Alibaba has faced growth challenges amid regulatory tightening in China’s domestic technology sector and a slowdown in the world’s second-largest economy. But analysts think the e-commerce giant’s growth could accelerate throughout the rest of 2022.
Kuang Da | Jiemian News | VCG | Getty Images
Alibaba said it will invest $1 billion over the next three fiscal years to support its cloud computing customers as the Chinese e-commerce giant hopes to restart growth after a historic slowdown.
The investment consists of “monetary and non-monetary incentives such as financing, discounts and go-to-market initiatives,” Alibaba said in a press release on Thursday.
The company said it will also create a program to help customers localize their cloud computing business needs by market.
According to Gartner, Alibaba is the world’s third largest cloud computing player behind Microsoft and Amazon. Although cloud computing is currently a small part of Alibaba’s overall business, the company’s management sees it as a critical component of future growth and profitability.
However, Alibaba has seen an unprecedented slowdown in growth amid China’s economic woes, due to the resurgence of Covid in the world’s second-largest economy and a tighter domestic regulatory environment. In the April-June quarter, Alibaba reported its first record revenue growth.
Revenue growth in the cloud computing business also slowed compared to the previous quarter.
Alibaba’s investment announcement is also part of a broader push by the Hangzhou, China-based company to expand its cloud computing business overseas.
In recent years, Alibaba has opened new data centers outside of China to win customers in other markets such as Singapore and Thailand.