Alibaba’s annual transaction volume surges past 3 trillion yuan
E-commerce group is bringing in more quality foreign brands, targeting growth among China’s rural population
Chinese e-commerce juggernaut Alibaba Group has sold 3 trillion yuan (HK$3.59 trillion) of goods through its online shopping platforms ahead of the fiscal year ending March, as the company wooed rural consumers and stepped up efforts to bring in foreign brands, according to a senior executive.
“If the platforms we operate were a province, we would rank as the 6th largest provincial economy in China,” said Joe Tsai, Alibaba executive vice chairman in a post on Alibaba’s blog, Alizila. The e-commerce giant has bought the South China Morning Post.
Tsai said in the blog post that Alibaba plans to bring in more quality foreign goods and brands onto its shopping platforms, and continue expanding its Rural Taobao initiative to encourage the rural population to buy and sell items on its marketplaces.
With China growing at its slowest pace in a quarter-century, Alibaba has concentrated on tapping the spending power of the half of the population that live outside of the main cities.
“The shift toward consumption and services is a massive transformation that will drive a new Chinese economy for years to come,” Tsai wrote. “At the heart of this new economy is Alibaba.”
Currently, the company has penetrated 12,000 villages in China with its rural programme, which represents a mere 2 per cent of China’s 600,000 villages.
“As you can see, we still have a lot of work ahead of us,” said Tsai.
Alibaba has pulled out the stops to get its e-commerce platforms in front of villagers, setting up free internet-equipped computers and working with local officials to train potential buyers and sellers. The company said in August it would buy a US$4.6 billion-stake in Suning Commerce Group Co. to leverage its delivery network in the countryside and its expertise in selling electronic household appliances.
However, the company is also grappling with a slowdown in China, a market that still accounts for about 90 per cent of its business. Consumption accounted for about 66 per cent of the country’s GDP growth in 2015, compared with 51 per cent the year before, according to the National Bureau of Statistics. That shifting economy should help companies focused on domestic spending, Tsai said.
In the longer-term, Alibaba founder Jack Ma is investing in video-on-demand services and cloud computing to generate new sources of income. Those investments span everything from Hollywood movies to homegrown TV series and food delivery services.
“Growth is meaningless unless it is sustainable. Thus, we have turned our focus to quality growth and broadening domestic consumption,” Tsai said.