The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
HANGZHOU, China — Alibaba Group Holding Ltd. surrendered the title of Asia's largest Internet company to Tencent Holdings Ltd., capping a 10-month slide for the e-commerce giant that wiped $140.7 billion from its market value.
The shares of Alibaba fell 4.7 percent to $60.91 at the close in New York on Tuesday, making the online marketplace worth $153 billion. That's below Tencent's value for the first time since billionaire Jack Ma oversaw Alibaba's record-breaking initial public offering in September 2014.
Alibaba’s reliance on consumer spending in China, where it gets 83 percent of its revenue, leaves it vulnerable to the domestic slowdown. Tencent is adding pressure by buying Hollywood content for its video platform, investing in cloud computing and on-demand mobile services, while forging an e- commerce alliance with JD.com Inc.
Tencent is defying a three-month downturn in Chinese stocks by gaining 15 percent this year in Hong Kong trading. The owner of China’s most-popular messaging services WeChat and QQ closed trading Tuesday with a market capitalization of HK$1.22 trillion ($156.9 billion).
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China may have lent its shares a hand. Last month, the government cut rates for the fifth time since November and resumed intervening in equities, seeking to arrest a stock market rout that wiped out trillions of dollars in value. That’s helped prop up stocks in neighboring Hong Kong.
Chinese Slowdown
Alibaba shares went in the opposite direction as investors’ early optimism over its prospects was superseded by worries about a Chinese economy headed for its slowest pace of annual growth in 25 years. Alibaba debuted Sept. 19 and surged 38 percent the first day.
The Hangzhou, China-based company has since faced several obstacles that weighed on its share price, including slowing sales growth, criticism by the Chinese government about its business practices and lawsuits in the U.S.
Alibaba fell below its $68 IPO price for the first time on Aug. 24. That prompted Chief Executive Officer Daniel Zhang to urge employees not to focus on the share price but rather the company’s longer term.
After blanketing urban China, the company now wants to expand into rural areas and abroad, particularly Russia and Brazil. Ma said in March he wanted more than half of of Alibaba’s revenue to come from overseas.
The company also is trying to help Chinese buyers gain more access to brands from the U.S. and Europe.
Tencent Messaging
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Tencent posted record quarterly profit in August. By comparison, Alibaba trailed analysts’ revenue forecasts in two of the past four quarters, and its sales grew at the slowest pace in at least three years.
Tencent is capitalizing on the more than 1 billion users of WeChat and QQ. Billionaire Chairman Ma Huateng is finding new ways to make money through advertising, payment services and health care through the apps.
Advertising revenue almost doubled to 4.1 billion yuan last quarter, boosted by higher-cost video ads linked to hit shows like The Voice of China and NBA basketball games.
Tencent earns more than half its revenue from games, and in April invested $126 million in San Francisco-based Glu Mobile Inc. to add a portfolio of action and role-playing games for smartphones.
By Lulu Yilun Chen; editors: Michael Tighe, Edwin Chan, Reed Stevenson.
The French beauty giant’s two latest deals are part of a wider M&A push by global players to capture a larger slice of the China market, targeting buzzy high-end brands that offer products with distinctive Chinese elements.
Post-Covid spend by US tourists in Europe has surged past 2019 levels. Chinese travellers, by contrast, have largely favoured domestic and regional destinations like Hong Kong, Singapore and Japan.
While travel to Europe remains muted, Chinese shoppers are flocking to Singapore, Thailand and other Southeast Asian destinations where fashion retailers are hoping Lunar New Year marketing investments will pay off.
Local fashion designers experimenting with puffers and other down clothing have scored collaborations with outerwear companies like Moncler and attracted the attention of prominent international retailers like H.Lorenzo.