Original link: https://www.latepost.com/news/dj_detail?id=1154
The first GMV drop since Taobao was established
One year is enough time to turn the world upside down. The same goes for the business world.
A year ago, the competition between Meituan, Pinduoduo and Didi in community group buying was in full swing, with investments exceeding 10 billion yuan. Alibaba joined the community group buying battle in March last year, saying “there will be no cap on investment”.
A year later, the community group buying business, which was once a frantic expansion of big companies, has been continuously shrunk. There was news of layoffs.
A year ago, after the release of the annual report, Ali announced that it would no longer pursue profit growth, and would invest the extra money in the future to acquire customers, strengthen supply chain capabilities, and reduce business operating costs. The reason is that Ali’s opponents They are all making huge investments, and the market competition is fierce. “We have no reason not to invest.” Said CFO Wu Wei at the time.
A year later, Ali still said that it would continue to invest in growth businesses such as Taocaicai and Taote, but its own performance situation has been very different.
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In the first three months of 2021, Ali’s revenue increased by 64% year-on-year to 183.8 billion yuan, the highest growth rate since 2017. A year later, Ali’s revenue was 204.1 billion yuan, and the growth rate of 9% was the lowest since 2017.
Beijing, Shanghai, Guangzhou and Shenzhen are the core user cities of Ali. In the first quarter of this year, these cities were affected by the epidemic to a greater or lesser extent.
In the first three months of this year, Taobao’s first quarterly GMV (transaction value) declined in its 19-year history. The GMV growth rate in January and February was already flat, and then fell directly in March: the outbreak of the Shanghai epidemic in March, the disruption of supply chains and logistics in Jiangsu, Zhejiang and Shanghai, and the consequent drop in demand.
GMV fell in the low single digits this quarter, and April was even worse, said Alibaba Chairman and CEO Zhang Yong, “April saw a drop of more than 10 percentage points in GMV. May saw some signs of improvement, but It still takes time to digest the backlog of packages.”
The epidemic also has some positive effects on Ali, such as its near-field retail business. Ele.me’s non-meal takeaways are in strong demand, and the order volume has increased by over 100%. Ele.me, which has been losing money for a long time, is close to break-even in this quarter’s UE (unit economic model); the proportion of Sun Art’s retail online sales increased by 5 percentage points to 29%. %; Hema online GMV contribution accounted for more than 60%.
According to the consumption changes under the epidemic situation in March and April, Zhang Yong said that consumers will want to stock up on more goods in the future to cope with uncertainty. Ali will provide diversified services to achieve on-demand and immediate delivery instead of the fastest delivery. delivery.
CFO Xu Hong announced that it will suspend Ali’s financial guidance for fiscal 2023. In the next year, Ali will “reduce costs and increase efficiency” in two aspects: some businesses with insignificant long-term value will be shut down; the business side will put forward higher requirements according to different natures, such as direct sales business will have higher requirements the gross profit.
Previously, Chinese regulators have sent a clear signal to encourage the healthy development of the platform and hope that it will play an important role. Zhang Yong said that Alibaba is committed to fulfilling its platform responsibilities, including enabling consumers to live a better life, helping merchants, and promoting technological innovation.
Internet platforms are trying to solve many problems. On the eve of June 18, taking into account the actual difficulties faced by merchants under the epidemic, Taobao and Tmall launched 25 support measures to all participating merchants, which ran through all aspects of merchant operations; at the end of April, JD.com also released 30 “Three Reductions and Three Excellences”. business support measures. And when part of the region or even the entire city is blocked, they also become an important infrastructure to maintain the operation of a city’s supply chain.
In response to the consumption trend in the second half of the year, Zhang Yong said that he should rely on two points. One is the sustainable operation of merchants, including stable commodities and supply chains, so that merchants can maintain operations until the time of recovery; the second point is also more important. Yes, it depends on the recovery of consumer demand, including consumers’ expectations for the future, the steady increase in disposable income, “especially the recovery of consumer demand for non-necessities, which is an important condition for China’s future GDP growth.” (Guan Yiwen)
iQiyi makes first profit after laying off thousands
iQIYI is profitable for the first time in its 10-year history. Before the U.S. stock market opened, iQiyi’s stock price rose more than 15%.
How surprising is this profit? In the last quarter of last year, iQiyi lost 1.77 billion yuan. Previously, the capital market expected iQiyi to lose 665 million yuan in the first quarter, but iQiyi made a profit of 169 million yuan in the first quarter.
iQIYI’s revenue has not grown. iQIYI has 100.8 million paying members, more than 4 million more than at the end of last year. Correspondingly, membership revenue has also increased by a single-digit percentage. However, because advertising revenue fell by more than 30% year-on-year, iQiyi’s revenue fell by 9% this quarter, leaving only 7.28 billion yuan.
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Gong Yu, founder and CEO of iQIYI, said that the cost reduction is mainly because iQIYI has improved the efficiency of marketing, operations and other links, and “closed or reduced some businesses that have no room for future development.”
Specifically, production and marketing expenses were cut, and layoffs were made.
iQIYI started to cut expenses sharply in the fourth quarter of last year, and by the end of the year there were fewer than 6,000 employees, about 2,000 fewer than a year ago.
Layoffs continued in the first quarter. iQIYI did not announce the number of employees, but almost all expenditures were reduced by 30% to 40%. Among them, research and development expenses were 38% less than in the fourth quarter of last year – this part of the expenses is mainly the salary of research and development personnel.
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But as previously reported by LatePost, stepping back is the only option for iQiyi.
Internet giants have lost confidence in long-term video revenue, the stock price of Chinese stocks has collapsed, and long-term video services have lost the ability to raise large sums of money. They can no longer maintain expensive copyright purchases, can no longer satisfy users’ one-stop long video consumption, and chase 200 million paying users. Long-form video platforms in China will have to cut costs first and make long-form video a sustainable business.
The beauty of the video business is that the library of content that has been invested in over the years can still attract viewers. So although iQiyi has drastically reduced expenses, it has not yet been reflected in membership fees.
But today’s revenue does not decline, relying on iQIYI’s more than ten years of video copyright purchases and content incubation year after year-in recent years, it has invested tens of billions of dollars. Such consumption inertia will gradually slow down as the growth rate of new content decreases.
In a few quarters, iQiyi will need to prove that it is indeed a sustainable business. (Huang Junjie and Wang Yuqing)
Rising prices, more U.S. tech giants respond with salary hikes
- According to media reports, Apple is increasing its overall compensation budget, in which the average hourly wage of retail store employees has increased from $20 to $22 since July, a 45% increase from 2018. Apple says it’s to keep good teams.
- The richest big companies have all raised their salaries this year. Microsoft said last week it was doubling its performance budget, Google launched a new performance system this month and expects most of its employees to increase their salaries, and Amazon promised to double the base salary cap for all employees to $350,000. Even Walmart, whose operating profit fell 23 percent in the first quarter, announced last month that it would raise wages for truck drivers by about 10 percent.
- As for the reasons for the raise, most of them mentioned that employees are facing inflationary pressures. According to official data, the average hourly wage in the United States rose by 5.5% year-on-year in April, but it still failed to keep up with the rate of inflation. After excluding inflation, the actual hourly wage fell by 2.5% year-on-year, the 13th consecutive month of decline.
- A tight talent market is a deeper reason. The U.S. unemployment rate fell to 3.6% in April, the lowest level since the outbreak. With the recovery of industries such as manufacturing and catering, grassroots employees have more employment options; top talents also face competition from Wall Street, the emerging metaverse or the blockchain field.
- The fundamental reason is that these companies are profitable and optimistic about the future. Apple, Google, and Microsoft’s net profit last year was at least $60 billion, enough to buy the entire Baidu company. In the same context, Meta and Nvidia said they would slow down hiring, and medium-sized companies generally lay off staff. (Lin Guangying)
Inflation in Europe and the United States, but funds are also reluctant to flow to emerging markets
- Money always goes to where more money can be produced. When mature markets in Europe and the United States grow slowly or even decline, investors generally turn more money to developing regions in exchange for more returns and help local development. U.S. and Western European companies have generally seen slower sales and lower profits this year because of rising prices. But this time, money is less willing to go to emerging markets.
- The Institute of International Finance (IIF) forecasts that flows to emerging markets this year will fall by 42% from $1.68 trillion to $972 billion.
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- Inflows will decline in all major regions, from Eurasia to Africa and South America. The worst declines were seen in emerging markets in Europe (mainly war-torn Eastern Europe) and Asia. Among them, the funds flowing to emerging markets in Europe decreased by about 60%, and the funds flowing to Asia decreased by about 40%.
- If China is excluded, the inflow of capital in Asia is also decreasing, and it is expected to shrink from about 390 billion US dollars to about 280 billion US dollars, a decrease of nearly 30%. (Lin Guangying)
Musk’s acquisition of Twitter reversed again: continue to pay another $6.25 billion
Musk’s pledge to raise an additional $6.25 billion in equity financing has reduced his margin loan backed by Tesla stock to zero, according to regulatory filings on Wednesday, meaning Musk is still working on a deal. Just 10 days ago, Musk insisted that if Twitter could not prove that the proportion of fake accounts was less than 5%, the deal would not go forward. Musk’s acquisition of Twitter has reversed several times since April:
- April 4: Musk disclosed his 9.17% stake in Twitter and was invited to join the board;
- April 9: Musk refuses to join Twitter’s board;
- April 14: Musk offers to buy Twitter for $43 billion;
- April 15: Twitter is said to use a “poison pill” plan to ward off Musk’s takeover;
- April 19: Musk hires Morgan Stanley, considers leveraged buyout;
- April 25: Twitter’s board backs down, agrees to takeover ;
- May 4: Musk raises an additional $7.1 billion for acquisitions, with backers including Oracle founder Larry Ellison, Sequoia Capital, Binance, Saudi Arabia’s Prince Alwaleed bin Talal;
- May 6: Musk’s Twitter revamp plan announced;
- May 12: Twitter suspends hiring, cuts costs, and key executives are asked to leave;
- May 13: Musk says trading is suspended because Twitter’s claim of “less than 5% of fake accounts” is false;
- May 17: Twitter hits back at Musk’s accusations, saying it will stick to the deal as originally agreed.
Baidu’s advertising revenue has been caught up to 2/3 by Kuaishou
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- In the first quarter of this year, Baidu’s core business advertising revenue fell 4% year-on-year to 15.7 billion yuan. Because of the increase in revenue from new businesses such as cloud services, Baidu maintained its overall growth, but it was only 1%.
- ByteDance’s advertising revenue has long been several times that of Baidu, and now Kuaishou is approaching. In the quarter of the epidemic in 2020, Kuaishou’s advertising revenue was only 23% of Baidu’s. Now, Kuaishou’s advertising scale is 67% of Baidu’s.
- In the first quarter, both Kuaishou and Baidu were affected by the decline in advertising, and Kuaishou’s advertising revenue declined for the first time after two years of continuous growth.
- Consumer goods are not sold, and naturally they will not be advertised. The closed big-name stores are no longer open, which has also reduced marketing investment in China. These are all money that flows to internet platforms.
- For Kuaishou with a live broadcast e-commerce ecosystem, anchors and merchants who sell goods can be allowed to place advertisements – the so-called “internal loop advertisements” . Baidu relies more on brand advertising and is more affected by the economic environment. (Wang Yuqing)
In the next two months, domestic flights will receive a subsidy of up to 24,000 yuan for one hour of flight
- The Ministry of Finance and the Civil Aviation Administration of China announced today that domestic passenger flights will be subsidized when the average daily domestic passenger flight volume is less than or equal to 4,500. The subsidy helps airlines maintain routes, allowing some routes with fewer passengers to continue operating.
- In the year before the epidemic, passenger airlines across the country flew an average of 12,600 flights per day. However, according to the data of Feichangzhun, from April 1st to 25th this year, there were more than 2,600 domestic flights per day.
- Taking Air China, which has the most losses, as an example, it is roughly calculated by 397,500 flying hours (1.59 million hours last year). If all of them meet the subsidy conditions, they can get a subsidy of 9.54 billion yuan (there is no upper limit on the amount of loss). Air China posted a non-net loss of RMB 8.962 billion in the first quarter.
- However, subsidized flights still need to meet two conditions: the average weekly load factor of each channel does not exceed 75%, and the actual flight revenue cannot cover the variable costs (that is, costs other than fixed costs, such as fuel, labor, etc.);
- The amount of the subsidy is calculated based on the loss after “actual income minus variable costs”, with a maximum cap of 24,000 yuan per hour;
- The implementation period is from May 21, 2022 to July 20, 2022.
- In the past two years, the three major airlines (China Southern Airlines, China Eastern Airlines, and Air China) have each lost tens of billions of yuan, and the subsidies received are only a fraction of the losses:
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- “Waidian Finance” calculated last week that the losses of the three major airlines in the first quarter of this year further increased, which is equivalent to an average loss of 544 yuan per passenger.
OTHER NEWS
Sony increases PS5 production capacity, says it’s not worried about the Metaverse.
Sony said it will significantly increase PS5 production to unprecedented levels as supply chain issues ease. In addition, in order to expand the player base, more game products will be provided, including more PC and mobile games. As for the rise of the “metaverse” that many people speculate will subvert the business model of the game industry, Sony CEO said that there will still be many, many people who prefer the game method that has lasted 30 years or more in the past.
Dyson wants to hire 1,000 engineers to develop robots that can do housework.
Dyson has shown off a series of prototype robots that show robotic arms that can remove dishes, pick up toys and vacuum sofas. Dyson said it is currently recruiting 250 robotics engineers, covering areas such as computer vision, machine learning, sensors, and more, with 700 more to be recruited in the next five years. The goal is to release an autonomous robot that can do housework in 2030. In 2020, Dyson announced that by 2025, it will invest 2.75 billion pounds in robotics-related fields, and plans to invest 600 million pounds this year.
Caption: The prototype of the Dyson housework robot that is sucking the sofa. Image via Dyson
Boeing Starliner spacecraft completes uncrewed test flight.
After six days of spaceflight and successfully docking with the International Space Station, the Boeing Starliner spacecraft landed safely on Earth Wednesday night. In 2019, Starliner made its first unmanned test flight and returned due to a software problem; this test flight also had minor faults along the way, including four of the propeller failures and thermal control defects. At present, NASA relies entirely on SpaceX’s spacecraft to transport astronauts, and Boeing will test manned flights next.
In Shenzhen, the subsidy for buying mobile phones and home appliances is 15%, and the maximum subsidy for buying new energy vehicles is 10,000 yuan.
Shenzhen released the latest policies to promote consumption. From May to August this year, the purchase of eligible consumer electronic equipment such as mobile phones, computers, and smart homes can receive a subsidy of 15% of the selling price, with a ceiling of 2,000 yuan. The purchase of home appliances is the same policy. In terms of car consumption, the maximum subsidy for buying new energy vehicles is no more than 10,000 yuan per unit; 20,000 new ordinary car indicators are added for those who have shaken the number more than 60 times and have not yet won the lottery.
Shanghai senior high school students will return to school on June 6, one month earlier than the college entrance examination.
Shanghai announced the return-to-school arrangement. Senior high school students and senior two students will return to school from June 6th, which is one month before the college entrance examination on July 7th. The third-year students also return to school on June 13, about a month before the senior high school entrance examination. Other grades of primary and secondary schools will not return to school this semester.
ZTO Express, the largest express delivery company, lowered its forecast for the second quarter.
ZTO Express released the first quarter financial report: the order volume increased by 16.8%, the price per order increased by 8.5%, and the express delivery revenue increased by 26.6%. Although oil prices rose by 30% in the first quarter, the high growth, coupled with technical optimization, kept the average cost per order of ZTO unchanged. But like almost all companies, things changed in the second quarter. ZTO predicts that in the second quarter, line utilization efficiency may decline, making it difficult to continue to offset rising costs. Because the parcel volume of China’s express delivery industry fell by 12% year-on-year in April, in the Yangtze River Delta and Northeast regions where the epidemic was severe, the volume of express delivery by units and residents dropped by about 30%.
Amazon’s first brick-and-mortar clothing store opens.
Amazon’s first brick-and-mortar clothing store, Amazon Style, opened Wednesday, featuring a combination of online and offline experiences. Customers can scan the code through the app to view the details of the products in the store. The app will also use data and algorithms to personalize and recommend related product combinations. In March of this year, Amazon announced the closure of 68 brick-and-mortar stores, including all bookstores, home furnishing and toy stores, indicating that it will shift its strategy to food stores, grocery stores, clothing stores and more that are more suitable for offline models in the future.
US chip company Broadcom announced a $61 billion acquisition of cloud service provider VMware.
The $61 billion price is 20% above VMware’s closing market value yesterday and is made up of stock and cash. The acquisition means Broadcom will further shift to enterprise software services. Broadcom, which bought enterprise software company CA Technologies for $18.9 billion in 2018, announced in March that it had bought Symantec Corp’s enterprise security business for $10.7 billion.
The central bank requires banks to grant loans to small and micro enterprises to “dare to lend, willing to lend, able to lend, and able to lend.”
Today, the central bank issued a document requiring banks to “dare to lend, willing to lend, able to lend, and able to lend” in granting loans to small and micro enterprises. The growth rate of inclusive small and micro loans this year cannot be lower than the growth rate of various loans. The central bank stated that it will improve the ability and willingness of banks to issue small and micro loans through better internal risk management mechanisms, incentive mechanisms linked to small and micro loans, and the use of various financial instruments (such as credit asset securitization). On Monday, the central bank announced that the amount and ratio of support for inclusive small and micro loans will be doubled this year, which means that the small and micro loan quota is 800 billion yuan and the central bank supports 80% of the principal. As a result, the risk of small and micro loans will be mainly borne by the central bank, and the risk of commercial banks’ mortgage loans to small and micro enterprises is smaller.
The cost of normalized nucleic acid testing shall be borne by local governments and not covered by medical insurance.
In an interview with CCTV, the National Medical Insurance Administration stated that the cost of normalized nucleic acid testing in the future will be borne by local governments. According to Huachuang Securities and media reports, the proportion of medical insurance payment for nucleic acid testing in various places has previously varied, such as 70%-95% in Shenzhen, Qingdao, and Suqian. Last weekend, the National Medical Insurance Administration and others required the government to charge no more than 3.5 yuan per person for multi-person mixed management of large-scale screening and normalized nucleic acid testing. Taking Shanghai, a city with a permanent population of 24 million, as an example, if the mixed management is 3 yuan per person and done once a week, then a monthly financial expenditure of 288 million yuan will be required.
Text | Guan Yiwen Huang Junjie He Ganming Lin Guangying Intern Wang Yuqing
Editor | Huang Junjie
This article is reprinted from: https://www.latepost.com/news/dj_detail?id=1154
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