Alibaba witnesses significant drop in profits amid China's economic slowdown

8/21/2024 8:43:52 AM

(MENAFN) On Thursday, Chinese e-commerce giant Alibaba reported a substantial 29 percent year-on-year decline in its quarterly net profit, reflecting the adverse impact of China’s economic slowdown on household spending and corporate earnings. The company announced a profit of 24.3 billion yuan (USD3.3 billion) for the first quarter of its fiscal year, down from 34.3 billion yuan recorded in the same period the previous year. Despite this drop, Alibaba's revenues increased by 4 percent year-on-year, reaching 243.2 billion yuan (30.8 billion euros), as detailed in a statement sent to the Hong Kong Stock Exchange. As a major player in the digital economy and a leader in online shopping, Alibaba's financial performance is closely watched as a gauge of consumer sentiment and economic health in China.

The release of Alibaba’s results coincided with an announcement from its competitor JD.com, which reported a remarkable 92 percent increase in quarterly profit, totaling 12.6 billion yuan (1.6 billion euros). This growth highlights the intensifying competition in China's e-commerce sector, with rivals such as Pinduoduo and its international app Temu gaining traction through competitive pricing. Additionally, Beijing unveiled a set of economic indicators that fell short of expectations, underscoring ongoing challenges despite recent government efforts to stimulate growth in the world’s second-largest economy. The country continues to grapple with a severe real estate crisis, declining confidence among consumers and businesses, and strained geopolitical relations with the U.S. and the European Union, all of which are dampening consumption and affecting foreign trade.

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