Alibaba Phone Conference: Taotian Group to Create a Positive Investment Cycle AI Revolution to Become the Growth Engine of Alibaba Cloud

On the evening of Thursday, 810, after the Hong Kong stock market, before the U.S. stock market, the e-commerce giant 630234.16 billion yuan in 2023, up 14% year-on-year, exceeding the market's expected consumption trend of 223.75 billion yuan## **Q1: 618. Apart from DAU, KPI and other indicators of Tao Tian Group, how to balance the profit level in the next 3 years * * Answer: The consumption trend is a slow recovery process in the whole Chinese economy, the government is also stimulating consumption. For increasing consumption, that is, we continue to increase our market profit share. In fact, we have to return to our three strategies-user first, ecological prosperity, and technology-driven. Then I always believe that more user scale will bring more merchants, and then generate a positive driving cycle. The credit growth of more merchants will allow us to obtain more revenue, and then we will continue to invest more revenue. Invest in the scale and experience of users. There is still uncertainty in the future. As long as we maintain the leading advantages of user scale and merchant scale, our investment will definitely bring more revenue and profit growth space in the medium and long term. ## **Q2: The customer growth of DAU and 88VIP is double-digit. The views on the consumption ability of new users and the shopping categories of 88VIP are more in line with the current economic development goals * * Answer: Tao Tian Group has achieved relatively good results mainly due to the following reasons: one is the impact of macro-economy, consumption is indeed slowly recovering, and the penetration rate of online retail is also steadily increasing; The second point, we have implemented the ability to own price Gree and build a platform to provide consumers with good goods and good prices. It has brought more cost-effective goods * *, thus attracting customers. According to the 618 data, we have also seen several major consumption trends. Users have higher and higher demand for cost performance and higher participation, which 618 attracts young customers' consumption. For them, another consumption driver is new products. More than 3 million products 618 started in Tmall this year, which has led to an increase in the sales of home appliances, home decoration, clothing and beauty makeup. More users will rely on new product drivers and richer supplies to drive. ## **Q3: When can cloud revenue increase rapidly, many large companies are not willing to invest in cloud services. Ali's approximate time to expand cloud business * * replied: According to the current situation of China's cloud industry, the percentage of Chinese enterprises' spending on cloud in the overall IT expenditure is still low compared with that of their peers in the United States. Therefore, we believe that there is still great potential for the penetration of cloud infrastructure. The second is about the current AI revolution. This is also an incremental opportunity. All companies in all walks of life will want to use artificial intelligence to improve their services, but this is inseparable from a lot of computing power, not only for the training of models at this stage, but also for supporting the various services they provide in the future. Therefore, we think this is a very important long-term growth engine. So if we look at our own performance, it should be said that we are still gradually digesting the impact of the reduction in demand after the epidemic, such as telecommuting, online education and online video viewing and other aspects of demand, is obviously lower than the epidemic period, this is an important factor affecting our growth rate. We are also in the process of digesting a reduction in demand from certain head customers. At the same time, we are also taking active measures to focus on public cloud, as well as the growth of high-quality cloud services. With the appropriate sales structure and customer structure, we can better capture the momentum of long-term sustainable growth in the future. As for how to rely on AI to realize cash, as a provider of cloud services, our goal is to let agency companies use the low-cost and high-performance infrastructure provided by Aliyun, including: using our basic model or deploying large models on Aliyun, Aliyun can help them to make trial adjustments, fine-tuning and provide the best services, * * helping companies in all walks of life to use infrastructure and our models * *. This is a huge opportunity for us, and we will certainly do our best to provide the best service in the industry and use our models to develop a new generation of AI applications. To add, regarding the ecosystem, entering a new AI era, a new ecosystem is hatching. We want to develop this community well and let the community include all good models, including Ali's own models. It can further provide developers with application tools, help models upgrade models, make good use of Kaiyuan resources, adhere to the open source strategy, and let more and more users use models and resources, at that time, the demand for computing power will also increase. ## **Q4: Aliyun has its own big model and has recently opened up several big models. So for this uncertain market, what do you think will be the territory of China's big model in three to five years? * * Answer: There are many companies that make big models today. In China, there are only two ways in the future, one is like Ali and the other is with Yun, the basic model is inclusive, so that more developers can use it; the second is that companies start with the basic model, but focus on certain areas, which depends on the quality and scale of the data of the relevant companies in that area. I think there will be a large number of such companies, starting with large models, and then entering specific areas. Strictly speaking, the second situation is actually not a large model company. What he is doing is a vertical model. This is actually difficult to distinguish in the industry today, but the two are different. Everyone is talking about big models now, but in fact the vast majority will focus on a certain area, deep-rooted models in a certain area. But what I want to add is that in addition to these two roads, there is another very important point. AI brings not only a single opportunity, but also a new upgrade opportunity for all application services. Either to B or TOC. Therefore, AI has something to do with all kinds of industries, including all kinds of Internet application services. As we said before, in this era, all Alibaba's businesses are worthy of this idea-to do it again with AI. I think this is not only applicable to Alibaba, but also to the whole industry, and to all walks of life. This is also the consensus of all. ## **Q5: Regarding our international digital business group, the performance of different countries is strong, so how can we now think about further realizing a synergy between China and the international business sector to further enhance the user experience? * * answer: it is true that idc performance of international digital business group is very good this quarter. we are also very happy to see that the efforts and strategies we have made in the past few quarters have achieved good results, and I think the momentum can be continued. We are trying to find our own unique positioning in different markets in the world, not only in different regions, but also in different countries, because consumption is closely related to local culture, and is closely related to the pattern of local retail industry. Therefore, we need to find our own unique advantages to provide unique value for local consumers. Of course, as Ali, one of our very important and unique advantages is **China's supply * *. The choice model we are now launching, the choice model is tantamount to releasing an advantage in this regard, that is, using our end-to-end integrated logistics performance system to enable international consumers to enjoy the supply from China and provide a very good performance experience. Another opportunity is to focus on cross-border business in some countries. This is the main course. We have a local to local (Local to local) model as the main course, China cross-border as dessert. Another is that we have done a very strong job in China's B to B. We basically have very strong ties with exporters of Chinese small and medium-sized enterprises. Many of them are industrial products and some of them are consumer goods. Then this can also form a very good flywheel effect, supplemented by our international logistics capabilities, which can be expanded from B to B to B to c. So back to the very good performance this quarter, * * I think it also fully shows that the synergy between Alibaba's different business groups is indeed working * *, because one of the big reasons is that our logistics services and the logistics experience for customers are constantly improving, and we can now provide the service commitment reached anywhere in the world on the 5th. So if we can provide a high-certainty logistics experience for consumers on the other side of the world tens of thousands of miles away, then this is a model of the best customer acquisition, these consumers he only needs to experience once, as long as his experience is good, he will continue to use. On the one hand, we will continue to do a good job in the supply of goods, * * on the other hand, we will constantly improve our logistics standards and experience to ensure that customers have a very good experience * *. ## Q6: Which vertical industries will Aliyun give priority to developing applications, and which vertical areas most need short-term help to drive business growth? Answer: All walks of life need to use cloud services, so if asked which are our priorities, I think the first is Internet companies. Many of these Internet companies in China are so-called digital native companies, and they basically rely on cloud to enable business. If you look back at a development history of Aliyun, you can find that we accompany these Internet companies, in particular, mobile Internet companies have grown up together, but there is still a lot of room for further penetration. Because not all of these companies are digitally native, although they all have such digital applications, the level of digitization of each company is also different. We can further use our cloud infrastructure, our products, including our AI services to further penetrate the Internet industry. So in addition, another big industry opportunity is financial services, and financial services also contains a lot of sub-industries, so we are also investing a lot of resources to develop this aspect of the business. Then there is the automotive industry, we are also developing products and services for this industry, if you look at these electric car companies, including mature, or relatively new companies, basically sooner or later they will become data-driven companies. Overall, **our strategy will focus on companies that are either digitally native or have very good digital transformation plans, which will be our priorities in the next phase. **## Q7: How do we see the revenue of Taobao's e-commerce business Tmall in the second half of the year, and how can we further save costs? In June, the profit margin of Taobao Tmall declined somewhat year-on-year. The proportion of Cat Super and Tmall International, which have lower profit margins in Taobao, increased. Is this the result of the overall profit margin decline? Answer: Let me first answer the question of Cat Super. Cat Super is a self-operated business. Now the profit margin is improving. At the same time, we are very firmly committed to the user experience this year. We will provide semi-direct service for our users on the 20th floor. From now on, we can see that the cities where we provide these services have been greatly improved in terms of user size, order volume and user satisfaction. In addition, e-commerce is also a business, so the factors affecting the results are more, we are closely related to the macro-economy and the competitive situation. Compared with short-term competition and short-term growth, we are more concerned about our own long-term development and self-breakthrough in long-term development. Because I also talked about the greater uncertainty and volatility capacity-building for the future is even more critical. Therefore, in the next three years, we will continue to make resolute investment in the growth of user scale, the improvement of user experience, the improvement of business business and the improvement of business services. We have more than 20 years of accumulation in the e-commerce field, and we have very deep confidence, so I am very confident that we will maintain the double leading edge of user scale and merchant scale in the future. And today's investment will certainly bring more revenue and profit growth in the future, thank you.