Ali executives interpret the first quarter financial report: Southeast Asia is the focus of internationalization strategy

The group released the first quarter financial report of fiscal year 2021. The financial report showed that Alibaba’s revenue in the first quarter was 153.75 billion yuan, a year-on-year increase of 34%, and the net profit under non US GAAP was 39.47 billion yuan, with a year-on-year increase of 28%. < p > < p > after the release of the financial report, Zhang Yong, chairman of the board of directors and CEO of Alibaba group, Cai Chongxin, executive vice chairman and Wu Wei, CFO, attended the subsequent conference call to interpret the financial report and answer analysts’ questions. Eddie Leung, analyst of Bank of America Merrill Lynch: we see that the number of users of several large e-commerce platforms, including Alibaba, is already very large, which means that the same consumer may choose to shop on several platforms. I would like to ask what types of users and under what circumstances will they buy products on Alibaba’s platform in the future? Zhang Yong: for Alibaba, China’s retail market provides consumers with a comprehensive consumption experience, which includes rich products, competitive prices, and perfect consumer services, including pre-sale, in-sales and after-sales services, so as to provide a complete user experience and enable different consumers to purchase different products at different times We believe that Alibaba’s platform is still the preferred consumer platform for Chinese consumers, and we will continue to work hard for this. < / P > < p > from the perspective of merchants, we have brands such as tmall. Consumers can directly buy the products directly supplied by brand manufacturers, especially new products. At the same time, we also have Taobao, which provides a large number of, rich and products from various channels, as well as products from origin, factories, and agricultural products from different regions Consumers can meet their different needs. The first is to meet the needs of different levels of consumers, and the second is to meet the needs of consumers for different categories of goods. In some categories, even the more wealthy consumers, they also want to buy high-quality and low-cost goods, while in some categories, they may pay more attention to service and quality. Therefore, in such a large number of users, we expect to provide different consumers with The same choice, to meet their different needs. Alicia Yap, Citi analyst: a question about lazada. How to see the progress of e-commerce business in Southeast Asia? What are the differentiated competitive advantages of Alibaba’s business? What is the difference between the evolution of Southeast Asian market and that of China and other markets in the region? What is lazada’s position? Zhang Yong: Southeast Asian market is the focus of Alibaba Group’s internationalization strategy. We expect lazada’s operations to become a sustainable business driven by technology and artificial intelligence, and we have been widely applying all the relevant technologies of the group. The competition in Southeast Asian market is very fierce. Some companies, in order to achieve short-term growth, do not hesitate to subsidize buyers, sellers, or even subsidize logistics costs. Alibaba firmly believes in the importance of building a long-term business development. Our advantages lie in basic technology, our experience and knowledge. Alibaba has great advantages in artificial intelligence technology, search, recommendation, relevance, and matching degree of supply and demand. After lazada’s business transformation, the company has benefited from technology implementation. < / P > < p > secondly, as part of the company’s operation, we have great advantages in terms of supply. The goods produced in China can be provided to the Southeast Asian market in an endless stream. Lazada’s operation is not isolated from other businesses of Alibaba. It is part of Alibaba’s global network. Our supply path is not only local to local, but also China to Southeast Asia, and Other regions to Southeast Asia. The company hopes to eventually establish a global network to sell and buy globally. < / P > < p > in addition, lazada also has different business departments, such as lazmall, a sales platform for brand goods, which has relatively high delivery quality. We also have lazada bazaar, a platform to meet the needs of other B2C and even C2C merchants, and lazglobal, a cross-border e-commerce platform, through which consumers can directly purchase products from sellers in China and other countries. The company will continue to strengthen the construction of these platforms to provide integrated services for consumers. As for the difference between the Chinese market and the Southeast Asian market, the biggest difference is that in the Southeast Asian market, social networks are very popular, and businesses also like to use social networks to interact with consumers. Therefore, one of our major tasks is how to play the role of social networks in e-commerce business. We have been working hard in this area and will continue to do so. < p > < p > HSBC analyst Binnie WONG: a question about Taobao’s special edition. It is reported that the company will launch short video service recently to enrich the relevant ecosystem. I know tiktok also talked about expanding the business of electronic commerce, forming a closed loop. In terms of live broadcast, short video and social networking, what kind of differentiated competitive advantages does the company’s e-commerce business have? How does the company maintain a long-term relationship with consumers? Are consumers of live broadcasting stock users or new users added to the platform? < p > < p > Zhang Yong: Taobao special edition is aimed at users who are relatively price sensitive and provide them with high-quality and low-cost products. Our goal is very clear. Both live and short video are part of improving the experience of consumers using Taobao special edition, not all of them. We hope that factories and suppliers can use these tools to manage customers and provide different experiences for users. As for the live / short video business of other companies, for Ali, live broadcasting is a promotion activity and a part of the business operation activities. However, this kind of live broadcasting can not be carried out 24 hours a day, 7 days a week. The purpose of live broadcasting is to promote products and obtain new customers. However, they need a stable platform to support their daily and sustainable operation. Alibaba can provide such a platform. Businesses do find it very efficient to set up shops in Taobao and bring the highest return on investment. In fact, I just mentioned that the sales volume of Taobao live broadcast has increased by two times in this quarter. Live broadcasting has become a very important way to improve the consumer experience. It can provide businesses with more tools to achieve long-term sustainable development, and facilitate them to manage and operate the entire life cycle of consumers. Mark Mahaney, capital market analyst at Royal Bank of Canada: a question about Alibaba cloud. Is the growth of cloud business sustainable? Which vertical industries are currently on the cloud faster? What is the overall competition pattern of cloud market? Is the pricing very stable at present, or is the price under the pressure of competition? Zhang Yong: cloud is a very fast-growing business sector, which can be seen from our revenue structure. At present, all industries are undergoing digital transformation. Cloud is a very important step for any industry. We believe that all industries have this demand. Therefore, in the short and medium term, we will continue to see rapid growth. In the long run, we believe that going to the cloud will completely change the way enterprises work and the way enterprises cooperate. When it comes to different industries, it is true that cloud deployment in some industries is faster. Generally speaking, the fastest and most willing to take the lead in cloud deployment is Internet companies, because many businesses of Internet enterprises are easy to carry out in the cloud. However, we have recently seen that the pace of going to the cloud in other industries is also accelerating, including financial services, retail for consumers, and some public sector services, including electricity. Of course, these industries are still in the early stage of going to the cloud. We believe that cloud services are not only infrastructure, that is, IAAs. If cloud services are provided purely as IAS, the price competition must be very fierce, and our products are unlikely to achieve differentiation. Therefore, I also stressed last time that one of Ali’s basic propositions is cloud + intelligence, which should combine the power of data. We are also vigorously developing solutions for different vertical industries, working with our partners to maintain and improve our market leading position. < p > < p > Wu Wei: on the issue of competitors in cloud business, you can compare the companies in the same industry. They may not disclose specific operating indicators as we do, but we can make a calculation. Obviously, Alibaba cloud is the largest company in the cloud market, and the company has achieved 12 billion yuan revenue in a quarter, which is the second largest company after us Twice, and we’re growing fast. < p > < p > CAI Chongxin: if we compare the cloud market in China with the cloud market in the United States, we can see from many analysis reports on the market that China’s cloud market is about US $15 billion to US $20 billion, while the US cloud market is more than 8 times of this figure, so the Chinese market is now in the early stage of development. Through our observation, we believe that the Chinese market will certainly develop faster than the US market. Therefore, we feel very good at present, and the environment we are in is also very good. Whether it is the speed of digital advancement or the improvement of cloud service penetration rate, the original base is relatively low, only one eighth of that of the United States, so the future prospect is very broad. Analysts: the recovery of high-income and low-income consumers after the outbreak seems to be unbalanced. May I ask the management whether the epidemic has a structural impact on low-income consumers? How long will it take them to recover from this outbreak? In addition, the company’s last forecast of revenue for fiscal year 2021 was RMB 650 billion. Does it need to be adjusted now? < p > < p > Wu Wei: our revenue increased by 34% in the first quarter, and we will not adjust our outlook at present. We are very confident in business growth. This fiscal year has just passed a quarter, and there are still three fiscal quarters. If we need to update, we will inform you in time. < p > < p > Zhang Yong: on the segmentation of consumer groups. First of all, generally speaking, China’s consumption recovery is strong. China is the first country in the world to get rid of the impact of the epidemic and achieve a strong recovery. Except for a few cities and regions, the epidemic situation in all parts of the country has been effectively controlled, and the recovery of consumption is also optimistic. The growth of Alibaba’s Chinese retail platform in this quarter is very strong, and an important data is that in all levels of cities, the unit price per customer has increased, and the frequency of purchase has also increased, which means that people buy more and more frequently. If we look at it more specifically, I agree that the consumption of some low-income groups may still be affected by some uncertain factors, so they may be more cautious about some consumption, or even more cautious about the future economic situation. At present, a lot of employment is in the service industry, and the complete recovery of the service industry may take some time, which will also affect the service consumption of some people. < / P > < p > Barkley analysis