Alibaba in loss for first time in nine years after record fine

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By Les Echos
Published on 13 May 2021 at 15:14, Posted on 14 May 2021 at 12:12

Hit but not sunk: plagued by a record fine last month of 2.3 billion euros, Alibaba announced a quarterly loss of nearly one billion euros. But the Chinese online retail giant assured that the future remains bright.

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This is the first time since 2012 that Alibaba has published results in the red. The Chinese online retail giant announced a loss of some 974.7 million euros in the last quarter of its fiscal year, weighed down by a record fine from Chinese regulators for violating anti-monopoly rules.

Long held up as a model of success in China, Alibaba was fined 2.3 billion euros last month for abusing its dominant position. An amount that represented 4% of its 2019 turnover. The authorities pinned the group, founded by the charismatic billionaire Jack Ma, for commercial practices deemed unfair, in particular the exclusivity imposed on merchants to sell their products on its platforms, to the detriment of competing sites.

Excluding the fine, a profit of more than 3 billion euros

This historic sanction came at a time when the digital giants were taking control, with Jack Ma’s vast empire being the first target. Without the fine, Alibaba would have made a profit of 3.3 billion euros, the Hangzhou-based group said. Since the row with Beijing in the autumn, the stock has lost 35% on the markets.

We accept this fine,” said Daniel Zhang, the group’s chief executive. We went through all sorts of challenges last year, between the pandemic, the competition in the market and this sanction from the authorities. But we think the best way out is to look ahead and invest for the long term,” he continued, promising to use any extra profits in technology and future areas.

Despite its setbacks with Chinese regulators, Alibaba said it was optimistic for the current year “given the potential of the market” in China. The group is aiming for a turnover of more than 119.2 billion euros in 2021. But the group, which has long been a pioneer in online commerce, has been facing increasingly aggressive competition in recent years. In March, for example, the Pinduoduo site, which specialises in low-cost group sales, overtook Alibaba for the first time in terms of annual users.

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Also under pressure in finance

The group, which is also active in finance, is also under pressure in this sector. Last year, regulators scuppered the huge IPO of its subsidiary Ant Group. The firm, which wanted to raise 34 billion dollars in Hong Kong and Shanghai, was prevented from doing so at the last minute by the authorities, who were worried about potential financial risks.

In the aftermath, Jack Ma, who lost his title of richest man in China in the sequence, had disappeared from the radar for two and a half months, a silence that had then raised many questions, particularly of a political nature. The billionaire resurfaced at the beginning of the week, posing in a blue T-shirt with employees and their children in disguise at the group’s headquarters in Hangzhou. A way of affirming, as much as possible, the “return to normalcy”.

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