Alibaba Group Holding Ltd. President Michael Evans downplayed the significance of the recent slowdown of the Chinese economy and emphasized up the longer-term prospects of the market for retailers.
Despite its slowing growth, the sheer size of the Chinese market makes it critically important to retail companies, he said Jan. 14 at the National Retail Federation's Big Show trade event. Small businesses, brands and retailers cannot afford to ignore its relevance, he argued.
"China is the largest consumer market in the world and the things that they want to buy for the most part are not produced in China," Evans said, adding that the country is still on a path to surpass the U.S. and become the largest economy in the world.
At the National Retail Federation's The Big Show event in New York, Evans said it would be "quite unusual" for the $13 trillion economy to continue to grow at 7% or 8% and might slow down to 6% in 2019 due to "natural causes" within China and the ongoing China-U.S. trade war.
China's quarterly GDP growth in 2018 has continually slowed, starting at 6.8% in the first quarter to 6.7% in the second quarter, and 6.5% in the third quarter. China is planning to set a lower economic growth target of 6% to 6.5% in 2019 Reuters reported Jan. 11. China's economic growth for full year 2018 is expected to come in at about 6.6%, its lowest growth rate since 1990, according to Reuters.
Building a consumer base in China requires patience, Evans said. He described the Chinese consumer as young, mobile, affluent, curious and story-oriented. More than 80% of Alibaba's 600 million consumer base is younger than 35 years old and 40% are younger 28 years old.
"The future I think looks very good notwithstanding some troubling headwinds in the interim," Evans said.
Evans said Alibaba is sharing the payment and delivery technologies it has developed with 30 other retailers in China. He added that Alibaba plans to export the technology outside China but did not provide additional details.
"We've created a technology platform that allows you to digitize everything you are doing online and everything you were doing offline, integrate them and provide merchants with all that data so that they can optimize the supply chain so that they can about how to make the fulfillment and delivery more efficient effective and productive and ultimately to increase [profits]," Evans said.
Alibaba's high-tech supermarket chain Hema is one example of Alibaba's "new retail" strategy that integrates the online and offline retail experience.