Alibaba Says China’s Deceleration Isn’t Hurting It That Much

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Alibaba Says China’s Deceleration Isn’t Hurting It That Much

Alibaba Group Holding Ltd. Vice Chairman Joseph Tsai said the e-commerce giant has experienced limited impact from China’s broader economic slowdown as more and more business moves to the internet.

“Our business is delinked” from the Chinese economy because “Alibaba is aiming to digitize the whole sector,” Tsai said Tuesday at the Goldman Sachs Group Inc. technology conference in San Francisco. Alibaba would continue to outpace the broader economy as digital commerce expands faster than the traditional retail business. Moreover, China is growing faster towards the digitized economy.

China’s economy expanded 6.4% in the last three months of 2018, according to the data from country’s National Bureau of Statistics. Alibaba’s revenue rose 41% to $17.3 billion, though that was the slowest growth in more than two years. While the Chinese economic deceleration is depressing the consumer demand it relies on, the company’s been spearheading a drive into lucrative new spheres such as cloud services and entertainment, while helping modernize physical retailers.

The vice chairman compared Alibaba’s situation with Amazon.com Inc.’s ability to achieve consistent double-digit sales growth while U.S. economic expansion is projected to slow to about 2.5% this year.

Alibaba’s Tsai also said on China’s decision to reduce the tax burden for small and micro-sized companies by $29.61 billion per year for the next three years. The initiative is aimed to boost those businesses amid the economic downturn.

“In prior cycles the Chinese government would use monetary policy to pump a lot of liquidity into the system,” Tsai said. Now, the government needs to “use fiscal policy, focusing on reducing taxes.” he added, “These SMEs, with more money in their pockets and reduced taxes, will be growing their businesses.”

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