Delayed Recovery in Chinese Consumer Spending Leads to Poor Performance
Rising Threat from Emerging Power Pinduoduo Heightens Sense of Crisis
Recently, Alibaba in China, which replaced the head of its e-commerce division, has been embroiled in rumors of major business sales. Due to sluggish consumer sentiment in China and poor performance, as well as the rapid rise of emerging competitors such as Pinduoduo (PDD Holdings), its market position is said to be shaken.
According to China’s First Financial Daily on the 20th, rumors spread in the market that Alibaba Group is selling its grocery distribution platform Hema and delivery service platform Ele.me. Wu Yongming, Alibaba Group CEO, who recently took charge of the e-commerce business division, is reportedly formulating a new management plan, which includes selling Hema, divesting shares in Ele.me, and even considering merging the video platform Youku with Alibaba Pictures, a video division affiliate.
Alibaba immediately denied these rumors, stating they are "not true." Hema also explained, "This is not true, and we plan to continue opening stores this year." Recently, Hema’s withdrawal of its long-prepared initial public offering (IPO) had raised concerns about disruptions in its management plans. Furthermore, other business units such as Ele.me also issued statements denying the sale rumors as fake news. There were even specific rumors that Douyin (TikTok), China’s largest video platform, was negotiating to acquire Ele.me, but both companies have denied these claims.
Alibaba Group has recently faced criticism that its core is shaking amid China’s economic downturn and rapidly changing market order. The day before, the group appointed CEO Wu Yongming as the overall head of the company’s main platform businesses, including Taobao and Tmall, its e-commerce divisions. This was widely seen as a de facto "dismissal" of the previous head, CEO Dai Shan, holding him responsible for the business downturn.
Wu, who has served as chairman of Taobao and Tmall since May, succeeded Zhang Yong as group CEO in September. Recently, he has also taken on the role of acting chairman and CEO of the Cloud Intelligence Group, which former CEO Zhang Yong unexpectedly stepped down from. The sale rumors appear to have originated from speculation that CEO Wu, now holding key positions, will devise an overall new management strategy.
Alibaba, once considered the most valuable company in China, recently lost its "largest market capitalization" status to PDD Holdings, a startup established just eight years ago. PDD Holdings’ U.S.-listed shares have risen more than 80% this year, reaching $195.8 billion (approximately 255.3 trillion KRW) as of the 30th of last month, surpassing Alibaba’s $190.5 billion. PDD Holdings operates the low-priced goods-focused e-commerce company Pinduoduo and the overseas shopping app Temu. In the third quarter, its revenue growth rate reached 94%, while Alibaba’s revenue grew by only 9% during the same period.
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