Even regulatory issues can’t stand in Alibaba’s way. The Hangzhou-based e-commerce firm raked in the equivalent of a record $75.1 billion during its annual Singles Day sales event despite ongoing government scrutiny, WSJ reports.
Think of Singles Day as China’s Amazon Prime Day. Because of the shifting Covid-19 environment, Alibaba extended the buying window of its shopping event from one to several days, which led to a new sales record by 12:30 a.m. Wednesday.
But the dominance of Alibaba, and other Chinese online giants, is now in jeopardy after China released “new draft anti-monopoly rules for its online platforms, signaling an increased appetite by Beijing authorities to rein in its dominant technology companies.”
- The move already disrupted Ant Group’s planned $34 billion IPO, which would have been the largest on record.
And Chinese regulators do have cause to be concerned. The gross sales of Singles Day “reinforces Alibaba’s outsize influence on Chinese consumption patterns.” Ant Group is backed by Alibaba and during the shopping event, the latter leveraged the former’s more-than-a-billion-user network with shopping deals and promotions.
- Alibaba also allowed many products to be purchased using loans from Ant’s micro-lending service, Huabei.
Ant’s digital lending operations mostly pull from banks to provide funding to consumers. Neither Ant nor Alibaba hasn’t disclosed the proportion of purchases funded by the micro-loans (it was 20% for Singles Day 2016).
- Rich Turrin, a financial-technology industry consultant, said this is one reason Chinese regulators are worried. “They do not know where the credit is going, or on what it is being used,” he said.
- China’s banking regulator recently proposed regulations to compel Ant to fund its own loans or invest more capital into its lending operations.
The increased news out of China about regulators being concerned about antitrust has me scratching my head, as we had assumed China would be much less sensitive to those issues, given their singularly party rule of law. We’ll have to do more digging into the dynamics in China over the coming months to inform our view on $BABA and $TCEHY.