After a positive review of their fiscal year 2019 results announced Wednesday, May 15—Alibaba, a Chinese e-commerce based conglomerate, forecasts further growth in the future of their business despite the ongoing US-China trade war.
The data comes from a shift in the Chinese market that they have seen to move from an export-driven economy to a consumption-driven economy; believing that domestic “consumption and the service sector will become new benchmarks to bring growth potential to China.”
Daniel Zhang, Chief Executive Officer of Alibaba, reports a phenomenal user growth in the last 12 months, with their marketplaces expanding to have 654 million annual active consumers. This represents an annual net increase of 102 million. He also states that their GMV reached over 5.7 trillion, with an annual net gain of approximately RMB 1 trillion. He credits this to the 300 million active middle-class Chinese population that has seen an increase in their annual disposable income and consumption in recent years.
In the past year, Alibaba has seen an increase of 70% in annual active consumers for their China retail marketplaces, which comes mainly from less developed areas. The Chinese giant is keen on catering to this growing market by promising to continue to bring new initiatives by expanding into products and services such as their new cloud computing services. With this, they hope to “increase purchase frequency, enhance user stickiness, and increase our wallet share” from existing and new consumers on their platform.
Joseph Tsai, Executive Vice Chairman, remains optimistic with the prospect a growing local economy, stating that “While total Chinese domestic consumption is $5.5 trillion today, consumption from this third-, fourth-, and fifth-tier cities, with a combined population of 500 million people, will triple from $2.3 trillion to nearly $7 trillion in the next 10 years.”
Despite the currently turbulent trade talks between China and the US, Alibaba believes that they are in an optimal position as the market economy mindset shift. Tsai is confident in hitting future company targets as China is predicted to be a net importing country, explaining that “consumers in China will benefit from the availability of quality imported products from all over the world” including America.
With the unrivaled scale and effectiveness of their access to millions of Chinese consumers, Alibaba seems to be set for the future in its industry.