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Alibaba: There's a trade war going on? Could've fooled us – just check out these swollen digits

Cloud biz still dwarfed by retail but everything's up

Alibaba, China's nearest equivalent to Amazon, is weathering the "uncertain economic" landscape caused in part by the "trade war" between the US and Middle Kingdom governments.

The group reported Q1 revenues of ¥114.924bn ($16.751bn) for the three months to 30 June fiscal '20, up a whopping 42 per cent year-on-year. There was an upward swing recorded across all of its divisions, though the online retail, food delivery services and cloud services were the big growth drivers.

The Core division – comprised of China retail, wholesale, international commerce, logistics and local consumer services – was up 44 per cent to ¥99.544bn ($14.133bn/ £11.63bn). The retail element brought in ¥75.601bn ($11.013bn/ £8.835bn)

The relatively affluent middle class in China, 300 million people living in large cities, continues to be one of the "big secular" trends that Alibaba has tapped into, said exec chairman Joe Tsai on an earnings call.

"We have talked about the desire by these consumers to upgrade the quality of product they buy, especially the pursuit of brand and imported goods," he added.

Clearly Apple might have something to say about that, having watched its iPhone sales drop by double digits in the first half of its year. But that's another story.

Tsai also spoke of the "rise of urbanisation" happening in third, fourth and fifth-tier cities in China, with roughly 500 million people in these locales with a consumption economy of $2.3 trillion that is forecast to rocket to $7 trillion by the end of 2030. Chinese companies tend to plan for the longer term rather than being driven by the whims of Wall Street.

Alibaba had 674 million active monthly users in its Core unit, up 20 million on the prior quarter.

Cloud Computing remains a fraction of the retail operation but is growing fast, up 66 per cent year-on-year to ¥7.787bn ($1.105bn). This was based on "an increase in average revenue per customer," said Alibaba CEO Daniel Zhang.

The fourth largest cloud provider worldwide didn't break out public-versus-private cloud sales figures, but said private jumped 250 per cent year-on-year.

Zhang said the work is to boost "high-valued added service while rationalising... commodity products". He added that it is still beefing up investment in "talent and technology infrastructure".

Alibaba has 52 availability zones made up of one or more data centres in 19 regions around the world.

The Digital Media and Entertainment unit was up 6 per cent to ¥6.312bn ($896m) and revenue from the Innovation initiative and others jumped 21 per cent to ¥1.281bn ($182m).

Group operating profit came in at ¥24.375bn ($3.46bn) versus an operating loss of ¥4.863bn ($690m)a year earlier. Net income was ¥21.24bn ($3bn). ®

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