Alibaba

 Alibaba

ALIBABA

ALIBABA

 

Alibaba HK

 

Fiscal year is April-March. All values HKD Millions.

2022 2021 2020 2019 2018 5-year trend 

INCOME STATEMENT

Sales/Revenue 1,034,800 820,205 571,884 440,328 294,897

 Sales Growth 26.16% 43.42% 29.88% 49.32% -

 Cost of Goods Sold (COGS) incl. D&A 667,600 493,919 327,872 251,001 133,580

 COGS Growth 35.16% 50.64% 30.63% 87.90% 

Gross Income 367,200 326,286 244,012 189,327 161,318

 Gross Income Growth 12.54% 33.72% 28.88% 17.36% -

 Gross Profit Margin 35.49% - - - -

 SG&A Expense 251,325 221,811 136,825 119,305 78,117

 SGA Growth 13.31% 62.11% 14.69% 52.73% -

 EBIT 115,875 104,475 107,187 70,022 83,201

 Unusual Expense 31,401 1,930 4,605 3,322 (81)

 Non Operating Income/Expense (6,282) 8,670 8,346 258 501

 Non-Operating Interest Income - 83,238 81,855 51,536 38,073

 Interest Expense 5,955 5,118 5,812 6,064 4,202

 Interest Expense Growth 16.35% -11.93% -4.16% 44.32% -

 Pretax Income 72,237 189,335 186,972 112,431 118,308

 Pretax Income Growth -61.85% 1.26% 66.30% -4.97% -

 Pretax Margin 6.98%

 

CASH FLOW STATEMENT

Net Income before Extraordinaries 57,109 163,842 157,469 93,750 72,364 

Net Income Growth -65.14% 4.05% 67.97% 29.55% -

 Depreciation, Depletion & Amortization 58,305 54,783 47,602 43,327 25,947

 Other Funds 81,436 (15,038) (22,602) 4,216 22,012

 Funds from Operations 195,189 207,288 178,606 138,726 121,473

 Changes in Working Capital (22,017) 57,755 24,031 37,683 26,020

 Other Assets/Liabilities (33,906) (35,305) (42,422) 34,107 (8,299)

 Net Operating Cash Flow 173,173 265,042 202,637 176,409 147,493

 Net Operating Cash Flow Growth -34.66% 30.80% 14.87% 19.60% -

 Net Operating Cash Flow / Sales 16.73% 32.31% 35.43% 40.06% 50.02% 

 Capital Expenditures (64,684) (49,381) (50,922) (58,006) (35,157)

 Capital Expenditures Growth -30.99% 3.03% 12.21% -64.99% -

 Capital Expenditures / Sales -6.25% -6.02% -8.90% -13.17% -11.92% 

 Free Cash Flow 108,488 215,661 151,715 118,403 112,337

 Free Cash Flow Growth -49.70% 42.15% 28.13% 5.40% -

 Free Cash Flow Yield 4.44% - - - -

BALANCE SHEET

 Cash & Short Term Investments 605,406 613,026 410,225 237,511 262,524 

ST Debt & Current Portion LT Debt 17,081 20,763 8,654 26,243 7,519

 Long-Term Debt 200,951 194,430 152,292 130,635 149,096

 Total Current Assets 783,523 759,129 503,668 313,385 318,353

 Total Current Liabilities 473,832 447,559 264,303 242,581 169,410

 Current Ratio 1.65 1.70 1.91 1.29 1.88

 Quick Ratio 1.58 1.62 1.84 1.25 1.85

 Cash Ratio 1.28 1.37 1.55 0.98 1.55 

 Net Property, Plant & Equipment 312,919 263,484 154,677 116,429 90,340 

Total Assets 2,093,442 2,004,711 1,434,804 1,127,375 894,748

 Assets - Total - Growth 4.43% 39.72% 27.27% 26.00% -

Asset Turnover 0.51 - - - -

 Return On Average Assets 3.67% - - - -

 Common Equity (Total) 1,171,080 1,111,927 825,511 575,069 456,532 

Common Equity / Total Assets 55.94% 55.47% 57.53% 51.01% 51.02%

 Total Shareholders' Equity 1,171,080 1,111,927 825,511 575,069 456,532

 Total Shareholders' Equity / Total Assets 55.94% 55.47% 57.53% 51.01% 51.02%

 Accumulated Minority Interest 165,088 173,355 135,773 143,847 91,830

 Total Equity 1,336,168 1,285,282 961,284 718,916 548,362

 Liabilities & Shareholders' Equity 2,093,442 2,004,711 1,434,804 1,127,375 894,748

Average Growth Rates 

Alibaba Group Holding Ltd. 

Past Five Years Ending 03/31/2022 (Fiscal Year) 

Revenue +50.18%

 Net Income -0.06%

 Earnings Per Share -0.90% 

Capital Spending +16.80%

 Gross Margin +50.88%

 Cash Flow -0.69% 

 KEY STOCK DATA 

P/E Ratio (TTM) 239.54(12/16/22) 

EPS (TTM) HK$0.36 

Market Cap HK$1.83 T 

Shares Outstanding 21.18 B 

Public Float 14.69 B 

Yield 9988 is not currently paying a regular dividend. 

Latest Dividend N/A 

Ex-Dividend Date N/A ? 

SHORT INTEREST 

()

Letter from the CEO of Alibaba

Dear Fellow Shareholder,

It has been a year full of excitement — and a few challenges — for the Alibaba Group. It is a privilege to serve as this company’s CEO, and on behalf of the entire Alibaba family, I want to thank you for your support as we move along our journey as a public company. I am writing today to share some thoughts on our progress over the past year and what we have in store in the years ahead.

OUR ECOSYSTEM IS THRIVING

Last September, we made history with the world’s largest IPO, an accomplishment made possible by the countless small and medium enterprises and consumers who are the backbone of the Alibaba ecosystem.

More importantly, over the past year the Alibaba ecosystem has grown stronger each day. We have 3501 million annual active buyers on our China retail marketplaces, tens of millions of small- and medium-sized businesses operating on our marketplaces and have achieved total effective GMV of RMB2.44 trillion for fiscal 2015. We have made great progress on mobile with more than 289 million mobile monthly active users.2 Our annual mobile GMV was approximately RMB1 trillion, and we have become the world’s first truly great mobile Internet company. Moreover, Alimama is playing an increasingly important role in user acquisition and monetization on our marketplace.

Six years ago, we began investing in a cloud-computing platform, which began to bear fruit last year. Over one million enterprises are currently using our services, and we are working with several Chinese municipalities to create cloud-based smart cities.

Cainiao Logistics, in which we invested, not only has proven successful in fulfilling the logistics needs of our transactional marketplaces, but also has clearly laid out a long-term strategy that is under execution. It is building up both the physical infrastructure and the data network necessary to solve for the immediate as well as future challenges in logistics.

We also added new capabilities to our ecosystem, including UCWeb (the number-one third-party mobile browser in China, and the most popular mobile browser in India and Indonesia) and AutoNavi (one of China’s largest providers of mobile mapping services), along with a series of important investments to serve and strengthen our ecosystem. We believe health and entertainment will be increasingly bigger opportunities in the future, so we expanded and invested in AliHealth and AliPictures.

The global markets have seen a lot of turmoil recently, and some of the volatility has impacted Alibaba Group’s stock price. I would like to take this opportunity to share our views: Alibaba’s values are reflected in the pursuit of our dreams and creating value for our customers. This value proposition is not affected by the stock price. We remain committed as ever in our focus to provide the best service to our customers. Only by better serving our customers and continually creating new value for them can we reciprocate the trust and support that they and wider society bestowed upon us, while successfully creating value for our shareholders and ourselves.

We are proud to share that Alibaba today is healthier, stronger and more confident than ever before. We have strong faith in the Chinese economy and the future growth of our business.

PERSISTENCE IN THE FACE OF CHALLENGES AHEAD

There is no denying that we have encountered many challenges during the course of our development. It was also inevitable that the market wouldn’t always fully understand us. However, we view all these challenges as invaluable opportunities.

1. MARKET LEADERSHIP EXPANSION

Alibaba will continue to focus on value creation for our customers to further expand our market leadership. How are we going to do that?

First, our unique market position and business model ensures our continued development and ability to add value. We are operating an ecosystem that is the catalyst for a transformation of the business landscape, and our hope is to provide the basic infrastructure for the future of commerce. We are dedicated to enabling others, ensuring opportunity for all ecosystem participants to flourish together. We can only achieve sustainable growth if all active ecosystem participants are growing and share collective interests.

Second, we plan for the future and long-term development. We will further invest in third- and fourth-tier cities and rural districts in the coming years in addition to fortifying our market leadership in major cities. We believe that building a truly viable network connecting people and products all across China is essential to realizing its full economic potential.

Third, we are committed to a profit model that is scalable with high efficiency. Any company that is not profitable or cannot scale profitably will find it difficult to sustain growth and provide long-term value to customers no matter the size of its business.

2. TRUST AND SAFETY OF OUR MARKETPLACE

We continue to improve our marketplace mechanisms and are committed to addressing some of the realities of operating a global e-commerce marketplace, which affect all companies in our space. This includes taking on the tough challenge of counterfeit products and brushing. We have confidence that Alibaba Group is the most qualified company to come up with effective solutions, leveraging the valuable experience and data accumulated over the years along with the hundreds of millions of dollars invested in the fight against counterfeiting and to enhance consumer protections. We have also announced several new partnerships with global anti-counterfeit organizations and continue to see significant progress. In this environment of intense competition, we will continue to upgrade our products; adapt to market changes; meet the needs of consumers and businesses; and further upgrade the governance and health of our marketplace platforms.

3. INVESTMENTS

Our investments are integral to the strategic development of Alibaba Group. All our investments are implemented in strict adherence to our strategic vision. While acquisitions contributing to annual and quarterly results are easily understood, we cannot make acquisitions and investments for short-term growth. We have strict procedures and controls throughout our entire investment process, from pre-investment analysis to post-investment oversight. We will also publicly report on the progress of our various investments in due time.

OUR FUTURE AND OUR CORE STRATEGY

Alibaba holds fast to our mission to “make it easy to do business anywhere.” This is our core principle, which has served us well over the past 16 years without losing steam. It will continue to be our guide. Alibaba Group is not just about being a profitable company. We want to work hard to bring about incremental change, to improve efficiency and solve the problems of society, and to catalyze social change.

But we will seek to bring new meaning to our mission. We are also well aware that in today’s era of rapid change, no industry is isolated from challenges and transformations. The integration of the physical economy and the digital economy is already a reality. We must ensure our efforts to make it easy to do business anywhere remain relevant in this new era in order to continue to create value for customers, help businesses grow, bring new users into the economy, transform supply chains, reconceive the production of goods and services, and ultimately enhance the efficiency of society and solve social problems.

We have set ambitious goals for ourselves. Over the next five years, Alibaba Group aims to become the world’s first platform to surpass US$1 trillion in GMV. Over the next 10 years, Alibaba Group will establish an ecosystem that serves two billion consumers, supports 10 million businesses and creates 100 million job opportunities. This ecosystem will allow SMEs around the world to fully participate in fair, free, open and equitable commercial trade.

We will get there by concentrating on three key priorities: globalization; rural expansion; and big data and cloud computing.

In the future, Alibaba wants to help consumers and businesses buy and sell globally. In past years we undertook a great deal of planning and exploration, and 2015 is the inaugural year of Alibaba’s globalization. We are aggressively developing cross-border e-commerce, bringing high-quality Chinese goods to overseas consumers while helping international companies introduce their products to the Chinese market. Our success depends in large part on our people. We are recruiting the best talent from around the world to support our globalization strategy.

Serving rural China will continue to be a priority. Almost half of China’s population lives in rural areas,3 and consumer activity is currently constrained by geographic limitations. Meanwhile, there is good farmland in rural areas that remains underutilized due to geography and lack of proper infrastructure. Through the power of the Internet, we believe rural consumers can enjoy the same selection of goods, services and prices available to their urban counterparts. At the same time, there is tremendous demand for high-quality, fresh agricultural products all over China that can be fulfilled by rural communities through e-commerce. We believe online marketplaces will gradually change the rural economy and foster positive rural economic development.

During the agrarian era, power came from wind and water. In the industrial age, the energy source was oil. The energy source of the new economy will be big data and cloud computing will be the engine. Data is the fuel for our future. Our cloud-computing capabilities will serve customers in China and around the world, moving them from today’s IT age, where information is harnessed for personal benefit, to the DT (data technology) era, where data is a shared resource for the benefit of society.

INNOVATION AND CONTINUOUS UPGRADING OF OUR ECOSYSTEM

We will continue to innovate and upgrade Alibaba's ecosystem. This includes the development of our five key platforms: e-commerce, logistics, cloud computing, digital marketing and mobile Internet services.

We will continue to upgrade Alibaba’s core business of e-commerce. No matter if it is in wholesale or retail, cross-border or rural expansion, products or services, we want to make the ecosystem more vibrant, influential and prosperous. We will take into consideration a variety of factors in addition to scale of business in determining platform upgrades, including marketplace mechanisms, health of the ecosystem and level of vibrancy. We plan to expand the category of services offered, building on the existing rich and diverse range of physical product categories and services to meet the multidimensional needs of consumer lifestyles.

On logistics, we continue to believe that an open and collaborative approach with partners is crucial to our goal of shipping goods anywhere in the world. Cainiao Logistics is exploring ways to help logistics partners all over China improve efficiency by integrating information from each parcel and every warehouse through social collaboration methods, big data and cloud computing.

Cloud computing has started to take off after six years of steady investment. We have comprehensive plans for a rich product selection and diversity in customer base. Today our cloud computing business is enjoying accelerated and robust growth in a market with tremendous potential, quickly becoming an important basic infrastructure in China’s future business landscape.

We are also in the process of transforming Alimama. Currently, Alimama works as a tool to help merchants on Taobao and Tmall better reach their consumers. Alimama will leverage our big data to become a standalone digital marketing platform for businesses to run marketing campaigns both inside and outside our owned and operated properties. Our hope is that Alimama will serve customers across all industries and sectors in a few years’ time, spanning physical products to entertainment and offering everything from marketing to local services.

We are also expanding our products and services into mobile service technologies. In addition to mobile Taobao and mobile Tmall, we own non-e-commerce-related web services built on UCWeb and Auto Navi. Web browsing, searching and geo-mapping capabilities are fundamental to the mobile era, and help to integrate our businesses more seamlessly and create endless possibilities for our development of mobile technologies.

FOSTERING TALENT OF THE NEXT GENERATIONS

We believe in the power of youth to keep Alibaba vibrant and ensure our future continuity. Therefore, at the beginning of May this year, in addition to my taking on the role of CEO, we appointed several younger executives to front-line decision-making roles. Over the years we have made significant investments in talent development succession planning so that at every stage of our development, we will have a strong team of young leaders to rise to the occasion. Today, our executive team is composed of people born in the ’70s, and more than half of Alibaba’s managers were born in the ’80s.

In our rapidly changing operating environment, we know the innovation and creativity of our people is our greatest asset. We will continue to challenge, reward and develop our talent to ensure our sustained growth and success.

Alibaba is a company driven by its vision, and our development is guided by strong company culture and values. We have always been idealistic yet realistic. As the leader of a new generation of management, I assure you we will continue to strengthen the Alibaba ecosystem, enabling the success of more people and creating more value for our customers and partners, the community and our shareholders. Thank you again for your investment in Alibaba.

DANIEL ZHANG

Chief Executive Officer, Alibaba Group

Footnotes

• 1. For twelve months ended March 31, 2015.
• 2. For the month ended March 31, 2015.
• 3. World Bank, as of 2014.

http://ar.alibabagroup.com/2015/letter2.html


http://ar.alibabagroup.com/2015/index.html

Alibaba - Jack Ma's first letter after the IPO of Alibaba.

Dear Alibaba Group Shareholders,

I would like to take this opportunity, on behalf of everyone at Alibaba Group, to express my deepest appreciation to our customers, employees, investors and partners who have believed in us and supported us over the past year as we embarked on our journey as a public company.

It has been a volatile time for global markets, and we have watched these developments closely. We have a clear vision of where Alibaba is and where it’s headed. Over the past year we have become healthier, stronger and more confident and have made great progress in our strategic development.

What I said on the occasion of our IPO last year when we raised US$25 billion bears repeating. What we earned was not money, but trust. Maintaining that trust means we must listen carefully to the views of others. It also means we must reflect on the challenges we have when communicating with our shareholders and the public. The majority of our products and services are not accessible outside China, which makes it difficult for our overseas shareholders and stakeholders to fully understand the company and what it is like to be an Alibaba customer. As a result, many are trying to understand us through the lens of an outsider and may not have a full or accurate understanding of who we are and what we do.

So, I would like to share some of our thoughts about Alibaba Group here with you:

I. ALIBABA GROUP’S STRATEGY IS TO BUILD THE INFRASTRUCTURE OF COMMERCE FOR THE FUTURE. E‑COMMERCE IS ONLY THE FIRST STEP.

Many people confuse us with other e‑commerce retailers and therefore assess our business model solely on the basis of the growth rate of our gross merchandise volume (GMV). In fact, this narrow definition of e‑commerce is only a fraction of the Alibaba Group strategy. What we are building is an open, transparent and collaborative infrastructure for commerce.

At the end of June 2015, Alibaba Group has 34,000 employees, and fewer than 10,000 of those employees are directly involved in our China retail marketplaces and related GMV. Our platform model is highly efficient as we generate close to RMB3 trillion GMV at an average of nearly RMB300 million per person. We continue to improve our technology and products in order to win market share through innovation and technology — we never rely on the strategy of simply increasing headcount. In the coming years, we will have the opportunity and capability to build the most efficient business organization among the large global companies while creating the most job opportunities through our ecosystem.

Setting aside the employees working on our China retail marketplaces, our B2B business and backroom operations teams, close to half of Alibaba’s workforce is focused on building businesses that have long-term strategic importance. We firmly believe that only by investing in the future and adhering firmly to our long-term strategy will Alibaba have a true future.

It is only through Internet technology and big data that we can establish a truly meaningful innovative infrastructure for commerce that will provide comprehensive support to small and medium-sized enterprises. The less developed business infrastructure in China provides Alibaba a unique opportunity to create the infrastructure of China’s future commerce, not just the infrastructure of e‑commerce. Around half of Alibaba Group’s workforce and our affiliated companies, including Ant Financial and Cainiao, are working on important areas of our ecosystem, including logistics, Internet finance, big data, cloud computing, mobile Internet, advertising and the so-called double H industries — Health and Happiness (the big data-based healthcare and digital entertainment businesses which will take 10 years to become data-driven).

Today, Cainiao, our logistics affiliate, helps handle around 10 billion packages every year; our affiliated Internet financial arm serves more than 400 million active users; our cloud computing business, which is maintaining an annual growth rate of over 100%, is taking a leading role in the world; and our mobile-based products, including search, map and browsers, are providing vital infrastructure services to Chinese users. In the future, we will continue to provide a broad spectrum of services to tens of millions of Chinese companies, spanning e‑commerce, financial services, logistics, cloud computing and big data, marketing, and cross-border trading services.

Our strategy is long-term, so although the above new platforms we are building are still in progress and have yet to yield substantial revenue, their prospects are exciting and we are making headway.

We firmly believe the era of heavy business conglomerates is gone. The economy of today and tomorrow will rely on a platform and ecosystem approach. Sustainable growth can only be achieved when enterprises operate within an ecosystem, participate in collective development and share common interests.

Today, some of our strategic businesses are yielding initial results. Take logistics as an example. In fiscal year 2015, Alibaba generated more than 24 million packages on a daily basis handled by the more than one million delivery personnel employed by our logistics partners. We expect that in 10 years, the number of delivery personnel in China will exceed 10 million. This growth will be driven by social forces rather than by any single company. We also believe that over the next three years, Cainiao’s unique services will bring significant changes to the logistics sector and users will be able to enjoy enhanced and standardized services. Logistics will become a standard offering of e‑commerce companies rather than a core competence. Therefore, Cainiao’s mission is to enable delivery firms to provide standardized and formalized services.

II. CHINA’S ECONOMIC DEVELOPMENT AND ITS RELATIONSHIP WITH ALIBABA GROUP

Recently, signals of China’s economic slowdown have triggered widespread concern and, I believe, overreaction around the world. This reaction illustrates how China’s economy has been fully integrated into the world economy with a considerable degree of influence. However, we believe an economy that continues to experience such rapid growth is neither realistic nor sustainable and China shouldn’t aim for such growth.

For example, the cost of high-speed economic growth has been the destruction of ecological resources. After many government vows to upgrade the economy, the financial crisis in 2008, fatigue in investment and exports and unrealistic expectations of ever-faster growth, China’s economy has reached a point where it must upgrade and update. The current GDP growth pattern is not sustainable. In fact, if China continues to pursue the high growth rates of the past, then China will pay a high price.

I firmly believe that for the future, the advantages of a slowdown in China’s economic prospects far outweigh the disadvantages. China’s economic development is no longer in need of increasing its numbers, but of increasing its quality. China is the world’s second-largest economy, and even with a GDP growth rate of 5%, the growth rate is more than double that of developed economies.

In the past 30 years, the Chinese economy has benefited from the liberalization of thinking and a more open economic policy. However, we have not focused on fostering the creativity and innovation of people, which is the most important factor in stimulating productivity. High GDP growth relies on the capacity of manufacturing, while the improvement in quality of life relies on innovation. I believe there is much more we can do in this regard.

China’s economy is transitioning from an export sales-driven economy to a domestic-consumption economy, and from investing in infrastructure to operating infrastructure. China will use advanced technology and a new market-driven approach to solve the issue of sustainable development. All in all, China’s economy has immense potential. It will not be easy, but China’s future “economic miracle” will lie in its ability to boost productivity and its use of big data and Internet technology to stimulate domestic consumption and generate exponential development opportunities.

Will the economic slowdown have any impact on Alibaba?

At the end of March 2015, the GMV of Alibaba’s China retail marketplaces had already reached RMB2.44 trillion, accounting for 9% of China’s retail consumption. We predict that over 50% of China’s consumption will be conducted online within 10 years, and that means massive potential for the e‑commerce market. On this basis, more than 80% of China’s enterprises will need to use an Internet-based e‑commerce platform, logistics network, financial services, cloud computing and cross-border services. Alibaba’s investments today will make this possible. Our business is no doubt closely related to the Chinese economy, and we believe the services Alibaba Group will provide in the future will be the fourth indispensable resource for enterprises, after water, electricity and land.

I do not agree with the notion that consumption will decline as economic growth slows. It is inaccurate to think that the slowdown of the Chinese economy means that Chinese people are unwilling to spend. The Chinese lifestyle philosophy is different from that of the West. Consumers in developed Western economies are good at spending the money they believe they will earn in the future. To the contrary, Chinese people are constantly saving for the future. The saving rates in China are some of the highest in the world. During economic downturns, Western consumers may have trouble borrowing to maintain their lifestyles, but their Chinese counterparts have savings for retirement or for times of crisis. Therefore, slower economic growth does not mean declining purchasing power. With the convenience and value-for-money merchandise offered by e‑commerce, consumers are becoming more and more willing to shop online.

China’s middle-class population is close to 300 million and in 10 years, that number is going to reach 500 million. Yet the level of consumption among the middle class is still well below their income level. Bearing in mind that consumption is triggered by innovation, it follows that Alibaba’s business model will be a strong driver of domestic consumption in China going forward. This is clearly illustrated by the consumption volume of Alibaba’s 11.11 Global Shopping Festival. China does not lack domestic consumption power. Being thoughtful about how to ignite that power is the key. Whether it is about facilitating imports, driving domestic demand in tier 3 and 4 cities or unleashing the purchasing power of a rural population more than 600 million strong, Alibaba has a great deal to offer.

Great companies are born in challenging times. We believe the transformation of the Chinese economy from a focus on quantity to quality will lead to the formation of some of the world’s most remarkable enterprises. Alibaba hopes it will become one of them.

III. FUTURE DEVELOPMENTS: GLOBALIZATION, RURAL DEVELOPMENT AND BIG DATA CLOUD COMPUTING

Our key priorities for the next decade will be globalization, development of the rural economy and big data.

In terms of globalization, we aim to help small- to medium-sized businesses around the world expand beyond their borders by leveraging the power of e‑commerce, Internet financing, big data, and marketing and logistics platforms. We believe the experience of Alibaba Group in China can be applied globally, giving all SMEs the opportunity to participate and compete in a transparent and fair marketplace. We further believe that future economic globalization will allow consumers everywhere to access a truly global purchasing experience. We have been preparing for a considerable amount of time to make this vision a reality. It may take another one or two decades to complete the mission, but we won’t quit until we live up to our true mission “to make it easy to do business anywhere.”

China has a rural population of more than 600 million, and the business infrastructure in China’s rural areas is poor. However, with the growing popularity of mobile phones, tremendous changes have taken place in these areas. Taobao Marketplace and Tmall, in particular, link farmers directly with urban life. We are now renovating rural infrastructure by leveraging mobile Internet technology, big data, logistics and Internet financing. We do this not only because of the tremendous market potential, but also to close the digital divide, promote information equity and help alleviate poverty through economic opportunity. We are witnessing great changes in China’s countryside, and we encourage our shareholders to visit China’s rural areas to see these changes for themselves. What we are doing today may become a development model for many developing countries in the future. At this historic time, Alibaba Group must embrace change, invest in change and drive change.

Over the past six years, Alibaba Group has made a significant strategic investment in cloud computing and big data services. We believe that mankind is departing the IT era and entering a new era of DT (data technology). In the society of tomorrow, data will be the most important means of production, innovation and social development. People and data will be interwoven. We must continue to invest in the development of data technology. Alibaba is fundamentally a data-driven company. We firmly believe that we will see substantial returns from the investments we have made in data and related technologies over the past six years and will continue to make in years to come. Still in its infancy, we are working to make data and cloud computing the foundation for an inclusive economy. The future potential is massive.

ALIBABA’S CHALLENGE

Alibaba has challenges, but what concerns us may be different from what some may think, and we never shy away from talking about competition or our competitors. Over the past 16 years, we’ve never been short of competitors, nor have we benefited from any form of protection. We’ve blazed our own trail through fierce market competition. We have learned to survive while maintaining our ideals and values. It hasn’t been easy.

We have never been afraid of confronting new challenges. We excel over our competition by engaging in effective strategic planning and flawless execution.

Alibaba seeks to initiate a business revolution. Our future is the infrastructure of commerce. We are in the business of enabling sales transactions — this means we never compete with the businesses on our platforms. Our so-called competitors are also businesses that we want to support and help scale. In other words, it is not appropriate and an oversimplification to view companies that are engaged in e‑commerce as competitors to the Alibaba Group. Comparing us to other e‑commerce companies is not an apples-to-apples comparison. In our case, our relationship with merchants on our platform is more like apples and the apple tree.

Our biggest challenge is not our competition, but our ability to grasp the future and manage ourselves. With our ambitious vision and unique ecosystem, we need professional talents from different fields, a unique culture and an organization that can adapt to future developments. Our colossal business ecosystem and intertwined structure will require not just more corporate managers, but leaders, innovators and trailblazers. This is a tremendous challenge for a 16-year-old company with a workforce with an average age of only 29. There is almost no reference for us when we develop our talents, corporate culture, management model, and the relationship between our business units and government departments. As a young company, we are committed to a mighty challenge, one that’s unprecedented and beyond the imagination. But this is a golden opportunity. We have told ourselves over the past 16 years: If not now, when? If not us, who?

This is the first letter I have published since the IPO on my thoughts about Alibaba’s development strategy to our investors. Thank you again for investing in us and being part of the development of a future business ecosystem. We are grateful for the trust you have placed in us and what we will accomplish in the future.

JACK MA

Executive Chairman

Alibaba Group Holding Limited

http://ar.alibabagroup.com/2015/letter.html


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