Chinese billionaire Jack Ma is not the only winner in Alibaba’s success

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CHINESE e-commerce giant Alibaba has almost doubled its profit to $2 billion on the back of soaring

Alibaba, which has made billionaire founder Jack Ma one of China’s richest men, is a dominant player in online commerce and its robust earnings highlight the strength of the sector even as the country’s broader economy sputters.

In its quarterly results released on Thursday, the company revealed its net profit attributable to ordinary shareholders soared 98 per cent from a year ago to $2 billion (10.65 billion yuan) in the quarter ended March 31.

That was on the back of a faster-than-expected 60 per cent surge in revenue to 38.58 billion yuan — a key figure for gauging China’s increasingly important consumer sector.

And while the online shopping giant has been raking in billions, a raft of Australian businesses have been profiting along the way.

Chemist Warehouse, Goat soap and Banaban Virgin Coconut Oil are among local companies to have tallied millions of dollars worth of sales from selling their wares Alibaba’s platforms, while savvy Gen Y entrepreneurs like New Zealand’s Iyia Liu have gotten rich by reselling products bought on the site.

Flush with cash, Alibaba said it had authorised an $8 billion ($US6 billion) buyback to take place over two years.

“Our robust results demonstrate the strength of our core businesses, as well as the positive momentum of our emerging businesses, including cloud computing, where we continue to see strong growth,” said Maggie Wu, Alibaba’s chief financial officer.

Full-year net profit fell 39 per cent to $US8.6 billion (43.68 billion yuan), dragged down by a weak performance in the first six months of the year.

CORNERING THE MARKET

Alibaba’s Taobao platform is estimated to hold more than 90 per cent of the consumer-to-consumer market. Its Tmall platform is believed to handle over half of business-to-consumer transactions.

But China’s largest online shopping portal has been on the defensive since the office of the US Trade Representative put Taobao on its annual blacklist in December, saying it was not doing enough to curb sales of fake and pirated goods.

Alibaba, often compared to eBay or Amazon of the United States, has been expanding outside its core e-commerce business into sectors ranging from sports to entertainment.

Alibaba vice chairman Joseph Tsai told a conference call the company was seeking to capitalise on changes in the Chinese economy.

“Chinese consumers are driving the shift of the Chinese economy from an export and investment-led to a consumption-led economy,” Mr Tsai said.

“When looking at investing in China, this secular trend is absolutely important to pay attention to, and that is what we focus on when we plan our strategy rather than on quarter-to-quarter cyclical trends.”

In October, Alibaba Pictures took a minority shareholding in Steven Spielberg’s Amblin Partners, a film creation company that includes DreamWorks studios.

Revenue from digital media and entertainment soared 234 per cent year-over-year in the quarter to 3.93 billion yuan.

“Investors will be paying attention to Alibaba’s top-line growth guidance for next year,” Ray Zhao, an analyst at Guotai Junan Securities, told Bloomberg News.

“Alibaba has done a lot of acquisitions this past year, so revenue growth might not be as fast as people expect.”

A GROWING USER BASE

The results came after Ant Financial Services Group, which is controlled by Alibaba and valued at roughly $US60 billion last April, reportedly delayed its highly anticipated public listing.

Ant is behind Alipay, a platform that accounts for 80 per cent of electronic payments in China where it is used for e-commerce at Alibaba online venues and a large number of mobile applications.

Mobile monthly active users on Alibaba’s China retail marketplaces reached 507 million in March, an increase of 97 million from a year earlier.

Daniel Yong Zhang, a director and chief executive, said the various Alibaba platforms deliver synergies that help each other.

“We are excited by the multiplied effects that can be gained through collaboration between our different platforms,” Mr Zhang said.

“There is immense potential for growing the user base of our core commerce platforms through conversion of users in our digital media and entertainment metrics as well as through the payment platform of our affiliate company Alipay.”

Chinese billionaire Jack Ma is not the only winner in Alibaba’s success

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Article Chinese billionaire Jack Ma is not the only winner in Alibaba’s success compiled by www.news.com.au