Today, Alibaba Group reported its September 2019 quarter earnings. Below are comments Executive Chairman and CEO Daniel Zhang made during a call with analysts.
In September, Alibaba celebrated our 20th anniversary. We truly appreciate our shareholders’ support over the years. Today, I am honored to speak to you in the role of the executive chairman of Alibaba Group for the first time. I would like to take this opportunity to share my thoughts about the opportunities and our strategy over the next several years.
Our mission has not changed since day one. It is to make it easy to do business anywhere. Today, our consumers, merchants and partners are entering a new journey in the digital era. We will continue to create value for them by leveraging the power of data technology, to make it easy to do business anywhere for the decades to come.
We have set a near-term goal to serve over 1 billion consumers and achieve at least RMB10 trillion of consumption by fiscal year 2024.
Geopolitical uncertainties have placed additional pressure on global growth. We believe this is both a challenge and an opportunity for the Chinese economy, and finding more opportunities in such an uncertain environment is the key to our business and strategy. I would like to point out two long-term developments that are in Alibaba’s favor.
One is domestic consumption. We see great potential in domestic consumption as an important driver for China’s economy. The overall consumption magnitude keeps increasing, and the percentage of digitized consumption keeps improving. Specifically, China retail sales reached about RMB30 trillion in the first nine months of 2019, growing at 8.2% year over year. This outpaced overall gross-domestic-product growth at 6.2%. More importantly, online e-commerce is still the key driver of consumption in China, growing more quickly at 17%. Alibaba is growing even faster than the overall online e-commerce sector.
Alibaba is the only platform to meet the diverse range of consumers’ demands in physical goods, local consumer services and digital entertainment. These three consumer-facing businesses as a whole already serve 730 million consumers in the Alibaba digital economy. Over the next several years, we will continue to grow our user base and, at the same time, drive user synergies by enabling merchants to cross-sell products and services in the digital economy.
Our New Retail strategy further enlarges our addressable market. We aim to enable the digital transformation of brands and retailers, empowering them with data technology and consumer insights to better serve their customers.
Another secular growth driver is enterprise digitization. IT spending in China for internet companies amounts to about US$80 billion, while the spend for public sectors and various industries reached over US$300 billion, according to our estimates. This represents huge opportunities for enterprise-facing businesses.
We leverage Alibaba’s cloud-computing technology and big-data insights to empower the enterprise. The adoption of cloud services in China will be driven by not only lower IT costs, but also by the digital transformations of business models and processes. As a digital-technology company, we are uniquely positioned to provide businesses with more intelligent and cost-effective cloud services. We call our solutions for enterprises the “Alibaba Business Operating System,” as we render them not just as IaaS or PaaS, but rather business as a service solutions.