Chinese online shoppers started the year cautiously, Alibaba says

BEIJING — Chinese e-commerce giant Alibaba has yet to fully recover from consumption.

The company operates two of the largest online shopping sites in China, Taobao and Tmall. Despite increasing competition, Alibaba’s results remain an important indicator for the economy.

“From January to early February this year, overall sales of physical online goods remained weak,” Daniel Zhang, CEO of Alibaba, said during a quarterly earnings call on Thursday, according to a FactSet transcript.

“Our Chinese trade continued to be heavily impacted by Covid cases and people traveling home or other places during the Spring Festival holidays,” he said, referring to the Lunar New Year at the end of January.

But Zhang said that after the holidays and the Covid wave, demand for clothing, sports and outdoor products recovered.

China abruptly ended its strict Covid controls in early December. After a wave of Covid infections, business activities started to return to normal over the past two months. Rule changes made it easy for people to travel at home and abroad again.

Consumers in China are still living in an economy beset by a real estate crisis and a decline in global demand for Chinese exports.

Alibaba’s Zhang was relatively cautious in his comments on the economic recovery. But he was optimistic that business would pick up later in the year.

“What we see in all sellers is a strong desire to go back to work,” Zhang said. “They want to have a top year in 2023 to make up for everything they’ve lost in the last three years.”

Alibaba’s Chinese trade revenue fell 1% in the last three months of 2022 to the equivalent of $24.64 billion, accounting for 69% of total revenue. Overall results for the quarter were well above expectations.

Restaurants in China also had a subdued start to the year, only beginning to see a significant recovery in sales in the week ending Feb. 16, according to analysis by Beijing-based BigOne Lab, an alternative data company backed by S&P Global among others. .

The weekly data showed that after a strong recovery in sales in 2021 after the initial shock of the pandemic in 2020, sales growth for 2022 was essentially subdued.

Restaurants in smaller cities generally outperformed those in larger cities in recent months, data from BigOne Lab through January showed.

Nationally, hospitality sales fell 6.3% in 2022, while retail sales fell 0.2% overall, according to the Chinese bureau of statistics.

The agency will release national retail sales for January and February on March 15. The data from the two months is usually combined due to variations in the timing of the Lunar New Year holiday, which does not follow the Gregorian calendar.

China is also expected to announce its 2023 economic targets, including GDP, on March 5.

Other major Chinese consumer-focused companies JD.com, Meituan and Pinduoduo have yet to announce when they will release their final quarter results.

However, the video streaming platform iQiyi, also known as the Chinese version of Netflix, this week reported a net increase of 13 million subscribers at the end of December over September – a significant increase after its subscriber growth stagnated over the past two years.

The company expects the number of subscribers to grow this year. In January, the platform’s newly launched shows included the police drama “The Knockout,” whose popularity reached a record high in the company’s history, according to iQiyi.