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Alibaba: Strategy shift sparks global expansion, investor confidence

Alibaba's pivot: Strategic shifts and new markets for e-commerce giant
Alibaba's pivot: Strategic shifts and new markets for e-commerce giant

Alibaba is again making headlines as it navigates regulatory scrutiny and redefines its market strategy. Bold moves underscore the e-commerce giant’s resilience in a competitive landscape.

In an interview with CNBC, the co-founder of Alibaba Group Holding Ltd, Joe Tsai, says the company “felt the competitive pressure” recently. “But now we’re back.”

Due to recent hurdles, the group’s stock lost 15% in value last year while also battling the rise of Temu. The PDD-owned platform surpassed Alibaba’s $185 billion market cap.

Alibaba’s bold moves: Strategic shift sparks global expansion, investor confidence

After a recent restructuring, Tsai is “feeling a lot more confident in placing as one of the top e-commerce players in China.” Tsai – who cofounded Alibaba in 1999 and served as chief financial officer until 2013 – was part of the September leadership reshuffle when he became executive vice chairman.

Alibaba’s recent hurdles

Alibaba disclosed detailed information about the ownership stakes held by the Chinese government across several of the company’s business units. Official documents were filed in the United States and Hong Kong over the weekend. 

The company was split into six business groups in 2023, hoping to file them publicly. The first would have been its cloud computing IPO (initial public offering), which was pulled in November due to restrictions regarding US chip exports. 

In addition, China’s Communist Party recently said it plans to have more influence over its technology sectors – including online retailers like Alibaba. According to a CCTV report, top decision-makers within the party, led by President Xi Jinping, will “accelerate the development of new productive forces.”

China had also previously fined Alibaba a staggering CN¥18 billion ($2.5 billion) for anti-trust infringements after the e-commerce giant “abused its dominant market position.” 

Deal to create a Chinese AI firm

As reported by Bloomberg, Alibaba Group Holding led the biggest single financing round yet for a Chinese artificial intelligence (AI) startup this month. Joining Tencent Holdings, Microsoft Corp, and other backers, the funding round boosted Moonshot AI’s valuation to $2.5 billion.

Moonshot AI – known as Yuezhi Anmian in China – was founded in March 2023 to develop generative AI in China. Its first project was the Kimi Chatbot, a large language model (LLM) capable of processing up to 200,000 Chinese characters.

Tsai hopes to reverse Alibaba’s economic downturn with these investments into AI, while still pushing for the cloud computing IPO deployment. According to Bloomberg, the cloud unit hosts nearly half of China’s generative AI firms.

Despite the impact of the Chinese government’s involvement in Alibaba, Investor Palace listed the group as one of seven ‘AI stocks with millionaire-maker potential in 2024.’ This is largely due to the company being China’s largest cloud provider.

American investor and hedge fund manager Michael Burry (aka ‘The Big Short Investor’) believes it’s time to bet on Alibaba stock (NYSE:BABA) despite the risks. Burry’s Scion Asset Management fund bought 75,000 shares at $5.8 million. It now makes up 6.15% of his portfolio.

About the author

Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.

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