- Online sales remained weak through early February this year, Alibaba CEO Daniel Zhang said during a quarterly conference call.
- However, he said some categories saw a rebound this month and that companies were looking to work hard to recover from losses over the past three years.
- Consumers in China are still living in an economy grappling with a housing slump and a drop in global demand for Chinese exports.
Mascots for Alibaba’s various platforms are displayed at a shopping mall in Hangzhou, China, 20 February 2023.
Qilai Shen | Bloomberg | Getty Images
BEIJING – Chinese e-commerce giant Alibaba has yet to fully see its consumption recovery.
The company operates two of the largest online shopping sites in China, Taobao and Tmall. Despite increasing competition, Alibaba’s results remain a key indicator of the economy.
“From January to early February this year, overall sales of physical online goods remained weak,” Alibaba CEO Daniel Zhang said during a earnings call on Thursday, according to a transcript of FactSet.
“Our trade in China continued to be severely impacted due to Covid cases, as well as people traveling home and other places during the Spring Festival holiday,” he said, referring to the Lunar New Year at the end of January.
But Zhang said demand for apparel, sports and outdoor products has recovered after the holiday and the Covid wave.
China abruptly ended its strict Covid controls in early December. After a wave of Covid infections, business activity started to return to normal in the last two months. Rule changes allowed people to travel easily both domestically and internationally again.
Consumers in China are still living in an economy grappling with a housing slump and a drop in global demand for Chinese exports.
Alibaba’s Zhang has been relatively cautious in his comments on the economic recovery. However, he is optimistic that business will 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 record year in 2023 to make up for everything they’ve lost in the last three years.”
Alibaba’s trading revenue in China fell 1% to the equivalent of $24.64 billion in the last three months of 2022, accounting for 69% of total revenue. Overall results for the quarter significantly exceeded expectations.
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Alibaba 12-month stock performance.
Restaurants in China also got off to a slow start to the year, only noticing a significant recovery in sales in the week ended February 16, according to analysis by Beijing-based BigOne Lab, an alternative data company backed by S&P Global.
The weekly data showed that after a strong rebound in revenue in 2021 following the initial shock of the pandemic in 2020, revenue growth for 2022 was essentially muted.
Restaurants in smaller cities generally outperformed restaurants in larger cities over the past few months, data from BigOne Lab through January showed.
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According to the China Bureau of Statistics, nationwide catering sales fell 6.3% in 2022, while overall retail sales fell 0.2%.
The bureau will release national retail sales for January and February on March 15. The dates of the two months are typically combined due to discrepancies in the timing of Lunar New Year holidays, which do not follow the Gregorian calendar.
China is expected to announce its 2023 economic targets, including GDP, on March 5.
Other major Chinese consumer companies such as JD.com, Meituan and Pinduoduo have yet to announce when they will release results for the latest quarter.
However, video-streaming platform iQiyi, sometimes referred to as China’s version of Netflix, this week reported a net gain of 13 million subscribers at the end of December from September — a sharp jump after subscriber growth has stagnated for the past two years.
The company expects the number of subscribers to increase this year. In January, the platform’s newly launched shows included police drama The Knockout, which iQiyi says has reached a record in popularity for the company’s history.