Companies

Alibaba says economic woes far from over

By Chen Limin (China Daily)
Updated: 2010-05-15 09:19

SHENZHEN - While China's economy is showing signs of recovery after the worldwide financial crisis, Jack Ma, chairman and chief executive of e-commerce company Alibaba Group, said the end of the financial crisis is yet to come.

This year and the next two years will be the toughest period of the crisis, Ma said on Friday at the shareholders' meeting of Alibaba.com Ltd (Alibaba), a Hong Kong-listed subsidiary of Alibaba Group.

"It's not the coldest when it is snowing, but rather when the snow is melting," he said.

He added that the number of newly established small enterprises hasn't increased much compared with before the financial crisis, and the bankruptcy rate of small companies didn't fall to any great extent, which means people are still not confident about the economy.

The biggest challenge for Alibaba is the threat facing China's small enterprises, said David Wei, chief executive officer of Alibaba.com Ltd.

To solve the problem of the decline in overseas demand for Chinese exports, Alibaba last year invested $30 million to attract about 4 million overseas buyers, and the company's members increased to 100,000 from less than 30,000.

The company this week reported total revenue of 1.22 billion yuan ($178.69 million) in the first quarter due to a 36.8 percent increase in the number of paying members and the consolidation of Web-hosting company HiChina, which was acquired by Alibaba last year.

Its net profit increased by 33.8 percent in the first quarter of this year to 330 million yuan, according to the company.

The company has been integrating its platform with others within Alibaba Group, including online shopping site Taobao.com and online payment arm Alipay.com. It is trying to boost the business of Alibaba by linking sellers from Taobao with suppliers on Alibaba.

It said the integration would begin to bear fruit by 2012.

Billionaire investor George Soros bought shares in Alibaba during the third quarter of last year and is now among its largest shareholders, Wei said.

Alibaba shares rose 5.3 percent on Friday to HK$15.82.

According to domestic research firm Analysys International, China's business-to-business e-commerce market in the first quarter of this year reached 1.6 billion yuan, up 1.9 percent from the previous quarter, among which, Alibaba took up a 74 percent share of the market, followed by Global Sources, which owned 6 percent.