Home / Technology / Alibaba Reports Growth, Even as China’s Economy Stumbles

Alibaba Reports Growth, Even as China’s Economy Stumbles

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Alibaba’s headquarters in Hangzhou, China. The company reported strong revenue growth as it continues to lure shoppers to its websites. Credit Crab Hu/European Pressphoto Agency

HONG KONG — China’s economic growth is slowing, but its biggest online marketplaces are doing just fine.

Alibaba Group, China’s largest e-commerce company, reported strong revenue growth on Thursday as it continued to lure shoppers to its websites instead of brick-and-mortar stores. The company, which is listed on the New York Stock Exchange, also earned more money from vendors, who pay to sell and advertise their goods on its sites.

The company said sales rose 59 percent in the first quarter, to $ 4.8 billion. Its operating profit rose 71 percent to $ 1.3 billion.

For many American investors, Alibaba is seen as a proxy for the health of the Chinese economy and the strength of its consumers. The company has outperformed the broader retail market in China. It has also been investing in the growth of e-commerce in the country — focusing on logistics and on rural areas where fewer people are online — so it can continue to grow even as the country’s economy slows.

The company is also working hard to brace itself for a further slowdown in China, pushing out of its conventional online shopping business into cloud computing, entertainment through online video and gaming, and even a food delivery business. Those long-term efforts have had mixed results. Results this quarter, for instance, showed the company’s smartphone-based food delivery business, Koubei, continued to burn cash competing with rivals.

After the first quarter, investors gained confidence in Alibaba but displayed noticeably less certainty in its main e-commerce competitor in China, JD.com.

Yet other sectors have been more promising. Alibaba’s cloud computing service, which is similar to the one offered by Amazon, has quickly gained traction in China, where businesses have been relying on Alibaba for computing power.

Alibaba’s gross merchandise volume, a closely watched measure of the transactions on the company’s websites, grew 24 percent compared with the same period a year earlier, about the same pace as the prior quarter.

Investors bid Alibaba’s shares up more than 2 percent in premarket trading on the results.

The underlying assumption that slowing growth in China will eventually hurt Alibaba’s sales has focused more attention on its other businesses. During its recent investor day, Alibaba said it would start to offer more information on its efforts in sectors like entertainment and food delivery.

“We have already started to see early signs of business breakthroughs in new categories and some of its burgeoning growth assets,” Evan Zhou, a Credit Suisse analyst, wrote in a recent report.

Yet those new breakthroughs come with risk. In the cloud computing sector, Alibaba has to contend with foreign rivals, and it faces a domestic challenge from the search engine Baidu. Its food delivery business risks becoming a drain on earnings, as many similar companies fight to gain customers by offering big commissions to drivers.

Alibaba has also recently increased its focus on international expansion. While much of its efforts are centered on bringing foreign vendors to sell to Chinese consumers — and in turn spending marketing dollars on Alibaba’s platforms — the company has also made bets on e-commerce in neighboring developing markets.

The company invested in the Indian commerce companies Paytm and Snapdeal, and this year, it made its largest overseas acquisition, paying $ 1 billion to take over Lazada, a popular Southeast Asian shopping website.

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