Merrill Lynch’s Eddie Leung: Could you share your thoughts first on the e-commerce competitive landscape given the fast growth of some of your peers in the lower price point market so to speak? Just — many years ago, if you remember, Taobao also started more in the lower price point market then developed into today’s scale. So just wondering, how you think about the difference today versus many years ago? And then if you guys can — could you also comment a little bit on the outlook of your customer management business. There has been a bit of deceleration, of course, we know there is a high base affect. But any color going into second half of this year would be helpful.
CEO Daniel Zhang: I think today, I think with the hundreds of millions of user base in Alibaba ecosystem, actually we do have consumers with different tiers with different consumption power. So all we want to do is to use the technology to do a roadmap matchmaking to make sure the right customers can find the right supply and the right assortments. So we do see that in recent years actually the new internet users grow, I mean, especially in low-tier cities, in rural markets. So that’s why we spent a lot of — we made a lot of efforts and investment in acquire the new customers in these areas. And this quarter, you’ll see we have a very good in terms of new user acquisition. And we will continue to do that in terms of the expanding the user base in the low-tier cities, by the same time we do try to improve the product selections on our platforms to not only meet but also create the demand for the customers with different needs. By having said that, I think price, of course, is a very important user experience. By the same time, all the customers expect a reasonable quality of the products when even they enjoy very low price. So how to provide a low-priced product but with the good quality is a key thing. That’s all we want to do. And this is what we, I mean, have achieved in the past few years.
CFO Maggie Wu: For customer management revenue growth, it’s — when you look at the fundamentals of our business, it all shows very healthy growth. The user net adds — it’s any of your annual active consumer shows one of the highest net adds in the past years. And GMV grew very strongly not only Tmall GMV but also Taobao accelerated for its paid GMV. So when you look at the revenue growth for China retail, as I mentioned last quarter during the call, people should combine customer management revenue and the commission. If you look at the combined revenue growth, 33%, it’s pretty much the same level as in previous quarter. That’s still a very strong growth. And, of course, we have been focusing on adding user as well as improve the user experience. And some of these business initiatives improving user experience could help on the transaction, but at the same time, may impact our indiscernible. For example, for those buyers who want to click to enter into the store directly, we let them do it, don’t have to click on the paid product listing. But overall, the China retail marketplace growth in the revenue represents — the performance of the business represents the value we provided to these merchants who pay us.
Barclays’ Gregory Zhao: My first question is about your international — some international brands, which, during the quarter, more international brands coming on to your Tmall marketplace. So how shall we expect the advertising and the commission revenue contribution from these new players? And how shall we expect growth trends going forward? And very quick follow-up is on your 88 VIP. So how do we expect the membership to integrate your existing services and improve user engagement? And can you share some initial metrics of the business?
CEO Daniel Zhang: For the first question, international, I think, globalization is our long-term strategy. That’s why we make very big investment in Southeast Asia. And that’s why we newly acquired a business in Southern Asia, Daraz, and our investment in Trendyol, a Turkey e-commerce — leading e-commerce company. So we have a very big picture in terms of globalization. And so far, actually we do see a very big progress on in terms of customer acquisition and user growth and the category expansions in the new markets. And one advantage we are taking is that we have a lot of, as I said in my script, we have a lot of brand partners with us for many years. Today we are working with not only in China anymore, but also in the new markets. And also, China is famous for manufacturing base, and we have a lot of good supplies with very good prices, and which are very popular in Southeast Asia and the Southern Asia markets. So we will continue to do that to do this — to leverage what we supply from China, and what we are partner with this brand to build a unique advantage in these new markets. And in terms of 88 VIP, I would say, actually this is the new program. And so far, we get very warm feedback from market. And the purpose of this program is to enhance the loyalty and the stickiness of our customers in our core commerce platforms, and other — I mean, new businesses. So that’s why for the first time, we consolidate the most of the consumer service we have in Alibaba ecosystem, starting from the retail discounts, exclusive offering of some products to movie and to entertainment, music even food delivery. So we strongly believe that in each of the business lines we may find some other, I mean, players, who can offer these kind of services. But we are more — actually, Alibaba today is more like all-in-one. And we want to provide this all-in-one membership program to our loyalty customers, to enhance their stickiness in our ecosystem.
Macquarie’s Wendy Huang: Your revenue growth is very strong yet the adjusted EBITDA growth was only the 13% this quarter. And given that you’ve mentioned the New Retail’s margin was structurally different from previous. So should we expect the EBITDA growth to stay at the current level for extended period of time? And second, very quickly, on your overseas strategy so there has been some new reports talking about US$5 billion investment in the Indian market, in the Reliance Retail. So can you give us update on your overseas expansion and investment?
CFO Maggie Wu: Wendy, look at EBITDA growth, right, so take a look at the core commerce EBITDA first. In one quarter’s time, I think, if you compare with the quarter last year of absolute EBITDA profit growth from US$3.9 billion to US$4.8 billion. So that means we net added approximately US$1 billion profit in the quarters time. That gives us the flexibility to invest. So we talked about the investment in all of these strategic important areas, local services, logistics, New Retail and also entertainment business, including some investment — seasonal investment like this World Cup investment in this quarter. So going forward, I think, we’re very clear that the core business we’re going to continue to emphasize the healthy growth, which going to support our investments. So strategic investment will not be anything in two or three quarters time, it will continue. But the thing is that we believe those are the areas that has big time at the same time, we, Alibaba Group has advantage to provide better service and the integration on different businesses, get a synergy out of these businesses, and eventually, add value to our customers and then we could maintain better in the future.
Executive Vice Chairman Joe Tsai: We — look Reliance is a very good company, strong company in India. We’ve a lot of respect for them. But what you read in the news is just untrue. I think taking a step back, we’ve — I’ve talked about investing in the emerging markets both Southeast Asia and South Asia. So as you know, we have — we put a lot of resources into Lazada, which operates in six Southeast Asian countries. We’ve also recently invested in the largest e-commerce business in Pakistan and Bangladesh. These are sort of off the beaten track markets, it seems to you guys, but, just remember that Pakistan has a population of 200 million people. It’s about the same size in terms of population as Indonesia. So these are some of the areas that really excite us. And, by the way Bangladesh, if don’t recall, has 160 million people. Although they’re growing from very low base, we think they have very good long-term potential. So we’re also very excited about these South Asian markets.
JPMorgan’s Alex Yao: For the formation of the local service holding company, why do you want to seek external investors and the funding source? Number two, in light of the consolidation of Koubei, and more investment in Ele.me, can you talk about the financial impact in FY 2019 from this local service holding company? Thirdly, in addition to investments in Ele.me, are there any other areas that you think it will worth investing in terms of the local delivery?
CEO Daniel Zhang: Let me answer your first question. In terms of the local service holding co, actually we are – this is a newly startup company and which we combined both Koubei and Ele.me business in — under this holdco. And as we said in our earnings release. And we are very happy to work with other investors and commit RMB3 billion in this – in the coming fund raising, and which we believe that will give a very solid support to our local service business to gain the market share and to acquire new customers in the ecosystem. And we strongly believe that this is very, very important area, and we will do everything we can to win the battle. And we are committed to invest not only the money but also the technology. But actually — because this is a new area, so that’s why we are very happy to work with other investors on this as well. And in terms of the — I think, Maggie may answer your second question. But let me finish your third question at the same time. I think, yes, while the investment in Ele.me we have – today we have a very good large-scale on-demand point-to-point delivery network. And I think this is very, very unique network and which is good not only for food delivery but also it is necessary for the new commerce any in-store fulfillment delivery. And this is, I think could be relevant to any other categories to do in-store fulfillment and peer point-to-point delivery. So we are actually – today we are working very hard to consolidate this network – integrate this network with our other business. And we do believe that if we add more business cases into this point-to-point network, this will enhance attractiveness and stickiness of the riders in the system, and also improve efficiency of the operation, which on a long-term, we believe is fundamentally important to this new retail strategy.
Executive Vice Chairman Joe Tsai: Yes, let me just supplement the first question, why we include third-party investors. We’re combining two businesses. And in the Koubei business, we already have third-party investors. So when we bring both companies into one holding company, those third-party investors will become part of the investors in the holding company. So we start with a starting point already with third-party investors. And also we want to make sure that this is a business that can be validated by the market in long run. And we have been talking to SoftBank, they came in and take a look, and they really like the business. So they are making this — a very, very large commitment to our business, which is a really great validation of the business. But this is just the first step. We only announced about RMB3 billion of commitments that we have received, but more money will be coming from other third-party investors.
CFO Maggie Wu: Alex, to your second question about the financial impact. So this investment into the local service area together with combined consolidating of Koubei will have an impact in our financial, it will result in slower overall group profit growth in near term. So to the extent, if you look at our core commerce EBITDA, we said that without this investment that business, EBITDA margin level could be comparable to the previous quarters. So that gives you a sense of how much we have invested in those strategic areas. And at Ele.me, local service represents somewhere around 20% of that investment, if we’re talking about the quarter. And so although, it will drag down our profitability, but this business will have a substantial operating leverage once unit economics turns positive and then we have the confidence that to turn that business — to first grow that and then turn it into profitable business.