International

How Alibaba Plans To Appease Shareholders

Alibaba hasn’t had an easy PR year — particularly from its shareholders’ perspective. But Jack Ma wants to assure its investors that China’s economic slowdown is not impacting Alibaba as much as many have suggested.

In a letter to shareholders, Ma shared insights into Alibaba’s growth, assuring investors that the company was equipped to wade through the economic issues going on in China.

“I do not agree with the notion that consumption will decline as economic growth slows,” Ma wrote. “Western consumers may have trouble borrowing to maintain their lifestyles, but their Chinese counterparts have savings for retirement or for times of crisis. Therefore, slower economic growth does not mean declining purchasing power. With the convenience and value-for-money merchandise offered by eCommerce, consumers are becoming more and more willing to shop online.”

“China does not lack domestic consumption power,” he continued. “Being thoughtful about how to ignite that power is the key.”

Alibaba has caught the most flack for its stock slump in the past year, which has not kept pace with the expectations after Alibaba’s record-setting $25 billion IPO. While the drop in Alibaba’s stock price might paint a bleak picture for its investors and employees, Alibaba CEO Daniel Zhang remained bullish on the company’s resilience.

In an open letter released in August, Zhang wrote that the company was cushioned by enough cash reserves and plenty of cash flow to keep things under control.

“Do not let the fog cloud your vision; broaden your horizons to see the bigger picture,” Zhang wrote in the letter. “Forget about the stock price and put your mind at peace.”

Alibaba faced the most criticism once its stock dipped below its IPO price of $68 a share, but the company might be on the mend as its stock price was just teetering at $67.86 on Thursday afternoon (Oct. 8).

In his letter, Ma posited that Alibaba is much more than eCommerce and wrote that the company’s “future is the infrastructure of commerce” through its initiatives in areas such as Big Data, cloud computing and logistics.

One way Alibaba is expanding its reach beyond eCommerce is through the launch of Alibaba Defined, a digital experience that’s designed to build Alibaba’s audience outside of China so that consumers can better understand how the company works, what its overall strategy is and what types of products and services there are.

“Alibaba needs no explanation in China, where consumers interact with our products and services every single day. But for those outside of China, who have limited access to our ecosystem, it can be difficult to appreciate our vision, our company and what we are working to achieve,” said Joe Tsai, executive vice chairman. “Our first annual report was the ideal opportunity to create a comprehensive experience for everyone who wants to better understand us.”

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