Alibaba Is Not Worried About China Economy

Profits of the Chinese e-commerce company has recently jumped despite of the economic slowdown in the country.

Alibaba is not worried about China’s economic conditions. The e-commerce enterprise stated Chinese shoppers still have room for expenditure and are interested in doing so. The statement was given after the organization reported its quarterly financial results that were appreciated by venture capitalists.

Joe Tsai stated that increases in wages and enough savings would strengthen buyers even as the economy plunges down to its lowest expansionary rate since 2009. Joe exclaimed, “People have lots of savings, lots of liquidity and we expect that a temporary setback in the macroeconomy is not going to affect their consumption pattern in a fundamental way.” 

Alibaba news today reported that in the early evening trading session, the company’s stock declined by 2.6% to $78.31 in New York. Its recently shared results gave good news to those observing China’s economic position. They came after the organization reported a poor previous quarter and follows remarks from a senior official who gave the suggestion that the country’s staggering growth rate was affecting the consumers’ behavior.

Alibaba Breaking news reported that the company’s persistence would be tested on the Singles Day, a yearly trading festivity in China on November 11, which the company and its competitors push as a huge selling event. The holiday could test Alibaba’s confidence and whether one of the biggest economies is able to affect it, stated Henry Guo, who covers Chinese Internet organizations at Summit Research.

Alibaba News on Tuesday reported that it earned a net profit of $3.57 billion in its second financial quarter ending September 30, significantly more than what it recorded in 2014, largely due to its one-off gain of $2.93 billion from its revaluation of Health Information Technology's stock. In the previous year, it recorded a profit of $476.8 million (3.03 billion Yuan).

Without the said improvement, profit attributable to share owners under USA’s accounting laws would have been less than the approximately $720 million anticipated by analysts surveyed by Thomas Reuters. Still the South East Asian company recorded a greater than estimated rise in sales revenue and important progress in earning more money from transactions conducted through cellular phones and other mobile devices. It also recorded a per stake profit figure without one-time products, such as share grants to workers that defeat analysts’ estimations.

Mr. Guo stated, “It beat expectations on mobile, so it really bodes well for the future of the company. Because increasingly, customers use mobile to make transactions, that is really the key here.” It could be assumed that the Chinese ecommerce giant’s financial reports would not only motivate its workforce but also contribute in attracting foreign investors to the country. Users’ desire to spend more acts as an opportunity for Chinese businesses despite economic conditions.