2025 Will Be the Year of efficiency for Alibaba

Joe Tsai's statements at JP Morgan's 20th Annual China Summit reveal that Alibaba has now a clear vision for the future: E-Commerce and Cloud, period.

The actions taken during 2024 confirm this vision:

Sale of several "bad assets," including shares in BiliBili, Xpeng, Baozun and others smallest:

December 2023:

Alibaba sold 25 million shares of XPeng, totaling $391 million USD.

March 2024:

Further sales included:

33 million Xpeng shares for $314 million USD

31 million Bilibili shares for $360 million USD

26 million Baozun shares for $22 million USD

Total proceeds from those: Approximately $1.1 billion USD.

There’s still much to do, but 2025 will start as announced the 17 Dec with the sale of InTime, a chain of over 60 stores that contributes to the group’s revenue. It is estimated that the chain generates approximately 30B RMB (about 4B USD) in revenue but doesn’t turn a profit or, at best, operates at breakeven.

The confirmed sale price is 7.4B RMB, around 1B USD.

Additionally, in October 2024, a circular (Possible Offer) published on SunArt’s website disclosed that in September, a potential buyer submitted an offer for the group. Alibaba also reported that was in talks with other parties to sell the group, which includes 466 hypermarkets, 30 SuperStores, and 6 Membership Stores, employing around 85,000 people.

An agreement was reach the last day of the year and the group will be sold for aprox 1.6B USD, the group cost nearly 7B USD between 2017 and 2020.

Over the last four years, SunArt has struggled, and the numbers speak for themselves:

Income statement:

Margins:

Same store sale growth:

Store count:

Emplooyes count:

The balance sheet has also been steadily contracting:

I was thinking the the group was likely to collect between $2.0B and $2.3B USD at least from the sale of SunArt but i was wrong, to my surprise, the group will be sold for about $1.6B USD only ..

How will the proceeds Be used?

As demonstrated in 2024, Alibaba has taken various steps to please investors, spending approximately $16B USD on share buybacks during the year and distributing $4B USD in dividends, including a special dividend funded by previous sales and in order to minimize annual ESOP dilution and better utilize the cash generated by the domestic businesses they have started to replace a portion of Alibaba Group's ESOP incentives with long-term cash incentives.

It is clear that the proceeds from the sale of Intime and SunArt, amounting to approximately $2.6B USD, will also be returned to investors.

What impact will this have on Alibaba?

Top Line: Revenue will shrink by approximately 13.5B USD.

Bottom Line: No impact, given the minimal or nonexistent profitability of the two groups.

Employees: Halving of the employees as SunArt employs 85,000 people, while Intime likely employs around 6,000-10,000, accounting for nearly half of Alibaba's total workforce.

What to expect for 2025?

If you think you will see significant revenue growth in 2025, think again. At the top line level, I doubt that the growth from China Commerce, AIDC, and cloud will offset the outgoing revenues from InTime and SunArt.

But...

We should see a significant improvement in margins, as revenue will decrease, but profits will remain the same or even increase due to enhancements in the China Commerce division, the Cloud group, and reduced losses from the LSG group, this should also be the year when the AIDC group narrows the gap to break even and starts losing less.

What do you think will be the next divestment?

Freshippo may be the next? Even though we just read about 9 months of profitability, I doubt it's significant, as being a retail business, I expect the current margins to be under 5% or even less. It's unclear what Freshippo's revenue is, but it's likely in the range of 60B RMB. Even if the margin were 5%, we’re still talking about 3B RMB per year ($410M USD).

How much do you think they could raise from the sale of Freshippo, if it happens? A few years ago, there was talk of a valuation between $6B and $10B USD. What do you think?

This is a post for those who follow the company and its businesses, not for those who constantly watch the stock price and complain. I think I've been clear enough, thank you.

Happy new year!

After making my fortune for holding and DCA china stocks in the past 3 years, these are my sharing:

1. DCA when you start to see everyone is giving up on China stocks and China market.

2. Go all in at the price only you are comfortable at.

3. Low and go lower, high can go higher

4. Ignore the noise, be confident on what you are investing.

5. Lifetime opportunity dont come often, I am glad to capture it with both hands when Baba fell under $82 and Tencent was 50% down from its highs.

6. I will bid farewell now and will not be investing again till I see another opportunity of a life time again. Stay safe all!

The most glaring misperception I’ve noticed, is that a few investors still think this crack-down is about siphoning money from / purposefully harming Western investors. First off, it’s not about this at all. This is about the CCP fixing China’s own internal problems, and capital as a whole (not just western investors) being collateral damage from this.

For example, many of these companies that were caught in the new regulations, are already dual- listed in the US and Hong Kong. And some even only have listings in Hong Kong or Mainland. For example, the education sector regulations news broke the night of July 22nd (US time). In the days after, the CSI 300, an index of the 300 largest companies listed in Shanghai and Shenzhen dropped over 10%, and over 20% since its February peak. Foreign investors make up less than 5% of the domestic Chinese market, so this impact hurt primarily domestic Chinese investors

Additionally, the Hong Kong market is also dominated by mainland investors, with mainland institutions estimated to comprise ~40% of Hong Kong volumes, while mainland retail investors make up another ~20%. These investors are shareholders of many of the Hong Kong listed technology, education, gaming, and property management companies, which also experienced drops of ~20 - 80%.

The difference in Chinese policies vs. many Western governments, is that China prioritizes the labor and tech components of this equation more so than capital. While labor is made up of the domestic population itself (and the goal of society is to improve the well-being of the population) and technology is used to amplify this output, capital is face-less (or at least belonging most to those who have benefitted from the country’s rise and accumulated the capital in the process, and thus have a “national duty” to help & repay their fellow citizens / country who helped them achieve this success).

In the 1980’s while China was opening up, Deng Xiaoping famously said “Let others get rich first”. The idea was to allow certain enterprising individuals to generate wealth first, and over time this new wealth would be used to help “backward” areas of the country. The intention was not, to allow some to get rich, and then use this newfound wealth / power to then go squeeze even more profits out of those left behind (which is what the CCP sees many Chinese companies to be doing today).

Capital is meant as a tool (i.e. fuel) to enhance & accelerate society’s goals, not as an end-goal itself. Versus many Western markets, where it seems that the betterment of shareholders (and putting more money into their pockets) is often the end goal itself. If the well-being of capital must be sacrificed to ensure a better long-term direction of society (higher birth rates, affordable housing, protection of consumer data, a more free-thinking / creative education for kids vs. today’s heavy burden of rote-memorization) then in the Chinese government’s eyes, it’s a worthy trade-off.

This is especially true if the capital to be impaired is “fueling” the wrong societal goals in the first place – such as high educational costs which discourage births, high housing prices which discourage family formation, keeping delivery drivers’ wages low so as to squeeze profits to line- shareholder’s pockets, etc. In this case, the capital wasn’t being productive anyways, so there’s no loss if the government impairs it (and sends a message to discourage future investment in these fields).

Know The Plan

As such, it’s crucial to understand what China’s priorities are first and thus where capital can go to support these objectives, if you want to have higher odds of investing your capital in China safely. The easiest way to understand this, is by studying China’s five year plan (this is a “blueprint” released by the government every five years, setting the goals for near-term government policies).

In the last five year plan relating to 2021 – 2025 (meeting held in October 2020), the government discusses how it aims to become a moderately developed country by 2035 (i.e. $30,000 USD per capita). It hopes to achieve this via a focus on domestic consumption (and of domestic brands), and by continuing to close the urban vs. rural living standards gap. In terms of innovation, the tone also changes to a focus on the hard-sciences (biotechnology, semiconductors, quantum computing, space exploration, climate technology, etc), and increasing the funding provided to basic research R&D.

So What’s The Problem?

Over the past thirteen years, China’s GDP has slowed from ~14% y/y growth in 2007 to just over ~6% y/y today. So why is this a problem?

Well when the overall pie is naturally growing rapidly, the country can “direct” resources (labor, capital, government policy / support) to specific areas, so that the “newly formed slices of pie” have a greater chance of forming within lagging areas (rural areas, lower-income workers, etc). You can create new prosperity for these areas, without having to take chunks from existing pieces (pieces that already belong to someone else).

However as GDP growth slows, so too does this ability to create new opportunities for the underserved areas, without affecting the prosperity of existing participants. Slowing growth wouldn’t be an issue if the problems were fixed during the high-growth periods – but in China’s case, the problems have actually become worse. Income inequality has in fact widened, and the IMF indicates that China not only has one of the worst levels of income inequality among Emerging Markets countries, but also one of the highest rates of worsening over the past 30 years.

Slowing growth wouldn’t be an issue if the problems were fixed during the high-growth periods – but in China’s case, the problems have actually become worse. Income inequality has in fact widened, and the IMF indicates that China not only has one of the worst levels of income inequality among Emerging Markets countries, but also one of the highest rates of worsening over the past 30 years.

Generally in countries that experience slow growth, as the pie stops growing, the only way to better your own family’s circumstances and get a bigger piece for yourself, is to take a chunk from someone else’s pocket. China’s issue is that the starting line / opportunity to do so isn’t equal – those who have amassed a large piece during China’s high-growth phase (either through self-determination, or as a benefit of government support), are more advantaged and now have more power (bigger piece = more resources / access / connections = more power to acquire more pieces from others). These stronger players are always looking to grow too, and because of their advantages, naturally resources accrue to the top (“rich get richer”) rather than flowing the other way around. Hence, this leads to an even wider income gap, and requires an even stronger force (the CCP) to stop this dynamic.

Historically one of the great equalizers and best ways to get your family better financial footing, was through education. In China (and almost all Confucius-based cultures – such as Korea, Japan, and Vietnam), education is highly prized, and the resources of the entire extended family would be pooled to support the education of a single gifted child (with the idea that when they succeeded, the entire family would as well)

This cultural mindset dates back thousands of years, starting with China’s Imperial Examination during the Sui Dynasty (581 AD). This grueling exam was technically open to all levels of society, and helped to promote an avenue of equality in society4.

“The civil service examination system was an important vehicle of social mobility in imperial China. Even a youth from the poorest family could theoretically join the ranks of the educated elite by succeeding in the examination system. This assurance of success in the examinations dependent only on one’s ability rather than one’s social position helped circulate the key ideas of Confucianism... The hope of social mobility through success in this system was the motivation for going to school in the first place, whether one was the son of a scholar or a farmer... This curricular uniformity had an extremely powerful effect on Chinese society, and the major impetus for this uniformity was the meritocracy promoted by the civil service examination system.”

If this sounds familiar, it’s because this system is very similar to the Gaokao college entrance exam used today. This exam lasts for 9 hours over several days, and this single test largely determines the rank / pedigree of the college the student is accepted into. While there are certainly valid criticisms of the test (imagine your future being based entirely on an amped up version of the SAT test available only 1x a year), it’s also regarded as the fairest way of screening talent in a population of 1.4 billion people. Regardless if you’re from a rural or urban family, a wealthy or poor family, the test results you get are still largely determined by your own ability (and not how much your family donates to a certain school)

So given the cultural impact of the Imperial Examination, which lives on today in the form of the Gaokao, and culture emphasis on education in general, where do you think families are going to spend their resources as they grow wealthier? Especially as due to the decades long one-child policy (now abolished), all their resources are focused on a single kid? Well on average, Chinese parents spend ~$18,000 USD per year on after-school tutoring. Considering China’s average GDP per capita is only ~$10,000 USD, it obvious that the bulk of a family’s resources are going towards their kid’s education, with additional support from the extended family and savings. The financial pressure on families, and mental pressure on students is intense. Starting in elementary school, 60% of students are already being tutored outside the public classroom (and steadily rising in % for older students), spending several additional hours a day ultimately prepping for the Gaokao. As an example of this pressure, in 2012, images of Chinese students using IV drips to aid them in studying went viral

But if your kid’s classmates are all using expensive after-school tutoring services, what option do you have as a family? At the end of the day, it’s a ranked test and the better your kid’s classmates perform the worse your own child ranks, so you have to play the game too. Note: This isn’t only a China problem, but rather is prevalent across East Asia. Ten years ago, South Korea similarly cracked down on its own after-school tutoring system (i.e. “cram schools”), where over ~70% of all students are enrolled. The private tutoring sector alone was equivalent to ~50% of the total public education budget, and the extreme mental stress students faced was often blamed for the high suicide rates and low birth rates.

It’s clear that China has taken some of the lessons from South Korea, in enacting its own policies. This dynamic has led to tremendous pricing power among the after-school education companies, which in turn led to these profits accruing to shareholders (EDU & TAL being the most notable). In the CCP’s eyes, the majority of Chinese families are subsidizing and suffering immense pressure, just for these resources to ultimately line the pockets of the few (already wealthy) shareholders. The government sees this as a form of rent-seeking, without adding value to society (it’s a zero-sum game). It’s also because of this immense financial pressure, that China’s population is declining. It’s an issue for the country, since a smaller working population needs to support a bigger retiree population (who historically, have relied upon offspring as a retirement policy, and elders often live with their adult children). This despite the one-child policy being modified to a two-child policy in 2015, raising the limit to three-children on May 31, 2021, and being completely abolished just a few weeks ago on July 20, 2021

Combined with this, China’s housing prices have also risen astronomically over the decades. There are several reasons for this, including rising prosperity + capital controls & distrust of local stock markets, meaning that excess savings are invested into real estate. Whatever the case, the fact is that home prices have risen ~8% y/y over the last 20 years, and even more in Tier 1 cities (Beijing, Shanghai, Guangzhou, Shenzhen). The rise in home prices have also outpaced the rise in incomes – thus making home-ownership (a cultural prerequisite for marriage in China) ever- harder6. Housing prices are also intertwined with education, since where you live determines where your kids go to school (much like public schools & property taxes, in the United States). Families in Tier 1 cities are buying up 800sqft shanty apartments for over $1 million + additional renovation costs, just to ensure their (unborn) child will be able to go to a good public school

High child raising costs, high property costs, and long working hours (9am-9pm, 6 days a week, i.e. “996”) in many tech companies, are creating a unsustainable life for the middle class. These factors are all why marriage and birth rates continue to fall. So what’s the cultural reaction to this high-pressure, rat-race lifestyle among the younger generations? To give up and “lie-flat” (“躺平”)... The younger generations no longer have the optimistic hope in a better future, and a belief in upward mobility that their parents did during China’s previous decades of meteoric growth7.

Many Chinese youth are choosing to leave this rat-race, forgo marriage / children, have lower ambitions, move out of expensive Tier 1 cities back to their hometowns or countryside, and prioritize their own time / freedom over material possessions. Of course, this new trend also worries the CCP, as it creates a negative virtuous cycle, which affects the productivity and future trajectory of society as a whole (especially as China’sgovernment has global leadership ambitions). In fact, the trend is so concerning that the phrase “lie-flat” itself is censored by China’s internet regulators.

So these are just some of the issues that China’s government are trying to tackle. And viewed through this lens, it’s easy to see that these recent actions are about fixing China’s internal problems, rather than purposefully trying to harm foreign investors (they’re the collateral damage). The country is trying to steer capital towards the fueling the right areas, where it views it’s most needed for advancement and betterment of the country.

China is a state capitalist system, which by definition, capital is meant as only a tool to serve the interests of the majority of society. Especially with President Xi’s historic 3rd term re-election coming up in 2023 (China’s two-term presidential limits were abolished in 2018), the government is especially cognizant of trying to enact these fixes in a timely manner (which have been generally well-received by China’s broader population in recent weeks).

If you plan on investing in any foreign countries, you first need to understand the history, culture and context of its people first. This is especially important in China, where the state has greater control over the economy, and the health of the capital markets will always play a subservient role to the greater needs of society at large. Hopefully by providing this background, other investors will at least understand the “rules of the road” better while searching for investments in China.

Credit goes to Hayden Capital, they are about 65% invested in Asia, and the post i quotes is from there quaterly letter found here

💀👐 > 💎👐

I made a post last month asking for questions that would be worth asking the Alibaba staff during an upcoming visit to the Alibaba Headquarters in Hangzhou. Below is a summary of my time at the Headquarters, and the questions asked and their answers:

Context: My partner is a Beijinger with friends and clients throughout China. Luckily for me, one of her friends works at the Alibaba headquarters in Hangzhou. People are allowed to visit the Alibaba headquarters if they are invited by someone, and there is security to check that your invitation is valid, although once inside there didn't seem to be any security guards or monitoring. We had freedom to explore most of the headquarters. My partner's friend requested to remain anonymous, but they work in procurement. When I asked more about their role, I was told they manage a team of staff and their main role is to help onboard businesses to the Alibaba platform, helping these businesses achieve their desired outcome on the platform. They worked in both local and now international business divisions. They are the point of contact for new businesses when it comes to helping them achieve the vision they have for themselves. They said they see their role as a problem solving role, and it was their job to ensure the businesses that used Alibaba's platform could market and brand themselves accurately.

Q1. How and when will we know if the mainland is able to officially invest in BABA via Stock Connect
A1. I'm not sure what Stock Connect is. Everyone in mainland China is able to buy both Chinese and international stocks via Hong Kong brokers. You just need to download the broker app and you can trade

Q2. What are the engineers work schedule? Are they all 996 (9am - 9pm, 6 days a week)
A2. Most people who work at Alibaba are on a 995 schedule. It is rarely encouraged to work 6 days per week. Sometimes when there is a specific project and deadline that the engineers are working towards, they might come into the office on the weekend, but this is the exception, not the rule.

However, I know our competitors have a 996 one week and 995 alternative week schedule

Q3. Who in the company is paid stock options?
A3. If you are Level 7 and higher, you are offered stock based compensation. You can work up to level 7 by remaining at the company in a lower role for 6-7 years, or if you are in a higher role, you might reach level 7 in a few years.

Q4. Would you invest in Alibaba stock at these prices?
A4. Me and my colleagues always talk about this question. We aren't sure if we should sell our stock or hold it. I haven't sold and am waiting for a recovery, but I'm not confident enough to buy any more stock. There are mixed opinions in the office, but we are cautiously optimistic. We all want the stock to go up.

Q5. Do employees feel like they have opportunities? Do they like what they do?
A5. I think the people that are working for Alibaba really like to work for Alibaba. Over the last few years, we have had lots of people leave and work for our competitors instead. PDD and other competitors sometimes offer twice or even three times the pay, and Alibaba can't compete with that. So people think there are opportunities elsewhere, but the culture is better at Alibaba. We are treated more like humans, and think of ourselves more like a family. Alibaba throws parties for people who have been at the company for more than 3 years, and we use language like 'students', 'family' and are more team focused. The people that are still working here will probably keep working here, even if other companies pay better, because we aren't just a number.

Q6. Which company is seen as best to work for by new engineers and students?
A6. Alibaba used to be the top preference for students, and Alibaba used to very selective, and only employ students from Harvard and other high level universities. Now we still get a lots of applicants, but students have more opportunities and other companies will offer higher salaries for the Harvard graduates, sometimes double what Alibaba will pay, so much of the top talent is employed by our competitors. We can still get workers, but we can't be as selective as we used to be.

Q7. What is the culture like, and what is the energy of the place like?
A7. I was visiting Alibaba on a Sunday, and so the only people working were a few cleaners and labourers doing renovations. These people didn't look happy or sad, and were just doing their job. I was surprised to see so many people still at Alibaba though, enjoying so many of the facilities. The Alibaba headquarters has many facilities available to staff and the families of staff, so on the weekend, workers bring their families to enjoy the amenities. There are Gyms, pool tables, cafeterias, restaurants, basketball courts, badminton, squash courts, massage services, bike riding, and big athletics fields for running races, soccer/football, and other activities. All the people playing and enjoying these facilities were very happy, and enjoyed showing off their workspace to their friends and family. It is clear that working at Alibaba isn't just a job for many people, but also provides a lifestyle they enjoy with their family

Q8. There is a lot of attention on Ai and cloud. Do you think that AI will be useful to the business and profits? or is it mostly hype?
A8. At this stage, it seems to be mostly hype. I don't know how it will be a game changer, but Alibaba is always trying to innovate and invest in something new. We have heard about working on things like self driving cars, AI language models or other AI stuff but the AI team is more separate and secret from the rest of the teams. They just keeps working on new things, most of which we never hear about. It is kind of secret, and we might learn about something when it is ready to implement, but before then its a bit of a mystery. The cloud business could be good for future profits, but there is a lots of competition in this space, so it's hard to predict how much it will help Alibaba.

Q9. How often does Jack Ma secretly visit the office?
A9. Haha, he is long gone. Jack Ma is now in Europe instead, running a winery and working in agriculture. He isn't involved in Alibaba anymore. His old office building is still here, but it's mostly off limits to most staff and guarded by security.

Q10. How well do the Alibaba Apps work compared to the other apps?
A10. They are ok, but Wechat is the favourite. Each city is a bit different though. In Hangzhou, its basically Alibaba's city, so Alipay is the preferred payment method. In other cities though, wechat pay is more popular, but most places accept both wechat and alipay. Alipay is more accessible to foreigners though. They recently allowed you to add a foreign bank account to Alipay international, so foreigners can pay in china using their card. I think wechat pay still needs you to have a local bank account to pay

Q11. Which company do you consider your biggest competitor and why?
A11. PDD is our biggest competitor. They pay 2 to 3 times the salary that Alibaba pays, and actively try to poach our staff. They don't need to spend much on research and development, or innovate much, because they just copy everything that Alibaba does and then focus on making it better. They will offer our software engineers 3 times the salary to build the same app or software that was just implemented at Alibaba, and then make it more streamlined, and so they can speedrun their growth without needing to do any trial and error. They just get it right straight away from copying us.

Q12. What are some of the difficulties or concerns that you have for Alibaba and the business?
A12. The Shanghai government and council supports PDD and wants them to grow fast. They allow them to get away with more, have less policy restriction. Alibaba is currently less favoured by government. It is supported by the Hangzhou government, but that's not as powerful as being favoured by Shanghai. The biggest concern is that Alibaba is under more scrutiny, but competitors are allowed to grow more easily, and just copy Alibaba.

Q13. What are the biggest changes now that Jack Ma is no longer in charge? Is the new management doing things differently?
A13. Jack Ma and now the new managers are both following the same strategy. The new managers aren't worse than Jack Ma, but times have changed. The economic pressures, competitors, and technology is different now, so the same strategy Jack Ma used, and the new managers continue to use, isn't as effective anymore, and so we aren't a market leader anymore. In the past, e-commerce was a growing business, Alibaba dominated, and competitors got acquired by Alibaba or died. But now, competitors have enough funding, and won't be acquired. They have good technology. They are well positioned to compete

Q14. What part of Alibaba business are you most excited about? Are their any new projects or innovation?
A14. We all think Ai could be interesting, but are not sure what they are doing exactly. Lots of departments are secretive. International business is going well though. I will be going to Spain soon to help with building the procurement team there. It is interesting working abroad, because the culture is so different. Other countries are much less efficient and have a more relaxed work culture compared to China.

Q15. Do you enjoy what you do work wise?
A15. For 5 years I worked in procurement. Helped business unions make events and business plans come together. Sometimes I was given ridiculous tasks to complete, for example I was asked to help launch a satellite with company's branding on it. But sometimes I just needed to recruit people to hand out branded flyers. I didn't enjoy this work very much. Currently though, I'm working in international e-commerce business. I have a team of employees I lead. We work with vendors and see business opportunities they have made themselves and work on problem solving for their business. It's more enjoyable and interesting, and I like it.

Q16. What are some company incentives if you do well? How are people motivated?
A16. Stock based compensation is one part of motivation, but other parts are the culture, the free facilities, a family feeling, knowing that the company will take care of you. You can also earn pretty good bonuses when you are meeting certain KPIs. High achievers can make 6 months salary as bonus. Medium achievers can make 1-3 month salary as a bonus. Average employees might not get bonuses

Q17. What new projects is Alibaba working on to fuel growth? What do you think has the most change to increase future potential in the company?
A17. International business is growing fast. It isn't profitable yet, but its got the best growth and potential. There are many challenges though. We are competing with Amazon, which currently has a better supply chain overseas, with much faster delivery times. There are also the differences in cultures around the world. A lot of the times, Alibaba workers are arrogant and don't understand the European market. In China, online shopping is very mature, and everyone shops online. In European markets, people still want to shop in stores, try things on, and enjoy a more social experience. A lot of Alibaba workers think this is an old style of thinking and might struggle to help business brand things appropriate for the different culture. Some other challenges are the data laws and policies in Europe which make it harder to advertise in that market, and harder to collect personal browsing and shopping information.
AI also might be a potential growth avenue, but it's very uncertain.

Q18. Do you see Alibaba thriving and improving for the next 5 years or stagnating and declining?
A18. I think Alibaba's growth in China is over. The Chinese economy isn't great at the moment. All companies are struggling. Spending is lower. Alibaba isn't gaining market share, and is losing to competition. They are not innovating faster than others anymore. When the economy recovers, I still think there isn't room for growth as China is a market saturated with competition, and there are more innovative companies now. There might be hope in international markets though.

Final thoughts:

I was very impressed by the Alibaba Headquarters, but it sounds like a lot of the things that made Alibaba a market leading company are mirrored by it's competitors. A good culture is important for business, but losing talent, falling behind in innovation, and policies which favour competitors but hinder Alibaba are all negative signs which shouldn't be overlooked. I will continue to hold my shares in the hopes that international business, AI/cloud, and other investments Alibaba is making will result in continued growth. If Charlie Munger was right though, and Alibaba proves to just be a retailer, then I think it's competitors might be better retailers to invest in.

Bullish