Alibaba’s Struggles and PDD’s Success

by Warren Seah

When a tough situation befalls you, the last thing you want is to be surrounded by others who seem to be thriving. This is precisely the predicament that global technology corporation Alibaba finds itself in when compared to its Chinese internet peer, PDD Holdings.

Alibaba has been grappling with the challenge of reassuring investors about its strategic plans, particularly after an unexpected decision to halt the spin-off of its cloud unit. This setback is believed to be a consequence of the U.S.’s imposition of controls on chip exports, further complicating matters for Alibaba.

As a result, Alibaba’s ADRs (American depositary receipts) experienced a decline of 2.6% during premarket trading on Wednesday, with a noteworthy 13% decrease throughout this year until Tuesday’s market close.

Conversely, PDD Holdings, the parent company behind popular retail platforms Pinduoduo and Temu, has been impressing investors with its robust revenue growth, showcasing exceptional performance in both the United States and other international markets.

During premarket trading, PDD’s ADRs experienced a marginal decline of 0.5% following the announcement of its third-quarter earnings. Nevertheless, it is worth noting that PDD’s American depositary receipts witnessed an incredible surge of 70% throughout this year until Tuesday’s close.

Despite the disparity in fortunes between Alibaba and PDD Holdings, investors remain captivated by the undeniable potential within the Chinese internet market.

The Divergence between Chinese E-commerce Giants

The implications of Ma’s post for Alibaba are not entirely clear. Since stepping down as chairman in 2019, Ma is no longer involved in the day-to-day operations of Alibaba. Additionally, he experienced a period of unavailability after Beijing regulators halted the plans for his fintech company, Ant Group, to go public.

Alibaba stockholders can only hope that Ma’s post signifies a firm determination to overcome challenges. Notably, Ma mentioned the potential of e-commerce driven by artificial intelligence, an area in which Alibaba aims to establish itself as a leading force in the Chinese market.

Alibaba’s AI Ambitions and the Challenges Ahead

Alibaba, the Chinese e-commerce giant, has been facing obstacles in pursuing its AI ambitions due to restrictions imposed by the United States. The company is uncertain about its ability to acquire the most advanced chips, which has the potential to impact its AI development significantly.

Currently, Alibaba finds itself entangled in a domestic price war against PDD’s brands. This traditional form of retail competition hinders its progress in matching the explosive growth of its international operations. To maintain its competitive edge, Alibaba must swiftly overcome this challenge.


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