As Domestic Sales Slow, Alibaba Looks to Overseas Unit to Bolster Growth

Alibaba Group Holding Ltd. (NYSE: BABA) has revealed that it will focus its attention on its overseas business to bolster company performance amid sluggish domestic consumption growth. The company has experienced rising year-over-year losses in recent years, partly due to poor economic conditions in the domestic market.

China’s economy struggled to recover to pre-COVID levels after Beijing lifted coronavirus restrictions, leaving many critical sectors such as real estate in trouble. Several experts say the economic situation in the country is at a historic low. According to China Market Research Group founder Shaun Rein, China is currently experiencing record-low levels of consumer confidence. Rein predicts that economic conditions in China will be poor for the next three to six months.

Another analyst noted that deflation would soon start to impact Chinese economic growth, especially with Beijing looking forward to several months of a “very painful economy.” During a recent discussion with CNBC’s Squawk Box Europe, Rein said things in China were “really bad” and urged investors to be cautious.

Consequently, Alibaba is looking to shore up its bottom line by attempting to bolster foreign sales. The Chinese tech giant earned $4 billion from its international e-commerce unit in the December 2023 quarter, a sales increase of 44% from the prior year. This international business unit comprises platforms such as Lazada, AliExpress, Trendyol and Daraz. The foreign unit was the only bright spot in Alibaba’s most recent earnings report. Alibaba notes that its strong performance in the international market was driven by “solid growth” on all of  Alibaba International Digital Commerce Group’s retail platforms.

Alibaba also earned $18.1 billion from core e-commerce businesses Tmall Group and Taobao, a year-over-year increase of only 2%. Alibaba Group CEO Eddie Wu said the company will invest in improving user experiences on its platforms to increase growth for both Taobao and Tmall Group. He added that the company would use its resources to build public cloud products and maintain its growth momentum in the increasingly competitive international e-commerce stage. Alibaba’s recent earnings reports came after the company shuffled leaders at the parent company, as well as sister companies such as Lazada Group.

Southeast Asian e-commerce company Lazada Group carried out a mass layoff across most departments in early January. The layoffs affected everyone from retail and marketing to senior company management. Lazada Group CEO James Dong was also granted the position of acting CEO at Daraz in place of former CEO Bjarke Mikkelsen.

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