After a strong quarter, China’s warns of weak domestic spending

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(Businesshala) – China’s Inc warned on Thursday that slower consumption amid higher input costs could hurt business in the second half of its fiscal year, even as the e-commerce firm Reported quarterly results that exceeded market expectations.

FILE PHOTO: People stand under a company sign at the Appliances & Electronics World Expo (AWE) in Shanghai, China March 23, 2021. REUTERS/Aly Song/File Photo

The world’s second-largest economy is recovering from the pandemic, but power shortages and supply chain woes have hurt factory output, with consumption growth hampered by sporadic COVID-19 outbreaks.

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The country’s tech industry is also battling a regulatory crackdown for anti-monopoly and security reasons and has affected powerful players including Alibaba Group Holding Ltd.

“We see considerable challenges, especially in the second half of the year, with relatively weak consumption demand, tight footprint transition from upstream, rising raw material prices, COVID cases, extreme weather, etcetera,” the JD president said. Lei Xu on a conference call.

His comments came as big rival Alibaba fell short of market expectations for its quarterly revenue and profit and warned of the slowest annual revenue growth since its debut in 2014.

Macroeconomic as well as regulatory challenges are likely to hinder the growth of e-commerce companies in China, which are benefiting from heavy online shopping amid the Delta variant outbreak.

In the reported third quarter, JD’s sales in its products segment, which includes online retail, grew 22.9%.

Its net revenue rose to 218.7 billion yuan ($34.27 billion) in the third quarter, according to Refinitiv data, higher than analysts’ average estimate of 216.24 billion yuan.

Excluding commodities, it earned 3.16 yuan per US depository share (ADS), compared to expectations of 2.05 yuan.

US-listed shares of JD were up 3.5% in early trade.

($1 = 6.3823 Chinese Yuan)

Reporting by Tiyashi Datta and Akriti Sharma in Bengaluru; Editing by Shinjini Ganguli and Arun Koyyur


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