How Chinese online companies are trying to stay relevant during the economic slowdown

Following the recent economic slowdown in China, investors are focusing on how Chinese E-Commerce sales have been effected. One of the biggest companies that has been under a magnifying glass lately is Alibaba (BABA). The firm, founded by Jack Ma, has been struggling to maintain its online presence through the slow growth occurring in its main market, China. One move that management has made to try and increase the said presence is a recent proposal to buy a $3.5 billion dollar online video company. The company also ran a very large promotion in November of last year that it though would boost sales. Alibaba announces earning on Tuesday. In Q2 Alibaba’s net profit rose to $3.32 billion dollars, on Tuesday the Wall Street Journal expects net profits for the company to top $3.36 billion dollars. Alibaba has struggled immensely over the past few months, with its share price dropping by about 40%. Deutsche Bank and Credit Suisse analysts have both cut their revenue estimates for the firm, citing a decrease in consumer interest and spending as the main drivers. Others such as Muzhi Li of Arete Research believes that Alibaba has tremendous growth prospects and is currently just trying to invest in its future. He says they are “buying content and investing in long term sustainability.” Alibaba as a microcosm for online companies in China shows us the struggles these companies are facing. With high overhead costs already in place many companies are attempting to offer discounts and incentives to consumers in order to stay relevant and keep up their expected online traffic, which is imperative to long term growth

-Adam Lifshitz .