Alibaba has decided to temporarily stop international expansions for other issues.
Alibaba just achieved huge success on its most awaited Singles Day, but oddly, its shares were still reported to decline. This leads to the decision it just announced that it is putting a pause to its expansions in India for the time being. India is the world second most populated country, and would have given the company huge business.
The future would be very good for the company if and whenever it expands to India in future, due to the high population of the country, around 1.2 billion and is growing every year by 1.24%. Alibaba Group stopped the deal it was supposed to sign with a smartphone group in India, MicroMax. A delay has been reported by business finance news on other investments in China’s demising economy. It has plans to expand to India but not now.
The chairman of the retail giant values the plans of growth in India, and made it the main feature of growth strategy in 2014, but its hometown’s slow economy has made it suffer and delays its plans. It has been making headlines over controversies of fake product on its platform, which has also played a part in the company’s decline in share.
It does not want to ruin its name and image in the market, but the ongoing lawsuit regarding this accusation have done the damage already. Alibaba Company deal with MicroMax was getting it 20% shares in the group, worth $3 billion. Other companies in the market are also interested in this attractive deal, and now that Alibaba has put a pause on everything, they will try getting their hands on the India’s major phone manufacturer’s deal.
The retail company has made a smart decision, and has a close eye on the currrent happenings in the market. It takes decision accordingly so that it faces as less damage as possible. It should give importance towards keeping a strong and dominant image in the market so that it can face the obstacles that will come in the future due to the declining economy of China.
Pause on the expansion is good decision even though it would have been very profitable for the retail giant. Patience is what will get the company through now but once the expansion takes place in such a populated country, it has to keep in mind to maintain its standard and take actions of the accusation of fake products on its online shopping platform.
Alibaba stock closed at $75.77 on November 13.
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