Chinese e-commerce giant Ali Baba The company is back on track to become a big player in the market after a period of pressure, co-founder Joe Tsai told CNBC's Emily Tan in an exclusive interview on Friday.
Questions have grown about Alibaba's future after a series of internal changes, the cancellation of its cloud computing IPO, and competition for its core e-commerce business.
The longtime giant in China's online shopping world has in recent years faced greater competition as cost-conscious consumers turn to lower-priced goods from China. PDD HoldingAnd amid rising live streaming sales on Douyin, the Chinese version of TikTok owned by ByteDance.
“Now with the restructuring and new management in place, we feel more confident in our position as one of the top e-commerce players in China,” Tsai said. “Where we didn't feel as confident as before, we felt competitive pressure, but now we're back.”
E-commerce penetration in China is also expected to exceed 40% in the next five years, a significant rise from the current level of 30%.
Tsai has been part of Alibaba since its founding in 1999. He became Alibaba's chairman in September as part of a cabinet reshuffle.
Eddie Wu became CEO of the company at the same time, replacing Daniel Zhang, who was also serving as Chairman of the Board. In December, Wu took over as head of e-commerce businesses on Taobao and Tmall, succeeding Trudy Day.
The management change follows a major overhaul of Alibaba's business last year that saw the company split into six business groups, with a focus on listing publicly starting with the cloud unit.
However, Alibaba in November withdrew plans for a cloud IPO, citing restrictions on exporting US chips. Zhang was originally supposed to remain head of the cloud business division, but he suddenly resigned from the company in September.
Tsai said a cloud IPO would have made more sense if investor sentiment had been higher.
“The markets haven't been great,” he said. As for an IPO for Alibaba's logistics company Cainiao, he said the company is waiting for better timing.
Cainiao applied for an IPO on the Hong Kong Stock Exchange in September, but has not yet listed.
In the past few months, Tsai and fellow co-founder Jack Ma have bought more than $200 million worth of Alibaba stock between them.
Ali Baba
Alibaba's US-traded shares have barely changed in the year so far, trading at around $76 – a fraction of its share price of around $300 in November 2020.
In the same month, Chinese authorities suddenly suspended the IPO of the company's fintech subsidiary Ant Group. Beijing later fined Alibaba for its alleged monopolistic behavior.
Since then, the company has faced increasing competition amid slowing growth in the Chinese economy. PDD Holdings, which owns Pinduoduo and Temu, saw its market value temporarily rise above that of Alibaba.
When asked about the success of Chinese e-commerce companies such as Teemo, Shen and TikTok in the United States, Tsai said the companies provided a “great offer to the consumer” due to “high-quality” products and “reasonable prices.”
“They are very bold in doing this and we will watch and find out what we want to do,” he added, noting that Alibaba already sells abroad through AliExpress and Trendyol, which focuses on Turkey.
As for tensions between the United States and China, Tsai said that the two governments have realized that they need to work together in certain areas despite the fierce competition, which is something Alibaba must learn how to deal with.
Although Alibaba no longer plans to spin off its cloud business, the company remains intent on building its AI capabilities and making money from cloud computing.
E-commerce offers “one of the richest use case scenarios, or brings the greatest diversity, in terms of use cases for using AI applications,” Tsai said. They include the ability to quickly create product catalogs for consumers, as well as virtual dressing rooms for clothing, he added.
