Alibaba Reports Slower Growth as U.S.-China Trade War Intensifies

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FILE -- Jack Ma, chairman of Alibaba, prepares to ring the bell at the New York Stock Exchange on Sept. 19, 2014. Ma, China's richest man, plans to retire from his e-commerce company to focus on philanthropy. (Todd Heisler/ The New York Times)

 

 

Raymond Zhong

c.2019 New York Times News Service

 

One of the world’s leading internet giants appears to be feeling the effects of China’s economic slowdown and the trade war with the United States.

 

The Alibaba Group, China’s largest e-commerce company, said Wednesday that revenue increased by 51% in the March quarter from the same period last year. That topped Wall Street’s expectations and represents a pickup from the quarter before. But it is still the company’s second-slowest pace of revenue expansion since early 2016.

 

For the full year that ended March 31, revenue also grew by more than half. The company said, however, that the increase was partly the result of adding several recently acquired businesses, such as the takeout delivery service Ele.me, to its sales computations. Without those, it said, full-year sales would only have increased by 39%, the slowest growth in three years.

 

Alibaba also said the number of customers on its Chinese retail marketplaces for the full year that ended in March grew to 654 million, an increase of 102 million.

 

China’s economy has slowed since the tariff fight with the United States began last year. Diplomacy with Washington has frayed. Alibaba’s sprawling business makes it a closely watched bellwether for consumer and business sentiment in China. But the company’s size and breadth may also make it better positioned than many other Chinese businesses to weather the present choppiness.

 

With services from commerce and food delivery to payments and travel booking now under its umbrella, Alibaba has built such a vast ecosystem of interconnected products and platforms that its hold on Chinese consumers and merchants is almost unassailable, said David Dai, an analyst at Sanford C. Bernstein in Hong Kong.

 

Alibaba is “overall in a much stronger position as compared to any other internet or e-commerce company in China,” Dai said.

 

Yet in this season of high anxiety about the trade war and the global economy, China’s entire tech sector is feeling the pressure.

 

Leading companies have laid off workers. Startups, including some that Alibaba has invested in, are struggling. Coders are protesting long hours and unpaid overtime — a sign, industry observers say, that the years of breakneck growth and boundless optimism for Chinese tech companies are past.

 

Alibaba has said that it will not lay off any employees this year.