Alibaba

[Wildreamz]

Yes. VIE structure is a risk in extreme conditions (financial distress). As long as Alibaba is growing and profitable, and Chinese government continue to close one eye (as they most likely will, because it could invalidate hundreds of companies overnight, and offend some of their allies, such as Temasek); risk should be minimal.

(not vested)

[Wildreamz]

“数字税”大潮来袭 中国如何应对
http://www.xinhuanet.com/politics/2021-0...997630.htm

Next up on “common prosperity”: a data tax?
https://supchina.com/2021/11/22/next-up-...-data-tax/

Party leaders are mulling the prospect of a data tax on big tech companies which profit from personal data, adding to the mounting list of regulations bundled under Xi Jinping’s “common prosperity” drive.

* At the now infamous Bund Financial Summit in October, the mayor of Chongqing argued that big tech platforms should return “20% to 30% of revenue generated by transactions” to owners of the data.
* The venue was highly symbolic: it was the conference that Jack Ma had spoken at last year. His attack on China’s financial establishment may have been the trigger for the procession of events that are now referred to as the “common prosperity” drive.

[Wildreamz]

China Asks Didi to Delist From U.S. On Security Fears
https://www.bloomberg.com/news/articles/...rity-fears

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China's Pinduoduo revenue disappoints as pandemic-led shopping boom wanes

Nov 26 (Reuters) - Chinese e-commerce platform Pinduoduo Inc (PDD.O) posted quarterly revenue that missed market estimates on Friday as the appetite for online shopping diminished with vaccinations and relaxed curbs aiding the reopening of the economy.

[CY09]

This is what happens to Tech companies after the growth story ends. Many of the titans in China are now reporting decelerating growth. So markets are spooked because their profits have not grown to the sky high levels.

Hampered by CCP asking for a common prosperity "donation", they are profitable, but getting less profitable with declining revenue growth. On the contrary corporate USA is still growing profitably while maintaining their margins.

As for the non profitable tech companies across all countries, wonder what will happen to their share price when growth decelerates but they are still in the red

[Wildreamz]

This is what happens to Tech companies after the growth story ends. Many of the titans in China are now reporting decelerating growth. So markets are spooked because their profits have not grown to the sky high levels.

..

Hi CY09,

This is what happens to all companies after they stop growing (ie deceleration/stagnation/decline in earnings). The share price of "low growth" non-tech companies will also decimate if expected earnings is greatly reduced from past/expectations (see share prices of Singapore Telcos). It really isn't specific to Tech or growth companies per se.

In fact, most investors that got burnt (at least temporary), are mainly value investors (or at least, bargain hunters) that just recently piled into this name due to the recent price movement, and perceived undervaluation to past performance and growth rates.

[CY09]

Actually for Alibaba, the other issue is not just low growth. But its earnings and cashflow are falling due to narrower margins.

This is similar to Tencent Holdings and its affiliates where profits are flat. This is why people are selling off Chinese Tech Companies. It will be hard for China Tech companies to double in earnings or cashflow generation again when they have reached saturation base in China at a high revenue base.

Not trying to sound anti CCP, but in this way, China has effectively killed its privately run companies where their profits are curtailed; while the SOE enterprises are given free rein and have been experiencing double digit growths. This is the dichotomy I am observing in China on SOEs vs non SOEs.

My experience is that such actions will result in an un innovative country as SOEs tend to be quasi bureaucratic corporations where inefficiencies are abound. Hence it kills off your privately run good enterprises who are fixated on margin controls and innovations while rewarding the SOEs.

I dont think China is doing things correctly in a business sense but i guess currently politics prevail over business sense in China. It may be moving to the communist model where it is more important to find work for their people even if the work is not meaningful and they will reward such corporations. Hopefully the country dosent follow the path of USSR which will spell its demise

[Wildreamz]

Actually for Alibaba, the other issue is not just low growth. But its earnings and cashflow are falling due to narrower margins.

This is similar to Tencent Holdings and its affiliates where profits are flat.

..

This is due to many reasons, anti-trust related regulations, the rise of competitors (which is partly a by-product of regulations), "common prosperity" initiatives (direct and indirect), "strategic reasons" to intentionally compress margins (by reinvesting in growth initiatives) to avoid a target board on their back, among a myriad of other reasons.

I am also not anti-China per se, but pointing out these obvious risks on social media platforms such as Twitter and YouTube comments section, is starting to get some pretty defensive replies.

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Finally some positive Alibaba news (IMO):

Huawei, Tencent lose cloud market share as Alibaba, Baidu extend their lead, report shows
https://www.scmp.com/tech/tech-trends/ar...tend-their

*China’s cloud infrastructure services market saw third-quarter revenue grow 43 per cent year on year to US$7.2 billion, according to data provider Canalys
*The demand for cloud computing accelerated after the Covid-19 pandemic forced activities like work, shopping and entertainment to migrate online

[Wildreamz]

Alibaba to test gaming potential of metaverse as Big Tech firms stampede into virtual world
https://www.scmp.com/tech/big-tech/artic...s-stampede

*The new unit, wholly owned by Alibaba’s investment arm, has listed its major business as software development and services
*Yuanjing Shengsheng’s (元境生生) creation comes just two months after Alibaba’s cloud gaming business unit launched a new brand with a similar name

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阿里巴巴向元宇宙进军？云游戏或只是开始
http://stock.10jqka.com.cn/20211215/c635098035.shtml

[Wildreamz]

China's 'livestreaming queen' fined US$204 million for tax evasion

https://www.channelnewsasia.com/asia/chi...ion-239168

BEIJING: A Chinese influencer known as the "queen of livestreaming" has been ordered to pay 1.3 billion yuan (US$204 million) for tax evasion, authorities said on Monday (Dec 20), the biggest fine of its kind in Beijing's crackdown on celebrities.

Huang Wei, known by her username Viya, is one of China's most popular e-commerce influencers with more than 110 million followers on social media.

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Analysis: https://twitter.com/lillianmli/status/14...93286?s=20

1) So Viya, the top Alibaba / Taobao livestreamer's is being fined $210m for tax evasion. Her accounts on Weibo have been banned, livestreamed stopped.

This is no mere celebrity mishap but actually a huge blow to Alibaba's war against Douyin / WeChat / Kuaishou on attention.

2) A top livestreamer, like Viya, is not a pretty face selling a product. But they are an aggregator in the same way Amazon is an aggregator.

Her masses of fans tune in every night and their clout allows Viya to command rock bottom prices from brand she works with.

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(see link for full thread)

[CY09]

I would roughly guess what XJP is doing is to kill off speculations and agents (such as property, data marketing and streamers) who add little value to the chain. Essentially he does not endorse viral marketing or the dark arts of targeting consumer's soft spot to entice people to consume (think of the tuition industry). XJP is going after true quality growth which is very very unachievable in today's context. He is okay if alibaba acts as the virtual marketplace but not okay if they employ psychological tricks to entice people to buy--> the crudest example will be for bikini girls to dance on top of tables to sell beer, similar to what we see on some Facebook platforms in Singapore and streaming (and Hong Lim Food Centre).

Without layers of redundant jobs in between the product creator and end user, employment for all is difficult to achieve. This reduces the circulation of money going through many hands. To chase after real quality job creation, the only few shining light are cloud computing, semi conductor production, high end manufacturing and invention of new products. The other way is to increase the pay of blue collar workers such as nurses, craftsman and construction workers. This is where his common prosperity plan comes in

With a large number of China graduates graduating every year and companies such as Alibaba and Tencent being very efficient to use their own technology products as force multipliers, the Chinese premier is going to find it tough to continue this difficult path. This is why a certain small country we know has been growing its wealth mgmt and insurance industry since 2009 because it has been difficult to find quality jobs; instead setting up offices which encourages trading, wealth hoarding, financial well being courses and flipping has been the way it has kept unemployment low. It has been an effective policy in creating well paying employment for its own citizens, albeit causing some form of wealth inequality. It is a complete 180 policy from what XJP is likely striving for now