Alibaba Group Holding Ltd is emerging as one of the biggest winners in China amid the coronavirus crisis, as it expands its businesses and solidifies its role as a crucial part of the country’s socio-economic engine. While many companies are struggling due to the disruptions caused by the virus, Alibaba has experienced an increase in traffic on its online marketplaces and a growing demand for services like food delivery. In fact, local authorities have turned to Alibaba’s cloud business to build health-tracking apps.

Following the 2003 SARS outbreak, which saw Alibaba become China’s leading e-commerce company, the company is now positioning itself as a major job provider and lender. It is advertising for over 100,000 jobs and offering billions of dollars in loans to small and mid-sized enterprises (SMEs), a move that sets it apart from competitors like Tencent Holdings Ltd and JD.com Inc who are implementing similar initiatives but with narrower offerings.

Professor Jeff Towson, a former investment professor at Peking University, sees Alibaba’s strategy as a classic gangster move, believing that when the market returns, Alibaba will have a strong hold on the entire market. Towson notes that he hasn’t seen any other company execute a plan of this scale.

This pattern of big tech companies like Alibaba capitalizing on the crisis is not unique to China, with tech giants like Amazon.com Inc and Microsoft Corp in the United States also weathering the storm and reinforcing their dominant positions. Analysts suggest that this could lead to further consolidation in the industry, potentially hindering the growth of smaller firms.

However, Alibaba isn’t without its challenges. E-commerce growth is slowing down overall, and the company recorded a loss of $1.09 billion on the value of outside investments in the most recent quarter, which was heavily impacted by the virus. Despite this, Alibaba has managed to outpace competitors like Pinduoduo Inc by promoting services like livestreaming, which gained popularity due to travel restrictions.

Alibaba’s financial performance has been impressive, with quarterly revenue growth of 21% and core commerce sales growth of 19%, surpassing expectations. Its food delivery arm, Ele.me, also successfully caught up with dominant competitor Meituan Dianping during the crisis by offering discounts. Additionally, other business lines like cloud computing have experienced significant growth, with revenue from cloud computing increasing by 58% in January-March.

The virus has also had a positive impact on emerging business lines for Alibaba, such as its workplace messaging app, Dingtalk. The app saw a staggering 1,000% increase in downloads through Apple’s App Store in February as work and schooling shifted online. Dingtalk now competes with social media leaders Tencent and ByteDance in this category.

As Alibaba’s position strengthens amid the virus and its strategic moves, analysts predict that it will reinforce trends that concern some individuals in China and around the world. The rise of Alibaba’s gig economy platform, Ele.me, has led to less stable employment opportunities, while Dingtalk’s promotion of remote work has raised concerns about increased surveillance by employers.

Furthermore, Alibaba’s growing dominance in the market may make it even more challenging for smaller startups to compete. As they gain traction, these smaller companies often get bought by Alibaba, preventing them from becoming major players in the industry. While Alibaba’s strategic moves during the coronavirus crisis position the company as a powerful force in the Chinese economy, there are concerns about the potential stifling of smaller firms in the future.

Useful links:
Alibaba Group News – Official Website
Barron’s – Alibaba Expects Strong Growth in 2020 on New Investment