MANAGEMENT DISCUSSION AND ANALYSIS
Alibaba.com Limited Annual Report 2011
MANAGEMENT DISCUSSION
AND ANALYSIS
WE ARE CONFIDENT THAT THE
SHIFT AWAY FROM AGGRESSIVE
MEMBERSHIP ACQUISITION TO FOCUS
ON STRENGTHENING BUYER’S TRUST
ON ALIBABA.COM WILL BENEFIT OUR
CUSTOMERS AND OUR LONG-TERM
BUSINESS GROWTH.
BUSINESS ENVIRONMENT
The global economy was sluggish in 2011 due to lackluster economic conditions in the major developed markets. Downside risks have been increasing as the Euro zone crisis unfolds without solution and the U.S. recovery falters. Cautious sentiment is restraining consumption in developed economies, which is negatively impacting emerging economies and developing nations. China is unlikely to prove immune to the global slowdown. China’s economic performance was hurt by a greaterthan-expected dampening of export growth, which declined from 31% in 2010 to 20% in 2011. In addition to falling global demand, small businesses struggled with surging production costs, high labor costs and a stronger Chinese currency. A credit squeeze caused by China’s tightened monetary policy also added pressures to small businesses. Nevertheless, many
16
small businesses have remained competitive by tapping China’s fast-growing domestic market and other regions through geographical expansion, thus diversifying their customer base.
More businesses also appear to be leveraging e-commerce to become more flexible, efficient and competitive.
Another phenomenon that we have observed is the increasing demand by small businesses for online sales and marketing services. Small businesses usually prefer variable, performancebased services as they aim to maximize their return on investment for the marketing dollars they spent. This trend supports our view that e-commerce is becoming indispensable for small businesses.
Going forward, we will continue to serve our customers by developing additional performance-driven and online transactionbased services.
Alibaba.com Limited
MANAGEMENT DISCUSSION
AND ANALYSIS
WE ARE CONFIDENT THAT THE
SHIFT AWAY FROM AGGRESSIVE
MEMBERSHIP ACQUISITION TO FOCUS
ON STRENGTHENING BUYER’S TRUST
ON ALIBABA.COM WILL BENEFIT OUR
CUSTOMERS AND OUR LONG-TERM
BUSINESS GROWTH.
BUSINESS ENVIRONMENT
The global economy was sluggish in 2011 due to lackluster economic conditions in the major developed markets. Downside risks have been increasing as the Euro zone crisis unfolds without solution and the U.S. recovery falters. Cautious sentiment is restraining consumption in developed economies, which is negatively impacting emerging economies and developing nations. China is unlikely to prove immune to the global slowdown. China’s economic performance was hurt by a greaterthan-expected dampening of export growth, which declined from 31% in 2010 to 20% in 2011. In addition to falling global demand, small businesses struggled with surging production costs, high labor costs and a stronger Chinese currency. A credit squeeze caused by China’s tightened monetary policy also added pressures to small businesses. Nevertheless, many
16
small businesses have remained competitive by tapping China’s fast-growing domestic market and other regions through geographical expansion, thus diversifying their customer base.
More businesses also appear to be leveraging e-commerce to become more flexible, efficient and competitive.
Another phenomenon that we have observed is the increasing demand by small businesses for online sales and marketing services. Small businesses usually prefer variable, performancebased services as they aim to maximize their return on investment for the marketing dollars they spent. This trend supports our view that e-commerce is becoming indispensable for small businesses.
Going forward, we will continue to serve our customers by developing additional performance-driven and online transactionbased services.
Alibaba.com Limited