Oct 09, 2015

Alibaba mounts new campaign to reassure shareholders

BEIJING-Alibaba Group Holding Ltd. is mounting a new campaign to reassure shareholders of its growth prospects after investors dumped its shares over slowing revenue growth, China's economic woes and other issues.

In a letter to shareholders set to be published on Thursday, Jack Ma, the e-commerce giant's executive chairman, said the world was overreacting to China's economic slowdown and that he believed it would not hurt consumption. The letter, reviewed by The Wall Street Journal ahead of its release Thursday, is part of an online interactive report with videos and charts that seeks to better explain the Chinese market and the company's strategy to overseas investors.

"I do not agree with the notion that consumption will decline as economic growth slows," Mr. Ma wrote. He said Western consumers may have trouble borrowing to maintain their lifestyles during economic downturns, but Chinese consumers save for the future, including for crises . More Chinese consumers are shopping online because of its convenience and better value for the money, he wrote. "China does not lack domestic consumption power," he said. "Being thoughtful about how to ignite that power is the key."

The new effort underscores the challenges Alibaba faces in communicating with US investors who have limited interactions with the company's products and services. The company's quarterly earnings results have twice disappointed investors since going public, first in the quarter that ended in December and then the one ended in June.

Tian X. Hou, founder of research firm TH Capital LLC, said one risk for investors is that Alibaba is inexperienced in communicating with Wall Street. "Partially, the responsibility is in the hands of Alibaba. They do not have good skills in handling communication "with investors, Hou said.

Alibaba's BABA, + 1.25% shares have hit new lows due in part to worries about the impact that the Chinese economic slowdown would have on Alibaba. Such concerns have also hit other US-listed Chinese stocks in technology and other sectors.




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