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The Chinese tech giant is dealing with scrutiny over the Ant Group and allegations by watchdogs of being a monopoly.
Alibaba is building a “rectification plan” for its fintech affiliate Ant Group after it pulled its $37bn IPO last November following pressure from regulators.
In its latest quarterly earnings, Alibaba said there have been “significant changes in the fintech regulatory environment in China” after regulators halted the listing of Ant Group with questions over the business’s operations. The retrench was a major blow for the fintech business, which was due to list in both Shanghai and Hong Kong in what would have been a record public listing.
Ant Group, which runs Alipay, was originally founded as part of Alibaba Group. It was spun out in 2014 but Alibaba owns around one-third of the fintech business.
Alibaba has attracted growing scrutiny in its home market from authorities. Competition watchdog, the State Administration of Market Regulation (SAMR), launched an investigation into Alibaba in late December over alleged anti-competitive practices.
“We have established a special taskforce with leaders from our relevant business units to conduct internal reviews,” the company said in its latest earnings report. “We will continue to actively communicate with the SAMR on compliance with regulatory requirements.”
The regulatory hurdles haven’t dampened the company’s balance sheet though.
It reported a 37pc increase in year-over-year revenues with fourth quarter earnings of RMB 221bn, about $33.9bn, and a net income of nearly $12bn.
Singles’ Day, a sales event on Alibaba and its competitor JD that is akin to Black Friday, boosted revenues for the company, reportedly seeing $74.1bn worth of orders sold through its platform during that period.
It has 779m active annual users in China as of December 2020, adding 22m users in the fourth quarter. The lion’s share of its business is in China but it marked gains in its international retail and wholesale business.
The retail gain was attributed to Lazada, its e-commerce site active in south-east Asia, and Turkey’s Trendyol.
“The increase [in international wholesale] was primarily due to increases in both the number of paying members and average revenue from paying members on Alibaba.com, as well as an increase in revenue generated by cross-border related value-added services,” the company said.
