‘We’re back,’ co-founder Joe Tsai says after doubts about Alibaba’s future | Private Equity Weekly

Chinese e-commerce giant Alibaba Co-founder Joe Tsai told CNBC’s Emily Tan in an exclusive interview on Friday that the company is back on track to become a top market player after a period of stress.

Questions are growing about Alibaba’s future after a series of internal changes, the cancellation of its cloud computing IPO and competition in its core e-commerce business.

The longtime giant in China’s online shopping scene has faced stiffer competition in recent years as cost-conscious consumers shift to lower-priced goods. Pinduoduo Holdingsand the growth of live streaming sales on Douyin, the Chinese version of TikTok owned by ByteDance.

“Now, with the restructuring and new management in place, we are more confident about becoming one of the top e-commerce companies in China,” Cai said. “We are not as confident as before, we feel the competitive pressure, but now we are back .”

He also predicts that China’s e-commerce penetration rate will exceed 40% in the next five years, a significant increase from the current level of 30%.

Tsai has been a member of Alibaba since its founding in 1999. He became Alibaba chairman in September as part of a leadership reshuffle.

John Woo also serves as the company’s CEO, succeeding Zhang Yong, who also serves as chairman. In December, Wu took over as head of Taobao and Tmall e-commerce operations from Ms. Dai.

The management changes come after Alibaba overhauled its business last year, splitting the company into six business groups with the aim of taking it public, starting with its cloud unit.

However, Alibaba canceled its cloud IPO plan last November, citing U.S. chip export restrictions. Zhang was supposed to continue as head of the cloud business, but suddenly quit the company in September.

Tsai said a cloud IPO would make more sense if investor sentiment is higher.

“The market is not doing well,” he said. As for the IPO of Alibaba’s Cainiao logistics business, he said the company is waiting for a better time.

Cainiao applied for a public offering on the Hong Kong Stock Exchange in September, but has not yet listed.

In the past few months, Tsai and co-founder Jack Ma have purchased more than $200 million worth of Alibaba stock.

Alibaba’s U.S.-listed shares have been little changed this year, trading at about $76 — a fraction of the roughly $300 price in November 2020.

The same month, the initial public offering (IPO) of the company’s fintech subsidiary Ant Group was abruptly halted by Chinese authorities. Beijing later fined Alibaba for alleged monopolistic practices.

Since then, the company has faced increasing competition as China’s economic growth has slowed. Pinduoduo owns Pinduoduo and Temu, and its market value temporarily exceeds that of Alibaba.

Asked about the success of Chinese e-commerce companies such as Temu, Shein and TikTok in the United States, Tsai said these companies offer “a very good consumer proposition” with “high-quality” products and “reasonable prices.”

“They are very aggressive in their approach and we will watch and figure out what we want to do,” he said, noting that Alibaba already sells overseas through AliExpress and Turkey-focused Trendyol.

As for U.S.-China tensions, Tsai Ing-wen said that despite fierce competition, the two governments have realized that they need to cooperate in certain areas, and Alibaba must learn how to deal with it.

Although Alibaba no longer plans to spin off its cloud business, the company remains committed to enhancing its artificial intelligence capabilities and making money from cloud computing.

Tsai said e-commerce offers “one of the richest use case scenarios, or the most diversity in terms of use cases using artificial intelligence applications.” These include the ability to quickly create product catalogs for consumers, as well as virtual fitting rooms for clothing, he added.