Big Three tuck into bumper returns

Updated 2017-06-15 08:51:38 China Daily
Working staff at Alibaba's Xixi garden in Huaian, Jiangsu province, feed a colleague with crayfish, a popular seasonal dish during summer in China, after the Xuyi government signed a cooperation agreement with Tmall to seek a wider online sales channel for the product. (Photo/China Daily)

Working staff at Alibaba's Xixi garden in Huaian, Jiangsu province, feed a colleague with crayfish, a popular seasonal dish during summer in China, after the Xuyi government signed a cooperation agreement with Tmall to seek a wider online sales channel for the product. (Photo/China Daily)

Alibaba, Tencent and JD.com are reaping the rewards on premier goods as shoppers go on an online buying binge

Shoppers with a taste for premier goods and services are boosting the profits of China's internet giants and driving a consumption-fueled economy.

Online retail sales of goods surged 25.9 percent in the first four months to 1.46 trillion yuan (5 billion) compared to the same period last year, according to data released by the National Bureau of Statistics in May.

The amount splashed out on services also jumped 55.9 percent, outpacing the 10.2 percent growth in overall consumption.

"Rising incomes among Chinese consumers mean that online retail demand is moving from low prices to better quality-driven products," said Matthew Crabbe, the Asia Pacific research director at consultancy Mintel.

The big three online players are reaping the benefits.

In its latest earnings report, Alibaba Group Holding Ltd posted a 56 percent year-on-year growth to 158.3 billion yuan.

Tencent Holdings Ltd also announced a revenue surge of 54.8 percent to 49.6 billion yuan in the first quarter of this year compared to the same period in 2015. This was triggered by a range of sectors from gaming to social media.

With those sort of numbers, it is hardly surprising that these online behemoths are valued at 0 billion each, and represent the rise of China's new economy.

But then, the country's middle class has created this amazing growth in their core business even though Alibaba and Tencent are now funnelling billions of dollars into long-term projects such as Hollywood-style entertainment and online finance.

Tencent has already scored a huge hit with the mobile game Honor of Kings, which has around 50 million daily users since its debut in 2015.

According to analyst company Niko Partners, players spend -a-month on average for the game and play for six hours a week.

As for Alibaba, it has reaped rewards from the steady growth of Tmall, its business-to-customer site.

The company announced that 80 percent of the world's most valuable 100 brands on Forbes' rich list are on Tmall.

"Transactions on Tmall alone probably jumped by 25 percent in the March quarter," Alicia Yap, an analyst at Citigroup Inc, said.

Of course, consumers are now more accustomed to paying for goods and services online.

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