Tuesday, October 26, 2021
اُردُو نیوز Newspaper Live-TV(UK) Live-TV(PK)
اُردُو نیوز Newspaper
Live-TV(UK) Live-TV(PK)

Alibaba's Suning deal a riposte to growing might of rival JD.com

Alibaba's Suning deal a riposte to growing might of rival JD.com
August 12, 2015
BEIJING - "Tragedy" – that was Alibaba Group Holding Ltd (BABA.N) founder Jack Ma's prediction for the fate of rival JD.com Inc (JD.O) in comments published earlier this year. On Monday, Alibaba signaled it is no longer writing off its smaller competitor, making a $4.6 billion investment to give it more traction in two areas JD.com does well in: logistics and electronics. Ma's online shopping titan bought into bricks-and-mortar electronics retailer Suning Commerce Group Co Ltd 002024.SZ, surprising investors given it has traditionally stayed away from physical, offline assets. Analysts say the main draw for Alibaba is likely to be Suning's logistics network, which it says covers nine-tenths of China's counties, helping it compete with JD.com's sophisticated in-house warehousing and delivery system. "Instead of building the network itself, it saves more time through this kind of deal," said Walter Woo, an analyst with Oriental Patron Finance Group in Hong Kong. But even for cash-rich Alibaba the investment is a bold one, coming when its heady growth of the past few years is losing momentum. The company reports its April-June results on Wednesday, with revenues predicted to hit $3.39 billion – the slowest rate of annual growth in at least three years – according to a Thomson Reuters SmartEstimate poll of 27 analysts. For a company long praised for its fat margins, fast revenue growth and lack of physical assets, buying a stake in Suning, which had margins last year of less than one percent, raised industry eyebrows. Suning is now valued at 149 times earnings for the last 12 months, according to Thomson Reuters data. GROWING THREAT In January, Ma apologized for his barbs about JD.com and its business model, saying he had spoken too openly. JD.com's recent growth in the total value of goods sold on its platforms is likely to have given Ma more reasons for reflection. JD.com's gross merchandise volume went from 21 percent of Tmall's, the main Alibaba site with which it competes, in the 12 months to December 2013, to 42 percent in the year ending June, according to Morgan Stanley Research. "This likely might have triggered Alibaba and Suning to form a closer alliance to fight back," said Alicia Yap, a Hong Kong-based Barclays Internet analyst, in a Monday research note. With China's increasingly discerning consumers drawn to JD.com's ability to use its in-house delivery system to avoid the more fragmented, chaotic one in China that its rivals depend on, Alibaba will be hoping Suning can give it a quick leg-up. This prospect has already made JD.com investors nervous, with its shares down 12.6 percent since Monday, the biggest two-day drop since it went public in May last year, though the company is playing down the threat. - Reuters
تازہ ترین خبریں حاصل کرنے کے لیے فوری اطلاع کی اجازت دیں

آپ کسی بھی وقت دائیں طرف نیچے بیل آئیکن پر صرف ایک کلک کے ذریعے آسانی سے سبسکرائب کر سکتے ہیں۔