Alibaba Posts Robust Revenue Growth Despite China’s Slowing Economy

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Alibaba posted strong quarterly earnings today, with revenue jumping 32 percent as shoppers spent more money on the e-commerce company’s mobile sites and apps.

Chief executive officer Daniel Zhang said during Alibaba’s earnings call that China’s expanding middle class is driving the company’s growth. In particular, younger people who have “little interest in saving compared to their parents” and see online shopping for trendy items as a pastime will not only boost revenue in the future, but also generate valuable data for advertisers on Alibaba’s sites.

Other growth drivers include rural development, which means merchants in cities will have a larger potential customer base, while farmers in return can use Alibaba’s platform and logistics to sell their harvest to urban dwellers. Cross-border commerce, or international brands selling goods to Chinese consumers, is also doing well and drove sales on Single’s Day (the Chinese equivalent of Black Friday) to record levels in November.

Despite continuing concerns about the slowing Chinese economy, Alibaba’s vice chairman Joseph Tsai sounded an optimistic note during its earnings call: “The Chinese economy is going through a structural shift from high growth to more moderate, but sustainable growth.”

The company posted total revenue of 34.54 billion RMB (about $5.3 billion). Revenue from its retail marketplaces was 28.7 billion RMB ($4.4 billion) a 35 percent increase, while mobile revenue jumped a strong 192 percent to 18.7 billion RMB ($2.9 billion).

Gross merchandise volume rose 23 year-over-year percent to 964 billion RMB ($149 billion), with sales from Alibaba’s mobile platform making up 68 percent of that amount. Despite Alibaba’s strong revenue growth, its GMV still lagged behind the 28 percent growth posted last quarter.

Koubei, the online-to-offline marketplace that Alibaba and its subsidiary Ant Financial plowed almost $1 billion into last summer, made 15.8 billion RMB ($2.4 billion) during the quarter. Its growth will be closely watched as Alibaba and rivals like Tencent invest large amounts of money on their O2O strategies.

Aliyun, Alibaba’s cloud computing unit, made 819 million RMB in revenue ($126 million), up 126 percent from a year ago.

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