While China slows, Alibaba revenues are on a magic carpet ride

28 Jan 201611 Shares

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Alibaba office image via Alibaba

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Chinese e-commerce giant Alibaba has posted its financial results for Q3 with much aplomb, as it reveals it had a particularly strong quarter, despite the fact the Chinese economy as a whole is slowing down.

In a country where the marketplace is an incredibly competitive environment – despite the irony that China is still technically a communist state – Alibaba’s dominance is incredible, with it having 80pc of the country’s e-commerce market.

Releasing its quarterly report, the company said that its revenues have beaten expectations with an increase on the previous quarter by 32pc – now standing at 34.53bn yuan (€4.8bn), aligning itself with the national trend of moving away from shopping in physical stores.

This surpassed market estimates from Thomson Reuters, which had suggested somewhere in the region of 33.33bn yuan.

Selling off minority stakes

The company also reported that its gross merchandise volume (GMV) – the amount of money it generated from selling its goods online – for the quarter reached 964bn yuan (€134bn), an increase of 23pc.

Even though Alibaba’s revenue growth is down considerably from the 79pc growth it registered at the same point two years ago, analysts say it’s impressive considering the current state of the Chinese economy.

Also announced with the results today was that Alibaba plans to sell off its stake in a Chinese online-to-offline start-up called Meituan-Dianping for somewhere in the region of $900m (€825m).

The reason being that it is looking to protect itself from any further damages caused by China’s slowing economy, as well as focusing on other areas, such as its own food delivery platform known as Koubei, to compete with one of its biggest rivals, Baidu.

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Colm Gorey is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com