Alibaba Group to lose its position as the country’s most valuable e-commerce firm

In a significant development within China’s tech sector, Alibaba Group is on the verge of losing its position as the country’s most valuable e-commerce firm to the eight-year-old competitor Pinduoduo (PDD Holdings), as reported by Bloomberg on Thursday.

As Alibaba’s market value dropped to around HK$1.46 trillion ($187 billion) in Hong Kong, PDD Holdings saw a nearly 2% increase in New York, reaching $188.3 billion. This shift represents a departure from the dominance that Alibaba, founded by Jack Ma, has held over the Chinese internet industry for over a decade.

Jack Ma, Alibaba’s billionaire co-founder, addressed the rise of PDD in an internal forum, urging Alibaba’s extensive workforce to “correct course” and regain momentum. This rare public acknowledgment from Ma emphasizes the gravity of the situation and the challenges Alibaba faces following Beijing’s 2020 crackdown on the tech sector. Vey-Sern Ling, Managing Director at Union Bancaire Privee, noted that Alibaba may have rested on its laurels, lacking execution or innovation at the pace required.

Once seen as China’s prime candidate to become a trillion-dollar company, Alibaba is navigating a turbulent period, with its stock at its lowest point this year. The company is dealing with internal challenges, including a proposed breakup plan and the reversal of the spinoff and listing of its $11 billion cloud arm.

In contrast, PDD has garnered investor attention with impressive growth and aggressive global expansion. This week, PDD reported an 18% surge in its stock after doubling its revenue, driven by the success of its shopping app, Temu. During the Singles’ Day shopping festival, PDD outpaced Alibaba with an estimated 20% growth in transactions, challenging Alibaba’s more traditional approach to overseas markets.

While PDD’s rapid rise has been fueled by aggressive promotions and disruptive strategies, Alibaba is not conceding defeat. According to Ling, Alibaba’s international business has been growing rapidly in recent quarters, indicating increased efforts in that direction.