China internet firms report first-ever combined revenue decline in 2022 as Alibaba and Tencent momentum wanes

Total revenue at China internet firms fell in 2022 from 2021, the first fall since the data was made available in 2017, as growth momentum at Big Tech firms – including Alibaba Group Holding and Tencent Holdings – waned amid an economic slowdown and tightened regulation.

The combined revenue of Chinese internet firms in 2022 shrank 1.1 per cent to 1.46 trillion yuan (US$217 billion), marking a sharp contrast to double digit growth in the previous six years as the once-booming sector was hit hard by China’s Covid-19 controls, according to data released by Ministry of Industry and Information Technology (MIIT) this week.

While the slowdown in revenue for Chinese internet firms was expected, the industrywide fall in revenue underlines how quickly the “high growth” scenario for China’s internet industry has ended.

Alibaba, which owns the South China Morning Post, reported 3 per cent revenue growth in the quarter to end-September while Tencent Holdings reported a 2 per cent fall in third-quarter revenue – only the second quarterly decline since the company’s listing in 2004.

According to the MIIT data, which covers internet service firms with annual revenue above 20 million yuan, internet services in ride-hailing, travel, financial and flat rental services was the hardest hit segment, with a 17.5 per cent year-on-year decline in revenue last year.

Other segments fared better. Enterprises providing online sales such as e-commerce, medical supplies and delivery services, reported a 12.6 per cent year-on-year increase in revenue last year. Meanwhile, companies providing information services, including news and information, search, social, games, music and video, reported 4.9 per cent growth in revenue.