Alibaba Group Holding Limited BABA, JD.com, Inc JD, and Meituan MPNGY have built efficient distribution systems amid covid lockdowns, Bloomberg reports.
The distribution systems enable the companies to source fresh produce from farmers and recruit armies of migrant workers for speedy deliveries as millions of Chinese can no longer go out shopping.
The internet companies have dispatched 20,000 riders to fill 2.5 million grocery orders a day, on average, for its 25 million residents, who have been in a complete lockdown since April 1.
However, the dynamic between Big Tech and the government remains uneasy. Along with demanding that tech companies pay more taxes, the government also asks them to provide essential services from time to time, Bloomberg wrote.
While China's standard corporate income tax rate is 25%, Alibaba and Tencent Holding Ltd TCEHY paid only 4%. Smaller e-commerce companies like Pinduoduo Inc PDD and JD.com made almost no contribution.
Big Tech's grocery delivery services come at a steep loss during city lockdowns. They have to provide housing for the riders as the workers cannot go home at the end of their day because the government wants to minimize traffic in and out of residential areas.
Alibaba Singapore has injected $378.5 million into Southeast Asia e-commerce website Lazada via share issue, DealStreetAsia reports. The investment marks the largest since Alibaba's $1.3 billion investment in the firm in June 2020.
Lazada recorded a gross merchandise value (GMV) of $21 billion and 159 million users in the 12 months ended September 2021. Sea Group's Shopee recorded a $62.5 billion GMV in 2021.
Alibaba looks to expand Lazada to Europe to diversify its growth amid cutthroat competition in China, Forbes reports. Alibaba already has a presence in Europe through AliExpress, specializing in cross-border sales from China.
Price Action: BABA shares traded lower by 0.97% at $84 on the last check Tuesday.
Photo via Wikimedia Commons
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.