Chinese online shoppers started the year cautiously, says Alibaba
Mascots of Alibaba’s various platforms are displayed at a shopping mall in Hangzhou, China, February 20, 2023.
Qilai Shen | Bloomberg | Getty Images
BEIJING — For the Chinese e-commerce giant Ali Babathe rebound in consumption has not yet fully arrived.
The company operates two of China’s largest online shopping sites, Taobao and Tmall. Despite increased competition, Alibaba’s results remain an important indicator of the economy.
“From January to early February of this year, overall online sales of physical goods remained weak,” Alibaba CEO Daniel Zhang said Thursday during a quarterly earnings call, according to a FactSet transcript. .
“Our business in China continued to be heavily impacted due to Covid cases as well as people traveling home or to other locations during the Spring Festival holiday,” he said, referring at the Lunar New Year at the end of January.
But Zhang said after the holidays and the wave of Covid, demand for clothing, sports and outdoor products has picked up.
China abruptly ended its strict Covid controls in early December. Following a wave of Covid infections, business activity has started to return to normal over the past two months. The rule changes made it easy for people to travel domestically and internationally again.
Chinese consumers are still living in an economy facing a housing slump and falling global demand for Chinese exports.
Alibaba’s Zhang was relatively cautious in his comments on the economic recovery. But he was optimistic that business would pick up later in the year.
“What we’re seeing from all traders is a strong desire to get back to business,” Zhang said. “They want to have a bumper year in 2023 to make up for everything they’ve lost in the last three years.”
Alibaba’s China trade revenue in the last three months of 2022 fell 1% to the equivalent of $24.64 billion, accounting for 69% of total revenue. Overall results for the quarter were well above expectations.
12-month performance of Alibaba stock.
Restaurants in China also had a lackluster start to the year and only started to see a significant recovery in revenue in the week ending Feb. 16, according to BigOne Lab analysis. Beijing-based alternative data company whose backers include S&P Global.
Weekly data showed that after a strong recovery in revenue in 2021 from the initial shock of the pandemic in 2020, revenue growth for 2022 was essentially subdued.
Restaurants in small towns have generally fared better than those in larger ones in recent months, according to BigOne Lab data through January.
Nationwide, restaurant sales fell 6.3% in 2022, while overall retail sales fell 0.2%, according to China’s statistics bureau.
The bureau is expected to release national retail sales for January and February on March 15. Two-month data is usually combined due to variations in the Lunar New Year holiday calendar, which does not follow the Gregorian calendar.
China is also expected to announce its 2023 economic targets, including for GDP, on March 5.
What other companies see
Other major Chinese consumer-facing companies JD.com, Meituan and Pinduoduo have yet to announce when they will release their results for the latest quarter.
However, the video streaming platform iQiyisometimes dubbed the Chinese version of Netflix, this week reported a net addition of 13 million subscribers at the end of December compared to September – a significant increase after subscriber growth has stagnated over the past two years.
The company expects the number of subscribers to increase this year. In January, the platform’s newly launched shows included crime drama “The Knockout,” whose popularity iQiyi said hit a record high in the company’s history.