Layoffs in China’s internet sector? Not at Alibaba!
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Layoffs in China’s internet sector? Not at Alibaba!

As many in the market speculate that there are job cuts coming in the Chinese internet sector, major ecommerce player Alibaba has reiterated a commitment to boost consumption over the coming year. And, according to CEO Daniel Zhang, who spoke to reporters on Friday, that means he’s planning to avoid layoffs this year.

Weakness in Chinese internet? Someone forgot to tell Alibaba’s share price! (+27%, year to date)

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Source: Yahoo Finance

Zhang says that Alibaba is looking to bolster the industry, which is weighed down by reports of cooling domestic demand and an ongoing trade dispute with the US, through job creation. At the end of last week, he said: "This year we not only won't layoff employees, we will continue to utilise the resources on our platforms to boost consumption, bringing in more manufacturing and services orders. When the economy is bad, the biggest advantage for online platforms is to create jobs."

Alibaba is showing its strength by committing to further hires and investment in innovation. Other Chinese giants, including ride hailing company Didi Chuxing, are promising just the opposite. In Didi’s case, 15% of its employees can expect to find themselves looking for work elsewhere this year.

Despite this negativity, Alibaba has good cause to remain positive and motivated. The company is a market leader in countless tech and internet fields, and in a great position to continue pursuing growth. And, as it expands into India and other countries, Alibaba is also poised to reap the rewards of a growing domestic market. Despite a spate of negative headlines in the business papers so far this year, China’s retail market is predicted to finally eclipse the US this year, becoming the world’s largest. That’s a direct result of the growing middle class and rising disposable income. Those are long-term trends, and Zhang is wise to focus on them, rather than a blip in trade.

Disclosure
Dominion holds Alibaba in its Global Trends Managed Fund.


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