Chinese digital giants face a tough end to the year…and an uncertain future for their businesses. , the Chinese giant in which a large drop in its profit stands out, and anticipated a slowdown in its growth for the next fiscal year.
The company claims that this is due to competition in the eCommerce market in China as well as “slowing market conditions” specifically due to factors such as the outbreak of Covid-19 and problems in the supply chain.
Alibaba shares fall 11% as uncertainty about its future prospects increases
This disappointing forecast was preceded by the sales, which failed to meet analyst estimates for the second consecutive quarter: Although Alibaba registered an increase in its revenues for the quarter, these were 29% less than expected, while its outlook for 2022 is about 20% to 23%, which is below the 27% that analysts projected.
As a result, more than 11% last Thursdayand so far in November, it has lost about 15% of its capitalization on the New York Stock Exchange.
As mentioned in the , some risk factors such as «a regulatory environment that affects Alibaba’s business operations” Y “regulations and concerns about privacy and data protection”, have given this result. Pressure on Alibaba from the Chinese government appears to be continuing from the first confrontation a year ago, when Ma questioned China’s trade and economic rules thereby suspending Ant Group’s stock market debut, which would have been, under the argument that the company did not meet the required requirements.
Also, last April Regulators imposed a record fine of more than 2.4 billion euros on Alibaba, accused of monopolistic practices. The impact of Chinese regulatory practices was noted during the past, formerly known as Single’s Day, the largest sales event in Chinese commerce that this year registered the lowest growth in its history, in which the large companies of the Asian country have been forced to contribute to the government’s policy of “common prosperity”.
Other Chinese giants slow their growth
Of course, Chinese regulatory pressure has not only affected Alibaba, and other Chinese digital giants have slowed their income, including Tencent, owner of QQ and , which showed the lowest figures since 2004, when it went publicwhile its prospects for next year remain uncertain as the gaming giant has also had to adjust to new regulations that include limits on the time children can spend playing video games, Not to mention, the Chinese government hasn’t approved any new video games since August.
Given this scenario, Tencent’s director of strategy assured that he expected this suspension to be temporary, since the company has a large catalog of games ready for approval, in addition to ensuring that the new limits on time of use are not expected of video games in China to spread to adults.
Secondly, JD.Com posted a 25% increase in its revenue from the third quarter of 2021, however, due “to the cost of revenue and marketing, general and administrative expenses.”
JD’s net loss was around 450 million euros in the quarter, mainly due to a decline in the value of the Chinese giant’s investments.
ByteDance continues to grow… at a slower pace
Despite this, it is not all bad news for the Chinese digital giants: ByteDance, owner of has reported a growth in its gross income of 60%, lower than the result of last year when it managed to double its figures, but much faster than that of its peers in the midst of the regulatory environment.
Most of ByteDance’s revenue comes from its domestic apps Douyin, the Chinese version of TikTok, and news aggregator Jinri Toutiao, despite being non-gaming related last October.
Despite his achievements, ByteDance may not go public for another year or more given the regulatory pressure on the digital sector in China.
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