Trader works on the spot where Alibaba trades 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
Chinese e-commerce giant Ali Baba is back on track to become a top market player after a period of pressure, co-founder Joe Tsai said in an exclusive interview with CNBC’s Emily Tan on Friday.
After a series of internal changes, a failed cloud computing IPO and competition for its core e-commerce business, questions about Alibaba’s future have grown louder.
The longtime giant in China’s online shopping world has faced increased competition in recent years as cost-conscious consumers switch to cheaper goods PDD holdingsand amid surging livestreaming sales on Douyin, China’s version of TikTok, owned by ByteDance.
“With the restructuring and new management, we are now much more confident of becoming one of the leading e-commerce players in China,” Tsai said. “Where we didn’t feel as confident as before, we felt the pressure of competition, but now we’re back.”
He also expects e-commerce penetration in China to exceed 40 percent in the next five years, a significant increase from the current 30 percent level.
Tsai has been part of Alibaba since its founding in 1999. In September, he became chairman of Alibaba as part of a leadership reshuffle.
At the same time, Eddie Wu became the company’s CEO, replacing Daniel Zhang, who also held the role of chairman. In December, Wu took over management of Trudy Dai’s e-commerce business Taobao and Tmall.
The management shakeup follows a reorganization of Alibaba’s business last year that split the company into six business groups with the aim of listing them on the stock exchange, starting with the cloud unit.
However, Alibaba withdrew its plans for a cloud IPO in November, citing restrictions on US chip exports. Zhang was originally expected to remain at the helm of the cloud business, but abruptly left the company in September.
Tsai said a cloud IPO would have made more sense if investor sentiment had been better.
“The markets haven’t been great,” he said. Regarding an IPO for Alibaba’s logistics business Cainiao, he said the company was waiting for a better time.
Cainiao filed for a public offering on the Hong Kong Stock Exchange in September but has yet to go public.
In recent months, Tsai and her co-founder Jack Ma have together bought more than $200 million worth of Alibaba shares.
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Ali Baba
Alibaba’s U.S.-traded shares are little changed year to date, trading at about $76 – a fraction of the share price of about $300 in November 2020.
That same month, the IPO of the company’s fintech subsidiary Ant Group was abruptly suspended by Chinese authorities. Beijing later fined Alibaba for alleged monopolistic behavior.
Since then, the company has faced increasing competition amid slower growth in China’s economy. PDD Holdings, which owns Pinduoduo and Temu, temporarily saw its market capitalization rise beyond Alibaba.
Asked about the success of China-linked e-commerce players such as Temu, Shein and TikTok in the US, Tsai said the companies offer “a great consumer proposition” due to their “high-quality” products and “reasonable prices.”
“They are very aggressive about it and we will watch and figure out what we want to do,” he said, noting that Alibaba already sells abroad through AliExpress and Trendyol, which are focused on Turkey.
As for tensions between the U.S. and China, Tsai said the two governments have recognized the need to work together despite fierce competition in certain areas, which Alibaba will have to learn to deal with.
Although Alibaba no longer plans to spin off its cloud business, the company remains committed to expanding its artificial intelligence capabilities and making money from cloud computing.
E-commerce, Tsai said, offers “one of the most diverse use cases, or brings the greatest variety in terms of use cases for the use of AI applications.” These include the ability to quickly create product catalogs for consumers, as well as virtual fitting rooms for clothing, he added.
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2024-02-26 00:34:54
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