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China Business News: Alibaba Cloud to Put ‘Partners First’

Editorial Staff
Jul 15, 2022
China business
Image: Phuong Uyen Vo Hoang via Unsplash

Welcome to China Business News, NEO’s weekly roundup of top business developments as reported by news outlets in China and the region.

This week’s highlights:

  • Alibaba Cloud’s “Back to Basic” strategy is in full swing. President of Alibaba Cloud Global Sales Cai Yinghua delivered a keynote speech called “Partners First” at a conference devoted to its partnership ecosystem. He proposed that AliCloud should form a clear cooperation model with partners with a long-term stable development policy, as well as outline clear digital requirements for the partners’ revenue shares. According to the last fiscal year data, AliCloud partnership business revenue reached an unprecedented 18.5 billion RMB. It still has significant growth potential, with revenue expected to exceed 30% this year. This year, AliCloud set up a number of teams to serve different groups of partners. This is in line with its strategy shift, in which AliCloud will adapt to its partners rather than letting partners adapt to AliCloud. In the next three years, AliCloud will invest 1 billion RMB in its special funds, and together with its partners in the distribution sector will serve China’s 300 cities (as part of the “100 Cities Plan”). AliCloud plans to increase cooperation with institutional partners in various sectors and will also provide exclusive consulting support for Chinese companies going abroad, as well as for multinational companies landing in China. (36Kr)
  • Tencent’s Cloud and Smart Industries Group (CSIG) announced the establishment of a government-enterprise business line. The initiative is aimed at continued expansion in the fields of government, industry, energy, cultural tourism, agriculture, real estate, sports and operators. This is the second change in Tencent CSIG’s organizational structure within a year, with Tencent Vice President Li Qiang to oversee the new initiative. In May last year, CSIG launched three strategies of “rooting in industries, cultivating regions and improving efficiency”. It subsequently formed the Smart Industry and Business Services line. Since 2020, the main battlefield for domestic cloud vendors has shifted from the Internet to the government-enterprise market, and cloud vendors are rushing to change their business models. Now, CSIG will focus on B2B and B2G markets, and the competition will undoubtedly become only more fierce. Tang Daosheng, vice president of Tencent Group and head of CSIG, said in an interview with a 36Kr that Tencent has undergone a major sales reform this year to shift away from the past model of low-quality, subcontracted projects to a healthy and sustainable business model based on Tencent’s self-developed products. After the establishment of the government-enterprise business line, CSIG will also further enhance the strategic position of its research products and invest more resources in such products as big data, security, TCE, TDSQL and TRTC to increase market coverage. (36Kr)
  • Alibaba is reported to have reformed its strategic investment department and reduced its investment team by 40 people, from 110 to 70. According to data for the first half of this year, Alibaba significantly decreased its investments. The company carried out investments only 11 times, spending approximately 1 billion RMB. Among the most important investment projects this year was ChangXin Memory Technologies, a Chinese semiconductor integrated device manufacturer specializing in the production of DRAM memory. Alibaba financed the company in February this year with 20 other shareholders. Alibaba Strategic Investment also participated in Fair Robotics’ 316 million RMB series B funding round, VR/AR/MR device vendor Nreal’s seriies C+ funding round, and Atom Semiconductor’s 100 million RMB pre-seed funding round. A source close to the company confirmed the reduction in personnel and said it “happened mainly because of the situation in the market.” (China Venture)
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