Alibaba shows strong momentum during 618 shopping festival, as chairman Joe Tsai eyes return to double-digit revenue growth

Alibaba Group Holding's sales campaign for this year's 618 shopping festival is seeing strong momentum, according to preliminary data from the firm's Taobao and Tmall platforms, helping boost the Chinese e-commerce giant's prospects of returning to double-digit revenue growth by 2027.

About 185 brands - including major smartphone vendors Apple, Xiaomi and Huawei Technologies - have each achieved more than 100 million yuan (US$13.8 million) in gross merchandise value, while 37,000 other brands doubled sales year on year as of 9pm on May 31, the latest data released by Alibaba e-commerce unit Taobao and Tmall Group showed. Alibaba owns the South China Morning Post.

In the highly competitive cosmetics sector, brands on Tmall have so far stood out during the 618 shopping festival. Local brand Shanghai Hanshu Cosmetics, for example, reported a 126 per cent year-on-year increase in sales from May 20 to 28, part of the initial period of promotions for the midyear shopping festival. Alibaba's 618 campaign will conclude on June 20.

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The preliminary data augurs well for Alibaba, whose co-founder and chairman Joe Tsai recently said the Hangzhou-based company will see double-digit revenue growth during its financial year ending March 2027.

The midyear 618 shopping festival, which was initiated by JD.com in 2010, has become mainland China's second-biggest retail extravaganza behind Singles' Day in the fourth quarter. Illustration: Shutterstock alt=The midyear 618 shopping festival, which was initiated by JD.com in 2010, has become mainland China's second-biggest retail extravaganza behind Singles' Day in the fourth quarter. Illustration: Shutterstock>

"From a planning standpoint, on a three-year time horizon, we'd like to be growing double digits by our fiscal year 2027," Tsai said on May 23 during a fireside chat with Kam Shing Kwang, JPMorgan's chairwoman for North Asia and vice-chair of investment banking in Greater China.

Tsai indicated that Alibaba does not see either geopolitical or regulatory factors as potential stumbling blocks. "We're in a stable regulatory environment [where] regulation is quite predictable," he said.

During a conference call in May, Tsai pointed out that Alibaba's e-commerce platforms saw sales of discretionary items, like apparel and electronics, grow during the Labour Day holiday.

That showed how mainland consumers' attitudes "are starting to reflect a willingness to spend", he said.

Alibaba Group Holding co-founder and chairman Joe Tsai speaks onstage at the TAAF Heritage Month Summit on May 3, 2024 in New York City. Photo: Getty Images for The Asian American Foundation alt=Alibaba Group Holding co-founder and chairman Joe Tsai speaks onstage at the TAAF Heritage Month Summit on May 3, 2024 in New York City. Photo: Getty Images for The Asian American Foundation>

Tsai's optimism has been bolstered by Alibaba's most profitable financial year since 2021.

The company grew its net income 10 per cent to 79.7 billion yuan (US$11 billion) in the 12 months ended March, beating the 72.5 billion yuan profit recorded the previous financial year.

Revenue for the year rose 8 per cent to 941.2 billion yuan, beating the consensus estimate of 939.7 billion yuan, in the first results released for a financial year since Tsai took over as chairman last September.

Tsai said Alibaba has high hopes for its self-developed Tongyi Qianwen large language models (LLMs), the technology behind generative artificial intelligence (AI) services like ChatGPT. More than 90,000 corporate clients have adopted these LLMs.

Alibaba's unique advantage is that the company combines its in-house AI and cloud computing businesses, giving it an edge over US rivals such as Microsoft and Amazon.com, which have leading cloud services but do not have in-house LLMs.

"As a lay person [looking] to understand AI, it's like educating a child: you send them to middle school, high school, college and then eventually they get PhDs," Tsai said.

"It takes about 22 years to send a kid to college and graduate from college. It took [Alibaba], maybe, three or four years to get to the large language models to be as smart as human beings in terms of knowledge."

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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