Is Alibaba’s Vice Chair Right Not To Be Worried?

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Alibaba’s Vice ChairAlibaba’s vice chair Joe Tsai’s remark that he is ‘not too worried’ about the state of China’s consumer economy reminded me of Shakespeare’s famous line ‘the lady doth protest too much, methinks’.

This idiom means a person is trying so hard to convince one of something when we are inclined to think the opposite is true.

The throwaway tone of Alibaba’s vice chair inclined me to think that the same might be true of him.

Alibaba’s Head of Industrial Relations Seems to Take a Different Angle

A few days ago Jane Penner was speaking to investors in New York when she warned that that gross merchandise value (the total value of goods sold on Alibaba platforms) will be “mid-single digits lower than our initial expectations … we are observing some negative impact of the magnitude of the spending. She went on to add that perceptions were behind the fall in spending, as consumers’ affordability was largely unchanged.

How Alibaba’s Vice Chair Plans to Reverse the Trend

Joe Tsai was chatting to Wall Street Journal when he made the remark on Thursday, adding that ‘Chinese consumers are likely to keep spending’. He planned to address the looming shortfall by broadening the range of merchandise available on Alibaba’s platforms. He mentioned investing more in groceries and speeding up delivery times. “That’s a daily activity, it’s high frequency,” Alibaba’s vice chair explained.

It Could be More a Matter of Elasticity of Demand

I don’t personally think that Chinese consumers are going to increase their vegetable spend on Alibaba much, no matter what Alibaba’s vice chair says. When there is a dent in confidence, we generally stay with what we know, as opposed to innovating with something we have not yet experienced. Besides, we will have to buy an awful lot of carrots before we come anywhere near the price of a flat screen television. This may take a little longer than Alibaba’s vice chair seems to think.

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Social Brand Watch (SBW) is a collection of experts in digital, mobile and social media in China. SBW was created to complement Resonance's China Social Branding Report, a bi-weekly report focusing on modern marketing methods of the world's top brands in China.

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