Chinese e-commerce giant Alibaba After a period of pressure, it is back on track as a leading player in the market, co-founder Joe Tsai told CNBC’s Emily Tan in an exclusive interview on Friday.
Questions about Alibaba’s future have emerged following a series of internal changes, a canceled cloud IPO and competition for its core e-commerce business.
A longtime giant in the online shopping world, China has faced more competition in recent years as budget-conscious consumers turn to cheaper goods from SDA Holdingsand amid rising sales of live streaming on Douyin, the Chinese version of TikTok owned by ByteDance.
“Now, with the restructuring and new management, we feel much more confident that we can become one of the leading e-commerce players in China,” Tsai said. “Where we didn’t feel as confident as before, we felt competitive pressure, but now we’re back.”
He also expects e-commerce penetration in China to exceed 40% in the next five years, significantly higher than the current level of 30%.
Tsai has been part of Alibaba since its founding in 1999. He became chairman of Alibaba in September in a leadership shakeup.
At the same time, Eddie Wu became the company’s CEO, replacing Daniel Zhang, who also served as chairman. In December, Wu replaced Trudy Dai as head of Taobao and Tmall’s e-commerce business.
The leadership changes follow an overhaul of Alibaba’s business last year, which saw the company divided into six business groups with the intention of listing them publicly, starting with its cloud division.
However, Alibaba abandoned plans for a cloud IPO in November, citing restrictions on chip exports to the United States. Zhang was initially expected to remain head of the cloud business, but abruptly left the company in September.
Tsai said a cloud IPO would make more sense if investor sentiment was higher.
“The markets haven’t been good,” he said. Regarding the IPO of Alibaba’s logistics business Cainiao, he said the company is waiting for a more opportune moment.
Cainiao filed to go public on the Hong Kong Stock Exchange in September but has not yet listed.
Over the past few months, Tsai and fellow co-founder Jack Ma have bought more than $200 million worth of Alibaba shares.
Alibaba
Alibaba’s U.S.-traded shares are little changed for the year, trading at around $76, a fraction of Alibaba’s $300 share price in November 2020.
That same month, the IPO of Ant Group, a subsidiary of the fintech company, was abruptly suspended by Chinese authorities. Beijing later fined Alibaba for alleged monopolistic behavior.
Since then, the company has faced increased competition amid China’s slowing economy. The market capitalization of PDD Holdings, which owns Pinduoduo and Temu, temporarily exceeded Alibaba’s market capitalization.
Asked about the success of China-linked e-commerce players such as Temu, Shein and TikTok in the US, Tsai said the companies offer a “great consumer proposition” with “high quality” products and “reasonable prices.”
“They’re doing it very aggressively, and we’re going to watch and figure out what we want to do,” he said, noting that Alibaba already sells products overseas through AliExpress and Trendyol, which specializes in Turkey.
Regarding tensions between the US and China, Tsai said the two governments have realized they need to work together in certain areas despite the intense competition that Alibaba will have to learn to cope with.
Although Alibaba no longer plans to spin off its cloud business, the company still intends to grow its artificial intelligence capabilities and make money from cloud computing.
E-commerce, Tsai said, offers “one of the richest use cases or brings the most variety in terms of use cases for artificial intelligence applications.” These include the ability to quickly create product catalogs for consumers, as well as virtual fitting rooms for clothing, he added.