Alibaba Shares Fall On Slowing Chinese Economy

Stocks for Alibaba, China’s eCommerce giant, are down 1.7 percent after the president of the company admitted that China’s consumer market is slowing down, according to reports.  

“This is a market that requires patience,” said Alibaba President J. Michael Evans on Monday (Jan. 14), according to The Wall Street Journal. ”But if you think about where the country is going in the long term … The future, I think, looks very good, notwithstanding some troubling headwinds.”

A slowdown in sales is affecting a slew of different companies, perhaps the most notorious being Apple, which recently cut iPhone production by 10 percent in Q1. Analysts are waiting to see if companies like Starbucks and Nike will be similarly affected.

Exports are also falling in the country — down 4.4 percent in December. Alibaba cut its revenue forecast by 4 percent to a total of 6 percent in November, amid talk of slow smartphone sales and a lack of faith in the economy.

“China has slowed down,” Evans said. “As a $13 trillion economy, it would be quite unusual if it could continue to grow at 7 percent or 8 percent.” He said he’s expecting slow growth this year “because of natural causes within the country, [but] also because [of] the trade embargo.”

Evans retains some optimism, however, that China will become the largest economy in the world over the next 10 years.

“China is the largest consumer market in the world, and the things that they want to buy are, for the most part, not produced in China,” he said.

Alibaba sells thousands of brands directly to Chinese customers, and the company’s market is predicted to grow as more Chinese consumers continue to grow in wealth.

“There are 300 million today that are in the middle class,” Evans said, adding that, in 5 years, “another 300 million to 400 million people will move into the middle class, and it will not be a market that most small businesses and retailers can afford to ignore. … If you’re a retailer, it’s a great market for the future, but it will take time.”