NewsWorldChinese consumers are cooped up at home, but still...

Chinese consumers are cooped up at home, but still spending, according to Alibaba

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Shanghai: Police drag people out of their homes to confine them 0:34 New York (CNN Business)– China’s economy has slumped as Covid-19 cases rise in the world’s most populous country. But Chinese consumers stuck at home are still spending.
E-commerce giant Alibaba reported better-than-expected earnings and sales for its most recent quarter on Thursday. Alibaba shares rose nearly 15% in after-hours trading after the company reported a 9% rise in revenue from a year earlier, beating analysts’ forecasts. Alibaba said the strength of its results was due to strong demand for online and mobile shopping, as well as a 12% rise in sales from its huge Alibaba Cloud unit. Alibaba said it now has more than 1 billion active customers in China, the first time the company has passed that milestone. Alibaba has more than 1.3 billion customers worldwide. Alibaba chairman and CEO Daniel Zhang said in a press release that Alibaba was able to deliver strong results “despite macro challenges affecting supply chains and consumer confidence.” The company expects the supply chain disruptions to end soon. Alibaba Chief Financial Officer Toby Xu said during a conference call with analysts on Thursday that “we are certainly seeing signs of improvement going into the month of May,” though it will still “take time” for outstanding shipments to be delivered. Xu added that “many merchants may need to invest to increase their income,” especially as retailers gear up for Alibaba’s mid-year shopping festival on June 18. Changing buying habits of Chinese consumers Concern about the increase in covid cases in major Chinese cities remains one of the main issues. This has caused a change in how (and what) Chinese consumers buy, just like in the United States and other parts of the world. “Although user traffic and engagement have remained stable, consumption patterns across categories on our platforms have changed,” Zhang said on the conference call. He noted that sales in the fashion and electronics categories were down, but “demand for essential supplies” such as food and personal care products “increased significantly with more consumers stockpiling products at home.” Zhang said that other categories, such as health care, sportswear and outdoor products, also grew rapidly. Major US retailers such as Walmart and Target have reported similar trends. But Alibaba faces other major challenges. In recent years, China’s regulators have taken a closer look at its tech giants. And many of the major Chinese companies listed in the United States could be forced off the New York Stock Exchange and the Nasdaq. The Didi ride sharing app is in the process of doing so. Starbucks competitor Luckin Coffee has already been delisted, although the company made an impressive return in China after facing accounting problems. Tension between China and the United States also remains high. President Biden has continued to speak harshly about possible military intervention in China if it attacks Taiwan. However, Biden and US Treasury Secretary Janet Yellen have hinted at withdrawing some of the heaviest tariffs put in place under the Trump administration on Chinese goods. Other large Chinese companies have also reported more upbeat results of late. Alibaba rival JD.com recently said its latest quarter sales beat forecasts. And Chinese search giant Baidu reported better-than-expected results on Thursday thanks to the growth of its cloud storage units and artificial intelligence. Baidu shares rose 10% on Thursday. But its shares are still more than 10% down from a year ago. Alibaba, JD and other Chinese tech majors like online retailer Pinduoduo and electric vehicle companies Nio, Xpeng and Li Auto remain largely down in 2022 despite recent rallies.

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