Alibaba Tackling A Much Bigger Risk Than A Trade War

Majority of the financial news media are focusing on the augmented rhetoric on trade tariffs and its impact on Alibaba and other Chinese firms. However, Alibaba is facing a much significant danger on its home ground. The swift growth of a group that is buying Pinduoduo (PDD), an e-commerce company, is said to be the reason of big concern for Alibaba.

Recently, PDD had applied for an Initial Public Offering (IPO) of about $1 Billion. Its most recent funding round was at $15 Billion. The daily active user base of PDD is about 32.5% as compared with the Taobao platform of Alibaba. Also, annualized Gross Merchandise Value has jumped to RMB 198.7 Billion.

If IPO of PDD is does well and the company gets a strong valuation in the few subsequent quarters, this will create a very big risk to the future growth story of Alibaba.

On a similar note, recently, Alibaba announced in a press release that Alibaba Cloud, cloud computing section of the company, is collaborating with Siemens. This partnership is intended to help China achieve its goal of building IIoT network via sharing technologies

Reportedly, both the companies have signed a Memorandum of Understanding (MoU). Angela Merkel, German Chancellor, and Li Keqiang, Chinese Premier, were present while the MoU was signed by both the companies. Both the companies will use the resources of each other to form a conventional IIoT that will help in China’s manufacturing transformation.

Joe Kaeser, Siemens president & CEO, proclaimed that the recent collaboration is a milestone deal that will bring Industry 4.0 solutions to China. Additionally, he stated that the company will further make our global leadership stronger that is aimed at automating and digitalizing the industrial world. Alibaba Cloud expressed the opinion for this partnership not just to help China, but for the development of the two companies also.

You might like