Chinese online marketplace Douyin has seen its gross merchandise volume (GMV) rise by 80% as it continued to ramp up e-commerce efforts. Parent ByteDance set up a dedicated unit last year to lead efforts to convert the social media platform's hundreds of millions of users into buyers. GMV for Douyin in 2021 was Yuan 1.41tn ($202.3bn), according to The Information. Alibaba and JD.com still have significantly higher volumes, of nearly Yuan 8tn and Yuan 3.48tn respectively.
Tencent Holdings will cut prices for cloud services by up to 40% from June amid similar moves from rivals that have plunged the sector into a price war. Alibaba Group Holding will slash prices for some cloud products by up to 50%. State-owned China Mobile also joined Tencent on Tuesday in announcing cuts, saying prices for some services would be reduced by up to 60% for a limited time.
Japanese investment firm Softbank sees potential for investment opportunities in artificial intelligence (AI), whose potential for rapid growth is akin to the early internet, according to founder Son Masayoshi. Yet experts are questioning whether investors will be able to distinguish between the upstarts backed by venture capital and the existing tech giants best placed to deploy the innovation for their existing customers. Analysts cite the earlier examples of Amazon, Alphabet, Meta, Microsoft and chip makers nvidia and Micron, whose use of machine learning have helped generate their current market dominance.
Huawei has signed cooperation agreements with local governments in Sichuan, Guangzhou and Tianjin, pledging to support smart port, computing resource and telecom infrastructure. 5G, artificial intelligence and cloud computing technologies will reportedly be employed to help Tianjin's digital transformation. Similarly, Huawei has signed a strategic cooperation deal with Sichuan province, which involves expanding local data storage capacity. These initiatives also reflect how China's biggest tech companies are following directives from China's leadership to strengthen job creation across the country in the wake of the pandemic.
UK Prime Minister, Rishi Sunak, has said that he is considering following the US's lead by imposing new restrictions on domestic companies investing in critical industries in China. US President, Joe Biden, has been drawing up a plan to limit investments in key parts of the Chinese economy, which is yet to be announced. Sunak also mentioned that placing further export controls on China would also be discussed at the G7 gathering. Meanwhile, Sunak has backed away from his promise to ban Confucius Institutes from operating in Britain in an attempt to improve UK-China relations.
Hong Kong stocks rose due to positive earnings reports from tech giants including Tencent and Baidu, which reported better-than-expected revenue. Alibaba is poised to reveal its latest report. The Hang Seng Index added 0.9%, but the Tech Index sank 0.8% and the Shanghai Composite Index slipped by 0.3%. Two new companies began trading in China, with defense technology manufacturer Aerospace Nanhu Electronic rising 18% and household appliance manufacturer Guangdong Deerma Technology falling 0.5%. Most Asian markets closed higher.
Alibaba Group has moved its autonomous driving research team from its DAMO Academy to its logistics wing Cainiao Network Technology, as part of a wider restructuring plan. Some DAMO Academy autonomous driving workers will remain with Cainiao, while others will be allocated to other parts of Alibaba. Reports suggesting 70% of the staff would be laid off were called untrue by DAMO Academy.
Alibaba has recorded a 2% rise in revenue to RMB208bn ($30bn) in the first quarter of 2021, and has announced it intends to complete the initial public offering for its Freshippo grocery business in the next year and to list its Cainiao Smart Logistics in the next 12 to 18 months. It will also spin off the cloud computing arm as the struggling business moves to become an independently listed company. The six new chief executives and board members for the companies created through the split have been revealed.
Alibaba, China's biggest online retailer, reported weak quarterly revenue growth of just 2%, missing expectations, due to increased competition from new rivals. Its cloud computing division also saw a fall in revenue, down 2% year-on-year. Alibaba's new restructuring plans have created six business units, with all but the Chinese e-commerce division due to seek outside funding and to go public. The company will spin off its Cloud Intelligence Group via a stock dividend distribution to shareholders, completing the public listing of the cloud computing business within one year. Its grocery arm, Freshippo, is due to launch an IPO and its logistics department, Cainiao, is set to explore an IPO in the next 12-18 months.
Alibaba has shared its first earnings report since its restructuring announcement. The conglomerate saw a 2% YoY increase in Q1 revenue, with 208.2bn yuan ($30.3bn), with its net income reaching 23.5bn yuan, up from a 16.2bn yuan loss the previous year. The company also highlighted its plans to complete the listing of Freshippo, its supermarket offering, within the next six to 12 months, and the hangzhou-based firm seeks to finalise the Cainiao IPO in the coming 12 to 18 months. Other plans include external financing for multiple business units and a full spin-off of its Cloud Intelligence Group.
Alibaba Group Holding achieved 2% year-on-year revenue growth, with the Chinese e-commerce giant posting CNY208.2bn ($30.12bn) for Q1 2018, missing its anticipated CNY210.15bn. The announcement follows the news that Alibaba will split into six distinct business entities, with plans for most of them to go public. Following the IPOs, Alibaba has said it will consider whether to retain control of the individual businesses.
Ant Group, Alibaba's fintech arm, reported a 56% drop in Q4 profit, with the Hangzhou-based firm citing a regulatory switch. With the company in the process of acquiring a financial holding firm license, it has cut back on expansion, contributing 3.18 billion yuan ($452 million) in profit to Alibaba, a 9.6 billion yuan profit for Ant. The firm is awaiting approval from Beijing following the cancellation of its planned IPO more than two years ago. Its top cable-breaking valuation has been slashed to $63.8 billion by Fidelity Investments, from $235 billion.
Alibaba plans to fully spin off its cloud services arm within a year to move ahead with the Chinese tech giant's planned restructuring into six business groups, CEO Daniel Zhang has said. The Cloud Intelligence Group is independent and has different features to Alibaba's other businesses, supporting the full spinoff, Zhang said. The move will also help attract strategic investors to the cloud business and spur growth.
China is to create regional artificial intelligence (AI) "highlands" to promote research and development. China's Minister of Science and Technology, Wang Zhigang, made the announcement at the opening of the 7th World Intelligence Conference. China, currently the world's second-largest economy, is promoting AI development and applications with the development of censor-compliant home-grown alternatives to major foreign services such as OpenAI's ChatGPT and Google's Bard. Chinese tech firms including Baidu, Alibaba Group Holding, SenseTime and iFlyTek have launched domestic services. The new AI facilities will include governance guidance and ethical norms.
Global chipmakers including Taiwan Semiconductor Manufacturing, Samsung Electronics, Intel and US chipmaker Micron, have agreed to invest billions of dollars in Japan as countries seek to reduce their dependence on Taiwan’s semiconductor industry, which is under threat of invasion by China. Rising tensions between the west and China have spurred on this shift towards reducing reliance on Taiwan. Semiconductors are an essential component to modern-day technology & electronic equipment, and Taiwan is home to 65% of the world’s semiconductors and almost 90% of the most advanced chips.
Hong Kong stocks, including Alibaba, Tencent Holdings, and Baidu, fell following disappointing revenue growth of 2% for the fourth quarter at Alibaba, and concerns that China's post-Covid recovery is losing momentum. The Hang Seng Index slumped by 0.9%, with the Tech Index falling by 1.8%. While the Shanghai Composite Index was little changed. Goldman Sachs warned that rising government debt levels would limit China's ability to roll out additional pro-growth policies through fiscal policy. Major Asian markets were trading higher, however, with Japan's Nikkei 225 up by 1% and South Korea's Kospi rising 0.7%.
European stocks rose on Friday as investors awaited central bankers' speeches for clues on the future direction of interest rates. Germany's Dax was 0.3% higher in early trade, putting it less than 100 points off the 16,290 high set in November 2021. The Stoxx 600 gained 0.4%, while London's FTSE 100 added 0.3% at the market open. Meanwhile, China's onshore currency fell to 7.027 against the US dollar, its lowest level since December following weak consumer spending and industrial production, as well as record-high youth unemployment in April data.
Chinese technology stocks are continuing to struggle despite recent strong earnings results from the industry's leading companies. Tencent, China's most valuable firm, reported its fastest revenue growth in over a year, while the country's internet search leader, Baidu, announced better-than-expected sales results on Tuesday. However, shares have declined by more than 2.5% for Tencent and 2% for Baidu, reflecting the broader malaise that is affecting Chinese equities. Investors remain concerned over a slowing economic recovery that is not receiving government policy support, as well as the ongoing trade spat with the US.
China's economy is falling into a "confidence trap", with anxiety elevated after three years of heated tensions with the West, President Xi Jinping's punishing regulatory campaigns, and strict Covid-control policies that have left a record number of young people unemployed and undermined commerce, warns Bloomberg. China has slipped into a confidence trap for consumers, businesses, and investors, leading to increasing calls for greater forceful stimulus measures. However, investors have shown little tolerance for negative news and only a meaningful policy response will give companies and consumers long-sought clarity to spend.
Russian mercenary group Wagner's front company acquired tens of thousands of protective helmets from China in late 2021 despite western sanctions intended to stop a private army designated as a "transnational crime organisation" by the US, according to the Financial Times. A Wagner-connected, Russia-based company called Broker Expert bought 20,000 polymer-based helmets from a small Chinese company called Hangzhou Shinerain Import And Export Co in November and December last year, according to customs declarations analyzed by the FT, whose analysis indicates that sanctions have failed to stem the group's activities.
