Due to the problems faced in China by the leading e-commerce giant, Alibaba Group Holding Ltd, the company has decided to put a halt to its expansion spree for the time being. For now, the Chinese e-commerce giant has planned to stop business in India, the world’s second most populated country.
Currently, India has a population of over 1.2 billion citizen with a growth in yearly population by 1.24%. It had initially struck a deal with Micromax, one of the South Asian country’s major smartphone groups but not it has put a stop to it while it plans on delaying other such investment deals in the country as well. The sole reason for stopping business in the South Asian country is the heightened volatility in the global market.
Due to the slowing economy of the e-commerce giant’s home market, it has stopped its expansion plans for India, which were according to the executive chairman, very close to his heart; even so that he had planned India to be the organization’s growth center for the past year. Along with the slowing economy, the lawsuit against the company for selling fake merchandise has also compromised on its reputation.
The deal that Alibaba Company signed with Micromax was based on acquisition of 20% stake of the Indian smartphone company, which was worth over $3 billion. Micromax, being the largest smartphone provider in the Indian market by sales, still has not backed out from the deal, but neither has Alibaba. Until further discussion, it has been halted for now. This deal is also believed to be quite enticing for other major players in the market.
On November 12, 2015, Alibaba’s stock declined by 0.05% and the shares of the company were being traded at a share price of $79.81 at the last trading session. The highest point was witnessed at was $82.49 while the lowest was $78.21. Throughout the session, the share price fluctuated between these numbers, despite of the fact that the company performed exceptionally well on Singles’ Day. Year to date performance of the company’s stock has declined by 20% and the lowest share price was witnessed amidst the slow global economy in September at $57.20.
Considering the slowdown, the e-commerce giant should just focus on its hometown market for now and try to maintain its reputation in that market rather than expanding elsewhere while moving towards further declining market shares. It has also previously discussed its plans of launching in the American market as well, but keeping in mind the economy, that time does not seem to be in the near future.