tsai said a cloud IPO would have made more sense if investor sentiment had been higher.
“The markets haven’t been great,” he said. As for the IPO of Alibaba’s Cainiao logistics business, he said the company is waiting for better times.
Cainiao filed for a public offering on the Hong Kong Stock Exchange in September but has yet to list.
In recent months, Tsai and co-founder Jack Ma have collectively purchased Alibaba shares worth more than $200 million.
Ali Baba
Alibaba’s U.S.-traded shares have remained virtually unchanged so far this year, sitting at around $76, a fraction of its share price of around $300 in November 2020.
In the same month, the IPO of Ant Group, the company’s fintech affiliate, was suddenly suspended by Chinese authorities. Beijing later fined Alibaba for alleged monopolistic behavior.
Since then, the company has faced increased competition amid slower growth in China’s economy. PDD Holdings, which owns Pinduoduo and Temu, temporarily saw its market capitalization surpass that of Alibaba.
Asked about the success of China-affiliated e-commerce operators such as Temu, Shein and TikTok in the United States, Tsai said the companies offer “a great consumer proposition” thanks to “high-quality” products and “reasonable prices ”.
“They are very aggressive in doing this and we will observe and understand what we want to do,” he said, noting that Alibaba already sells abroad through AliExpress and Trendyol, which focuses on Turkey.
Regarding tensions between the United States and China, Tsai said the two governments understood that they need to work together in some areas despite stiff competition, something Alibaba should learn to deal with.
While Alibaba no longer plans to spin off its cloud business, the company remains intent on developing its AI capabilities and making money from cloud computing.
E-commerce, Tsai said, offers “one of the richest use case scenarios, or offers the greatest variety, in terms of use cases for using AI applications.” They include the ability to quickly create product catalogs for consumers, as well as virtual fitting rooms for clothes, she added.