Restructuring Amid E-commerce Business Slump
Abandoning Non-core Businesses and Struggling with Fundraising
Alibaba Holdings, China's largest e-commerce company, has raised funds by selling its stakes in streaming platform Bilibili and electric vehicle maker Xiaopeng. This move is interpreted as an acceleration of business restructuring to focus on core businesses such as e-commerce and cloud services.
On the 21st (local time), Bloomberg News reported, citing sources, that Alibaba sold 30.85 million shares of Bilibili, which is listed on the Nasdaq Stock Market in the United States, raising $357.8 million (approximately 477.3 billion KRW). The sale was made at $11.60 per American Depositary Receipt (ADR) of Bilibili, representing a 5.5% discount compared to Bilibili ADR's closing price of $12.28 the previous day.
Alibaba began to emerge as a major shareholder of Bilibili in February 2019 by acquiring 13.6 million common shares and 10 million ADRs through Taobao. Subsequently, in 2021, Alibaba increased its shareholding further, showing interest in related businesses. Alibaba also exerted influence as a major advertiser for Bilibili. According to Bilibili's recent annual report, the two companies have been collaborating on content production since 2018.
However, Alibaba has recently been continuously streamlining its portfolio of non-core businesses. On the previous day (the 20th), it raised $317 million by selling 33 million shares of Xiaopeng, which is listed on the New York Stock Exchange. Alibaba also partially divested its stake in GOGOX, a vehicle-sharing company listed on the Hong Kong Stock Exchange.
This move is closely related to the rapid growth of competitors such as Pinduoduo (PDD Holdings), which has been expanding its presence in the global market recently. Pinduoduo's revenue last year was 247.68 billion yuan (approximately 46.03 trillion KRW), a 90% increase compared to the previous year. Net profit was 60.0265 billion yuan, also up 90% during the same period.
In particular, fourth-quarter revenue reached 89 billion yuan, and net profit was 23.28 billion yuan, representing increases of 123% and 146%, respectively, compared to the same period last year. In contrast, Alibaba's revenue growth rate during this period was only 2%. This performance lags not only behind Pinduoduo but also behind its largest competitor JD.com (3.4%).
CEO Eddie Wu announced during last month's earnings conference call that "we will increase investment in core businesses," signaling a restructuring of non-core businesses. It is also known that Alibaba is in the process of selling major Chinese supermarket chains Hema and RT-Mart. Some media outlets have reported that COFCO Corporation, a Chinese state-owned enterprise, is being mentioned as a potential buyer.
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