Alibaba FY 2Q16 Earnings Call Notes

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Alibaba Group Holding’s (BABA) CEO Daniel Zhang on Q2 2016 Results

Added service to 4k rural villages

“we added 4,000 villages in this quarter and actually today we are – I think China is very big and we are still in early stage, but we believe the most important thing is to create the value for the farmers. So today we are focused on to help them to buy from our online marketplace to improve their lifestyle. ”

Online shopping accounts for 10% of retail in China

“For the first question, I would say today, if you look at the landscape in China, online shopping only accounts for 10% of the total retail in China. So I would say that is a huge potential”

The Chinese economy is under penetrated in terms of consumption

“we just don’t think that the current macroeconomic situation will fundamentally affect consumption patterns. You have a Chinese economy that is only 37% penetrated in terms of consumption relative to more developed countries, you’re looking at – over 60% of their economy is consumption. So there is definitely a secular tailwind driving consumption growth.”

The Chinese consumer is very liquid and has lots of savings

“When you look at the individual Chinese consumer, they’re very liquid, they have a lot of liquid cash deposits in their bank accounts. Over the last several years, wage growth has been growing over 10% year-on-year and there is a high savings rate. So people have lots of savings, lots of liquidity and we expect that this is not, so a temporary setback in the macro economy is not going to affect their consumption pattern and in a fundamental way.”