A person walks next to the Alibaba company logo in front of the Alibaba office building in Chaoyang Science and Technology Park in Beijing, China.
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BEIJING—Chinese e-commerce giant Alibaba and JingdongQuarterly results released on Thursday highlighted a slowdown in China’s consumer market as retailers struggle to attract value-conscious customers.
Major U.S. consumer brands have highlighted weak Chinese demand in their products. second quarter reportsome companies also show how local companies can become stronger competitors.
Alibaba said Merchant commission income and advertising on its Chinese platforms up 1% exist Quarter ended June 30 Started a year ago. This is from 5% annual increase in the last season. Documents show that the annual decline in direct sales fell sharply from 2% to 9% in the two quarters.
JD.com said its average order value fell annually in the quarter ended June 30, partly due to “weak consumer spending.” Thanks to its in-house logistics operations, the company is known for slightly higher-priced products and next-day delivery.
Wednesday, TencentThe company reportedly operates social media and messaging app WeChat Annual revenue growth slows grow The proportion of users’ financial transactions was 4%, compared with 7% in the previous quarter and 15% in the same period last year. WeChat is one of the two main mobile payment apps in China.
Alibaba said on Thursday that a decline in the valuation of its affiliate Ant Group, which operates Alipay, another major mobile payments app in China, led to impairment charges related to stock-based employee awards. This resulted in a 10% annual decrease in Alibaba’s related profits this quarter.
China reported on Thursday that Total retail sales of consumer goods increased by 2.7% The year-on-year growth in July followed a growth of only 2% in June. This is well below past retail sales growth.
A downturn in the real estate market, which accounts for the majority of Chinese household assets, and uncertainty about future income have weighed on consumer confidence.
GMV growth slows
Alibaba said on Thursday that its main e-commerce businesses in China, Taobao and Tmall, achieved “high single-digit online GMV growth” in the quarter ended June 30. Gross merchandise value is an industry metric that measures sales over a period of time.
Alibaba did not provide specific GMV data. The total revenue of Taobao and Tmall Group decreased by 1% compared with the same period last year.
The company said Taobao and Tmall’s GMV achieved double-digit growth last quarter, while in the same period last year, Alibaba said Taobao and Tmall’s GMV had grown, but did not specify the extent of the growth.
Dealing with value hunters
Jasmine Bai, China internet analyst at Haitong International Securities Group, told CNBC on Friday that Chinese consumers are increasingly looking for value-for-money products, regardless of income level.Asian road sign“.
Bai said this has led to fierce competition among e-commerce platforms such as Pinduoduo, JD.com and Alibaba as they focus on more cost-conscious, value-seeking consumers.
Alibaba and JD.com have struggled to compete with heavily discounted products Pinduoduo HoldingsChina’s Pinduoduo app and the byte-beating Douyin (China’s version of TikTok).
Byte Bounce is not publicly traded. PDD has not yet announced when it will release its second-quarter earnings. That’s what was done on August 29 last year.
Is the price war coming to an end?
Nomura analysts said this week that their conversations with an unnamed Douyin employee revealed that the app’s e-commerce growth slowed so much in the second quarter that the company may not achieve 30% GMV this year. growth goals.
The report quoted the same conversation as saying that Douyin’s management realized that over-emphasis on low prices has led to a decline in GMV, and will ease the pressure on merchants to sell at low prices this month.
ByteDance did not immediately respond to a request for comment.
Analysts at Nomura Securities said Douyin’s measures could help boost profit margins in the e-commerce industry, benefiting Alibaba, the largest player in the space.
Alibaba’s Hong Kong-listed shares rose 5% on Friday afternoon, while JD.com’s shares rose 9%. Tencent shares rose more than 1% on Friday.
Michael Burry is best known for his prescient views on mortgage-backed securities before the 2008 global financial crisis, Create Chinese internet stocks Here are some of his top holdings last quarter, according to the latest filings.
— CNBC’s Sonia Heng reported from Singapore.
