Fidest – Agenzia giornalistica/press agency

Quotidiano di informazione – Anno 34 n° 349

Expert comment on Alibaba’s fourth quarter results

Posted by fidest press agency su sabato, 7 Maggio 2016

shanghai-chinaQing Wang, of Warwick Business School, is a Professor of Marketing and Innovation, and is Director of the Marketing, Innovation and the Chinese Economy (MICE) Group.Professor Qing Wang said: “Alibaba’s rapid sale growth is still largely from China. For this fiscal year, only about 10 per cent of the total sales of £101bn are generated from outside China. The sales growth rate in China is about 35 per cent, while outside China it is roughly 20 per cent. “This indicates that Chinese consumption is still growing despite the decline in GDP growth. This is largely due to an explosive growth of the Chinese upper middle class. According to a McKinsey report on China, consumers with household incomes in the 106,000 to 229,000 renminbi (£10,000 to £23,000) range are upper middle class and those with household incomes from 60,000 to 106,000 (£6,000 to £10,000) renminbi are mass middle class. “In 2012, the upper middle class segment accounted for just 14 per cent of urban households. It is estimated that by 2022, the upper middle class will account for 54 per cent of urban households. The mass middle class will dwindle to 22 per cent of urban households.
“In the meantime, the evolution of the middle class poses a threat to Alibaba’s current business model, which is based on cost advantage rather than quality and brands. The rise of the upper middle class means that these sophisticated and seasoned shoppers are able and willing to pay a premium for quality and to consider discretionary goods, not just basic necessities.”These shoppers will soon emerge as the dominant force and they are highly educated, highly mobile and globally minded. Alibaba needs to transform its business model to meet this growing segment and innovation and branding are the key for its long term success.”Alibaba has been working on innovative ideas and on diversifying the company’s businesses to include high-tech services such as cloud computing, big data platforms and music. But most importantly, it needs to expand business overseas to reduce its reliance on the Chinese market.”

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