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What changed in Alibaba Group Holding Ltd's 20-F — 2022 vs 2023

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Paragraph-level year-over-year comparison of Alibaba Group Holding Ltd's 2022 and 2023 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+837 added−712 removedSource: 20-F (2023-07-21) vs 20-F (2022-07-26)

Top changes in Alibaba Group Holding Ltd's 2023 20-F

837 paragraphs added · 712 removed · 498 edited across 3 sections

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

267 edited+89 added−134 removed328 unchanged
Biggest changeThe Internet Advertising Interim Measures, which were promulgated by the SAIC on July 4, 2016 and came into effect on September 1, 2016, set out, among other things, the following requirements for Internet advertising activities: ● online advertisements for prescription medicine or tobacco are not allowed, while advertisements for special commodities or services such as medical treatment, pharmaceuticals, food for special medical purposes, medical instruments, agrochemicals, veterinary medicine and other health foods must be reviewed by competent authorities before online publication; ● Internet advertisements must be visibly marked as “advertisement,” while paid-search results must be obviously distinguished from natural search results; and ● Internet advertisements must not affect users’ normal use of the Internet; “pop-up ads” must be clearly marked with a “close” sign and be closable with one click; and no deceptive means may be used to lure users into clicking on advertisements.
Biggest changeThe Administrative Measures for Internet Advertising set out, among other things, the following requirements for Internet advertising activities: • online advertisements for tobacco (including e-cigarettes) are not allowed, and online advertisements for prescription medicine are not allowed unless otherwise permitted by laws and regulations; • online advertisements for special commodities and services such as medical treatments, pharmaceuticals, medical devices, agrochemicals, veterinary medicine, health foods and food for special medical purposes must be reviewed by competent authorities before online publication, and the advertisements for such commodities and services are not allowed to be published in the form of introducing health and wellness knowledge.
We are also further strengthening our supply chain capabilities, including through the direct sales model and integrated online and offline solutions, to strengthen the competitiveness of our products and services and enhance our penetration in categories that are essential to our consumers’ daily lives.
We are also further strengthening our supply chain capabilities, including through direct sales model and integrated online and offline solutions, to strengthen the competitiveness of our products and services and enhance our penetration in categories that are essential to our consumers’ daily lives.
Furthermore, in November 2021, the Cybersecurity Administration of China promulgated Draft Regulations on Network Data Security Management, or the Draft Cyber Data Security Regulations, for public comments, pursuant to which, data processors shall apply for cybersecurity review if they engage in (i) merger, reorganization or division of Internet platform operators with significant data resources related to national security, economic development or public interests that affects or may affect national security; (ii) overseas listing while processing over one million users’ personal information; (iii) Hong Kong listing that affects or may affect national security; or (iv) other data processing activities that affect or may affect national security.
Furthermore, in November 2021, the Cyberspace Administration of China promulgated Draft Regulations on Network Data Security Management, or the Draft Cyber Data Security Regulations, for public comments, pursuant to which, data processors shall apply for cybersecurity review if they engage in (i) merger, reorganization or division of Internet platform operators with significant data resources related to national security, economic development or public interests that affects or may affect national security; (ii) overseas listing while processing over one million users’ personal information; (iii) Hong Kong listing that affects or may affect national security; or (iv) other data processing activities that affect or may affect national security.
Using our proprietary technology, this platform matches the marketing demands of merchants, brands and retailers on all of the platforms in the Alibaba Ecosystem with the media resources on our own platforms and third-party properties, and enables us to monetize our China commerce, International commerce, Local consumer services, Cainiao, Digital media and entertainment and other businesses in our ecosystem.
Using our proprietary technology, this platform matches the marketing demands of merchants, brands and retailers on all of the platforms in our ecosystem with the media resources on our own platforms and third-party properties, and enables us to monetize our China commerce, International commerce, Local consumer services, Cainiao, Digital media and entertainment and other businesses in our ecosystem.
Alimama operates Taobao Ad Network and Exchange, or TANX, one of the largest real-time online bidding marketing exchanges in China. TANX helps publishers to monetize their media inventories both on mobile apps and web properties. TANX automates the buying and selling of tens of billions of marketing impressions on a daily basis.
Alimama operates Taobao Ad Network and Exchange, or TANX, one of the largest real-time online bidding marketing exchanges in China. TANX helps publishers monetize their media inventories both on mobile apps and web properties. TANX automates the buying and selling of tens of billions of marketing impressions on a daily basis.
In addition, any online platform operator possessing over one million users’ individual information must apply for a cybersecurity review before listing abroad. Relevant competent governmental authorities may also initiate cybersecurity review if they determine certain network products, services or data processing activities affect or may affect national security.
In addition, any network platform operator possessing over one million users’ individual information must apply for a cybersecurity review before listing abroad. Relevant competent governmental authorities may also initiate cybersecurity review if they determine certain network products, services or data processing activities affect or may affect national security.
Because of the presence of a large number of global brands and the stringent standards required for merchants, brands and retailers to join and operate on Tmall, a presence on Tmall has become a validation of quality, allowing merchants, brands and retailers to take advantage of our significant traffic to extend and build brand awareness and customer engagement.
Because of the presence of a large number of brands and the stringent standards required for merchants, brands and retailers to join and operate on Tmall, a presence on Tmall has become a validation of quality, allowing merchants, brands and retailers to take advantage of our significant traffic to extend and build brand awareness and customer engagement.
It connects Chinese and overseas suppliers to overseas wholesale buyers, who are typically trade agents, wholesalers, retailers, manufacturers and SMEs engaged in the import and export business, and provides sourcing, online transaction, digital marketing, digital supply chain fulfillment and financial services to them.
It connects Chinese and overseas suppliers to overseas wholesale buyers, who are typically trade agents, wholesalers, retailers, manufacturers and SMEs engaged in the import and export business, and provides them with sourcing, online transaction, digital marketing, digital supply chain fulfillment and financial services.
The revisions include (i) optimizing the governance mechanism, clarifying that the board of directors is the executive body of the company, allowing the company to choose to establish a corporate governance structure composed of “board of directors with an audit committee under the board of directors” or “board of directors and board of supervisors” based on its actual circumstances, and allowing small companies limited by shares to be incorporated without a board of directors; (ii) further improving the company capital system, introducing the authorized capital system for companies limited by shares, clarifying the classes of shares that can be issued by companies limited by shares, strengthening the principle of capital maintenance, and allowing the use of capital reserves to cover losses; (iii) strengthening the fiduciary duties of the directors, supervisors and senior management, including the responsibilities of the directors, supervisors and senior management to maintain adequate company capital and report related party transactions, their joint and several liabilities and liquidation obligations; and (iv) improving the company registration system, clarifying that equity interests and creditor rights can be contributed as capital, allowing the establishment of companies limited by shares with one shareholder, and introducing simplified procedures for capital reduction and de-registration of company to facilitate a company’s operation.
The revisions include (i) optimizing the governance mechanism, clarifying that the board of directors is the executive body of the company, allowing the company to choose to establish a corporate governance structure composed of “board of directors with an audit committee under the board of directors” or “board of directors and board of 108 Table of Contents supervisors” based on its actual circumstances, and allowing small companies limited by shares to be incorporated without a board of directors; (ii) further improving the company capital system, introducing the authorized capital system for companies limited by shares, clarifying the classes of shares that can be issued by companies limited by shares, strengthening the principle of capital maintenance, and allowing the use of capital reserves to cover losses; (iii) strengthening the fiduciary duties of the directors, supervisors and senior management, including the responsibilities of the directors, supervisors and senior management to maintain adequate company capital and report related party transactions, their joint and several liabilities and liquidation obligations; and (iv) improving the company registration system, clarifying that equity interests and creditor rights can be contributed as capital, allowing the establishment of companies limited by shares with one shareholder, and introducing simplified procedures for capital reduction and de-registration of company to facilitate a company’s operation.
Our China commerce retail businesses primarily include Taobao and Tmall, which together constitute the world’s largest digital retail business in terms of GMV for the twelve months ended March 31, 2022, according to Analysys, Taobao Deals which offers consumers value-for-money products, Taocaicai which provides next-day pick-up services for groceries and fresh goods at neighborhood pick-up points, as well as our direct sales businesses which offer upgraded consumer experiences with integrated online and offline capabilities, including Tmall Supermarket, Freshippo and Sun Art.
Our China commerce retail businesses primarily include Taobao and Tmall, which together constitute the world’s largest digital retail business in terms of GMV for the twelve months ended March 31, 2023, according to Analysys, Taobao Deals which offers consumers value-for-money products, Taocaicai which provides next-day pick-up services for groceries and fresh goods at neighborhood pick-up points, as well as our direct sales businesses which offer upgraded consumer experiences with integrated online and offline capabilities, including Tmall Supermarket, Freshippo and Sun Art.
Key Content Platforms We offer a diverse range of digital media and entertainment content using a sustainable production and acquisition approach. First, we provide self-produced content. Second, we also jointly produce content with studios, some of which is distributed exclusively on our platforms.
Key Content Platforms We offer a diverse range of digital media and entertainment content using a sustainable production and acquisition approach. First, we provide self-produced content. Second, we jointly produce content with studios, some of which is distributed exclusively on our platforms.
In addition, as we expand our businesses and operations into an increasing number of international markets, such as Southeast Asia, we increasingly face competition from domestic and international players operating in these markets. See “Item 3. Key Information — D.
In addition, as we expand our businesses and operations into an increasing number of international markets, such as Southeast Asia and Europe, we increasingly face competition from domestic and international players operating in these markets. See “Item 3. Key Information — D.
Article 10 of the Revised Cybersecurity Review Measures also sets out certain general factors that are the focus in assessing the national security risk in a cybersecurity review, including (i) the risks of critical information infrastructure being illegally controlled by any individual or organization or subject to interference or destruction; (ii) the harm caused by the disruption of the supply of the product or service to the continuity of critical information infrastructure busine ss; (iii) the security, openness, transparency and diversity of sources of the product or service, the reliability of supply channels, and risks of supply disruption due to political, diplomatic, trade and other factors ; (iv) compliance with PRC laws, administrative regulations and department rules by the provider of the product or service; (v) the risk of core data, important data or a large amount of personal information being stolen, leaked, damaged, illegally used, or illegally transmitted overseas; (vi) the risk that critical information infrastructure, core data, important data or a large amount of personal information for a listing being affected, controlled, and maliciously used by foreign governments, as well as network information security risks; and (vii) other factors that may endanger the security of critical information infrastructure, cybersecurity and data security.
Article 10 of the Revised Cybersecurity Review Measures also sets out certain general factors that are the focus in assessing the national security risk in a cybersecurity review, including (i) the risks of critical information infrastructure being illegally controlled by any individual or organization or subject to interference or destruction; (ii) the harm caused by the disruption of the supply of the product or service to the continuity of critical information infrastructure business; (iii) the security, openness, transparency and diversity of sources of the product or service, the reliability of supply channels, and risks of supply disruption due to political, diplomatic, trade and other factors; (iv) compliance with PRC laws, administrative regulations and department rules by the provider of the product or service; (v) the risk of core data, important data or a large amount of personal information being stolen, leaked, damaged, illegally used, or illegally transmitted overseas; (vi) the risk that critical information infrastructure, core data, important data or a large amount of personal information for a listing being affected, controlled, and maliciously used by foreign governments, as well as network information security risks; and (vii) other factors that may endanger the security of critical information infrastructure, cybersecurity and data security.
Compared with the prior VIE structure adopted by many peer companies in our industry, which uses natural persons to serve as direct or indirect equity holders of the variable interest entity, we have designed the Enhanced VIE Structure to: ● reduce the key man and succession risks associated with natural person VIE equity holders, through a new structure that has widely dispersed interests among natural person interest holders; and ● create a VIE ownership structure that is more stable and self-sustaining, by distancing the natural person interest holders with the VIE with multiple layers of legal entities, including a partnership structure and multiple layers of contractual arrangements.
Compared with the prior VIE structure adopted by many peer companies in our industry, which uses natural persons to serve as direct or indirect equity holders of the VIE, we have designed the Enhanced VIE Structure to: • reduce the key man and succession risks associated with natural person VIE equity holders, through a new structure that has widely dispersed interests among natural person interest holders; and • create a VIE ownership structure that is more stable and self‑sustaining, by distancing the natural person interest holders with the VIE with multiple layers of legal entities, including a partnership structure and multiple layers of contractual arrangements.
In addition, Fengniao Logistics, Ele.me’s on-demand delivery network, provides last-mile logistics services, including delivery of food, groceries, FMCG and pharmaceutical products for Freshippo, Sun Art, Alibaba Health, as well as Taoxianda.
In addition, Fengniao Logistics, Ele.me’s on-demand delivery network, provides last-mile logistics services, including delivery of food, groceries, FMCG and pharmaceutical products for Freshippo, Sun Art, as well as Alibaba Health.
For example, from a China import standpoint, Cainiao is focused on developing cross-border fulfillment solutions for Tmall Global, utilizing a combination of bonded warehouses in China and direct shipment from markets outside mainland China.
For example, from a China import standpoint, Cainiao is focused on developing cross-border fulfillment solutions for Tmall Global, utilizing a combination of bonded warehouses in China and direct shipment from markets outside Chinese mainland.
Our strategy for Ele.me is to leverage our China commerce platforms, Alipay and our data technology to expand our offerings from shopping to services, further tapping into new addressable markets for consumption in China.
Our strategy for Ele.me is to leverage our China commerce platforms and our data technology to expand our offerings from shopping to services, further tapping into new addressable markets for consumption in China.
In fiscal year 2022, the order volume of “To-Destination” businesses grew rapidly year-over-year. Amap. Amap is a leading provider of mobile digital map, navigation and real-time traffic information in China. Amap empowers major mobile apps across different industry verticals, including local services, ride-hailing and social networking, which end users can access directly through Amap’s leading open platform.
In fiscal year 2023, the order volume of “To-Destination” businesses grew rapidly year-over-year. Amap is a leading provider of mobile digital map, navigation and real-time traffic information in China. Amap empowers major mobile apps across different industry verticals, including local services, ride-hailing and social networking, which end users can access directly through Amap’s leading open platform.
The Opinions on Intensifying Crack Down on Illegal Securities Activities issued on July 6, 2021 called for (i) tightening oversight of data security, cross-border data flow and administration of classified information, as well as amendments to relevant regulations to specify responsibilities of overseas listed Chinese companies with respect to data security and information security; (ii) enhanced oversight of overseas listed companies as well as overseas equity fundraising and listing by Chinese companies; and (iii) extraterritorial application of PRC’s securities laws.
The Opinions on Intensifying Crack Down on Illegal Securities Activities issued on July 6, 2021 called for (i) tightening oversight of data security, cross-border data flow and administration of classified information, as well as amendments to relevant regulations to specify responsibilities of overseas listed Chinese companies with respect to data security and information security; (ii) enhanced oversight of overseas listed companies as well as overseas equity fundraising and listing by Chinese companies; and (iii) extraterritorial application of PRC securities laws.
The Data Security Law also introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, as well as the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, or illegally acquired or used, and an appropriate level of protection measures is required to be taken for the respective categories of data, for example, the processor of important data shall designate the personnel and management institution responsible for the data security, carry out risk assessment for its data processing activities and file the risk assessment report with the competent authorities.
The Data Security Law also introduces a data 106 Table of Contents classification and hierarchical protection system based on the importance of data in economic and social development, as well as the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, or illegally acquired or used, and an appropriate level of protection measures is required to be taken for the respective categories of data, for example, the processor of important data shall designate the personnel and management institution responsible for the data security, carry out risk assessment for its data processing activities and file the risk assessment report with the competent authorities.
For example, Freshippo’s proprietary fulfillment system enables store-to-door 30-minute delivery to consumers living within a three-kilometer radius of a Freshippo store; we provide groceries and fresh goods to consumers with Taocaicai’ next-day pick-up services; and Tmall Supermarket offers daily necessities, FMCG and general merchandise through Taobao app with same-or-next-day delivery services. ● Engagement.
For example, Freshippo’s proprietary fulfillment system enables 30-minute store-to-door delivery for consumers living within a three-kilometer radius of a Freshippo Supermarket store; we provide groceries and fresh goods to consumers with Taocaicai’s next-day pick-up services; and Tmall Supermarket offers daily necessities, FMCG and general merchandise through Taobao app with same-or-next-day delivery services. • Engagement.
Box 847, George Town, Grand Cayman, Cayman Islands. Our agent for service of process in the United States is Corporation Service Company located at 1180 Avenue of the Americas, Suite 210, New York, New York 10036. Our corporate website is www.alibabagroup.com. 62 Table of Contents We have a demonstrated track record of successful organic business creation.
Box 847, George Town, Grand Cayman, Cayman Islands. Our agent for service of process in the United States is Corporation Service Company located at 1180 Avenue of the Americas, Suite 210, New York, New York 10036. Our corporate website is www.alibabagroup.com . 70 Table of Contents We have a demonstrated track record of successful organic business creation.
Consumers can enjoy a broad variety of quality products at different price points with a wide selection of delivery options that satisfy their varying needs. The core capabilities that form the critical foundation of our digital commerce infrastructure include the following: - Product and supply chain capabilities . We believe our ecosystem provides the most comprehensive product and service offerings.
Consumers can enjoy a broad variety of quality products at different price levels with a wide selection of delivery options that satisfy their varying needs. The core capabilities that form the critical foundation of our digital commerce infrastructure include the following: - Product and supply chain capabilities . We believe our ecosystem provides the most comprehensive product and service offerings.
We believe our cloud services have become a critical foundation that many of our customers increasingly depend on in their daily operations. DingTalk DingTalk is our digital collaboration workplace and application development platform that offers new ways of working, sharing and collaboration for modern enterprises and organizations. Millions of enterprises and users use DingTalk to stay connected and work remotely.
We believe our cloud services have become a critical foundation that many of our customers increasingly depend on in their daily operations. DingTalk DingTalk is our intelligent collaboration workplace and application development platform that offers new ways of working, sharing and collaboration for modern enterprises and organizations. Millions of enterprises and users use DingTalk to stay connected and work remotely.
Any such circumstance could subject us to penalties, including fines, suspension of business and revocation of required licenses, significantly limit or completely hinder our ability to continue to offer securities to investors and cause our securities to decline in value or become worthless. For more detailed information, see “Item 3. Key Information — D.
Any such circumstance could subject us to penalties, including fines, suspension of business and revocation of required licenses, significantly limit or completely hinder our and our subsidiaries' ability to offer securities to investors and cause our securities to decline in value or become worthless. For more detailed information, see “Item 3. Key Information — D.
During the same period, we generated approximately 67% of our revenue from our retail commerce business in China. We have also developed a digital commerce infrastructure that offers an upgraded consumer experience by seamlessly integrating online and offline capabilities for our marketplaces and direct sales businesses.
During the same period, we generated approximately 65% of our revenue from our retail commerce business in China. We have also developed a digital commerce infrastructure that offers an upgraded consumer experience by seamlessly integrating online and offline capabilities for our marketplaces and direct sales businesses.
For example, marketplace platform providers are obligated to make public and file their transaction rules with MOFCOM or its respective provincial counterparts, to enable examination of the legal status of each third-party merchant selling products or services on their platforms and display on a prominent location on the merchant’s web page the information stated in the merchant’s business license or a link to its business license, and group buying website operators must only allow a third-party merchant with a proper business license to sell products or services on their platforms.
For example, marketplace platform providers are obligated to make public and file their transaction rules with MOFCOM or its respective provincial counterparts, to enable examination of the legal status of each third-party merchant selling products or services on their platforms and display on a prominent location on the 96 Table of Contents merchant’s web page the information stated in the merchant’s business license or a link to its business license, and group buying website operators must only allow a third-party merchant with a proper business license to sell products or services on their platforms.
In addition, as the largest IaaS service provider in Asia Pacific, we continue to expand our international cloud infrastructure and strengthen local cloud service capabilities, especially in Southeast Asia. We have set up data centers in 27 regions globally, including Singapore, Indonesia, Malaysia, the Philippines and Thailand, among others.
In addition, as the largest IaaS service provider in Asia Pacific, we continue to expand our international cloud infrastructure and strengthen local cloud service capabilities, especially in Southeast Asia. We have set up data centers in 28 regions globally, including Singapore, Indonesia, Malaysia, the Philippines and Thailand, among others.
The Platform Economy Anti-monopoly Guidelines set out detailed standards and rules in respect to the definition of relevant markets, typical types of cartel activity and abusive behavior by companies with market dominance, which provide further guidance for enforcement of anti-monopoly laws regarding online platform operators.
The Platform Economy Anti-monopoly Guidelines set out detailed standards and rules in respect to the definition of relevant markets, typical types of cartel activity and abusive behavior by companies with market dominance, which provide further guidance for enforcement of anti-monopoly laws regarding network platform operators.
Under the Foreign Investment Security Review Measures, foreign investments in military, national defense-related areas or in locations in proximity to military facilities, or foreign investments that would result in acquiring the actual control of assets in certain key sectors, such as critical agricultural products, energy and resources, equipment manufacturing, infrastructure, transport, cultural products and services, IT, Internet products and services, financial services and technology sectors, are required to obtain approval from designated governmental authorities in advance.
Under the Foreign Investment Security Review Measures, foreign investments in military, national 109 Table of Contents defense-related areas or in locations in proximity to military facilities, or foreign investments that would result in acquiring the actual control of assets in certain key sectors, such as critical agricultural products, energy and resources, equipment manufacturing, infrastructure, transport, cultural products and services, IT, Internet products and services, financial services and technology sectors, are required to obtain approval from designated governmental authorities in advance.
According to the Administrative Provisions on Security Vulnerability of Network Products jointly promulgated by the MIIT, the Cyberspace Administration of China and the Ministry of Public Security, which came into effect on September 1, 2021, network 110 Table of Contents product providers, network operators as well as organizations or individuals engaging in the network product security vulnerability discovery, collection, release and other activities shall establish channels to receive information of security vulnerability of their respective network products and shall examine and fix such security vulnerability in a timely manner.
According to the Administrative Provisions on Security Vulnerability of Network Products jointly promulgated by the MIIT, the Cyberspace Administration of China and the Ministry of Public Security, which came into effect on September 1, 2021, network product providers, network operators as well as organizations or individuals engaging in the network product security vulnerability discovery, collection, release and other activities shall establish channels to receive information of security vulnerability of their respective network products and shall examine and fix such security vulnerability in a timely manner.
Empowered by our commerce technologies and services, we appeal to a massive base of consumers by connecting them with diversified and comprehensive offerings in highly engaging and social formats. ● Consumers. We serve a large and growing consumer base, across both large cities and less-developed areas.
Empowered by our commerce technologies and services, we appeal to a massive base of consumers by connecting them with diversified and comprehensive offerings in highly engaging and social formats. • Consumers. We serve a large and diversified consumer base in China, across both large cities and less-developed areas.
Even if the aforementioned revenue threshold is not met, the transaction must be reported to anti-monopoly authority of the State Council of the PRC if (i) the revenue in China of one of the business operators involved in the concentration exceeds RMB100 billion in the last fiscal year, (ii) the market value or valuation of the business operators to be merged or controlled in the concentration 107 Table of Contents exceeds RMB800 million and their revenue in China in the last fiscal year accounts for more than one third of their worldwide revenue.
Even if the aforementioned revenue threshold is not met, the transaction must be reported to anti-monopoly authority of the State Council of the PRC if (i) the revenue in China of one of the business operators involved in the concentration exceeds RMB100 billion in the last fiscal year, (ii) the market value or valuation of the business operators to be merged or controlled in the concentration exceeds RMB800 million and their revenue in China in the last fiscal year accounts for more than one third of their worldwide revenue.
Our retail commerce businesses in China, primarily consisting of Taobao, Tmall, Taobao Deals, Taocaicai and our various direct sales businesses which offer upgraded consumer experiences with integrated online and offline capabilities, have become an important part of the everyday lives of consumers in China.
Our retail commerce businesses in China, primarily consisting of Taobao, Tmall and our various direct sales businesses which offer upgraded consumer experiences with integrated online and offline capabilities, have become an important part of the everyday lives of consumers in China.
Our vision for our logistics services is to fulfill consumer orders within 24 hours in China and within 72 hours anywhere else in the world. To realize this vision, Cainiao continues to build and operates a global fulfillment network together with its logistics partners.
Our vision for our logistics services is to fulfill consumer orders within 24 hours in China and within 72 hours anywhere else in the world. To realize this vision, Cainiao continues to build and operate a global fulfillment network together with its logistics partners.
The Provisions on Technological Measures for Internet Security Protection, or the Internet Security Protection Measures, promulgated on December 13, 2005 by the Ministry of Public Security require all ICPs to keep records of certain information about their users (including user registration information, log in and log out time, IP address, content and time of posts by users) for at least 60 days and submit the above information as required by laws and regulations.
The Provisions on Technological Measures for Internet Security Protection, or the Internet Security Protection Measures, promulgated on December 13, 2005 by the Ministry of Public Security require all ICPs to keep records of certain information about their users (including user registration 103 Table of Contents information, log in and log out time, IP address, content and time of posts by users) for at least 60 days and submit the above information as required by laws and regulations.
In general, a VAT at the rate of 17% (before May 1, 2018) or 16% (from May 1, 2018 to March 31, 2019) or 13% (from April 1, 2019 onwards) is levied on most goods imported via cross-border e-commerce platforms and a 15% consumption tax is levied on high-end cosmetics and high-end skincare products, while no consumption tax is levied on regular skin care products, maternity or baby care products.
In general, a VAT at the rate of 17% (before May 1, 2018) or 16% (from May 1, 2018 to March 31, 2019) or 13% (from April 1, 2019 onwards) is levied on most goods imported via cross-border e-commerce platforms and a 15% consumption tax is levied on high-end cosmetics and high-end skincare products, while no consumption tax is 110 Table of Contents levied on regular skin care products, maternity or baby care products.
Securities Act, include the following entities: ● Taobao Holding Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands, which is our wholly-owned subsidiary and a holding company of certain major subsidiaries relating to China commerce and Local consumer services businesses. ● Taobao China Holding Limited 淘寶中國控股有限公司 , a limited liability company incorporated under the laws of Hong Kong, which is the direct wholly-owned subsidiary of Taobao Holding Limited and a holding company of certain major subsidiaries relating to China commerce and Local consumer services businesses. ● Alibaba.com Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands, which is our wholly-owned subsidiary and a holding company of certain major subsidiaries relating to China commerce, International commerce and Cloud businesses. ● Alibaba.com Investment Holding Limited, a company incorporated with limited liability under the laws of the British Virgin Islands, which is the direct wholly-owned subsidiary of Alibaba.com Limited and a holding company of certain major subsidiaries relating to China commerce, International commerce and Cloud businesses. ● Alibaba.com China Limited 阿里巴巴網絡中國有限公司 , a limited liability company incorporated under the laws of Hong Kong, which is the direct wholly-owned subsidiary of Alibaba.com Investment Holding Limited and mainly operates back office and administrative functions. ● Alibaba.com Singapore E-commerce Private Limited, a company incorporated under the laws of the Republic of Singapore, which is a wholly-owned subsidiary of Alibaba.com Investment Holding Limited and a holding company for subsidiaries relating to China commerce, International commerce and Cloud businesses and operates certain International commerce businesses. ● Alibaba Investment Limited, a company incorporated with limited liability under the laws of the British Virgin Islands, which is our wholly-owned subsidiary and a holding company for strategic investments and a major subsidiary relating to Digital media and entertainment business. ● Alibaba Group Services Limited, a limited liability company incorporated under the laws of Hong Kong, which is our wholly-owned subsidiary and operates as our treasury center in Hong Kong. ● Taobao (China) Software Co., Ltd. 淘宝（中国）软件有限公司 , a limited liability company incorporated under the laws of the PRC, which is a direct wholly-owned subsidiary of Taobao China Holding Limited, and provides software and technology services for Taobao. ● Zhejiang Tmall Technology Co., Ltd. 浙江天猫技术有限公司 , a limited liability company incorporated under the laws of the PRC, which is a direct wholly-owned subsidiary of Taobao China Holding Limited, and provides software and technology services for Tmall. ● Alibaba (China) Technology Co., Ltd. 阿里巴巴 （ 中国）网络技术有限公司 , a limited liability company incorporated under the laws of the PRC, which is jointly owned by Taobao (China) Software Co., Ltd., Zhejiang Tmall Technology Co., Ltd. and Alibaba.com China Limited, and mainly operates our wholesale marketplaces and cross-border commerce retail and wholesale businesses. ● Alibaba (China) Co., Ltd. 阿里巴巴 （ 中国）有限公司 , a limited liability company incorporated under the laws of the PRC, which is a direct wholly-owned subsidiary of Alibaba Group Service Limited, and is mainly involved in our strategic cooperation.
Securities Act, include the following entities: • Taobao Holding Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands, which is our wholly-owned subsidiary and a holding company of certain major subsidiaries relating to China commerce and Local consumer services businesses. • Taobao China Holding Limited 淘寶中國控股有限公司, a limited liability company incorporated under the laws of Hong Kong, which is the direct wholly-owned subsidiary of Taobao Holding Limited and a holding company of certain major subsidiaries relating to China commerce and Local consumer services businesses. • Alibaba.com Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands, which is our wholly-owned subsidiary and a holding company of certain major subsidiaries relating to China commerce, International commerce and Cloud businesses. • Alibaba.com Investment Holding Limited, a company incorporated with limited liability under the laws of the British Virgin Islands, which is the direct wholly-owned subsidiary of Alibaba.com Limited and a holding company of certain major subsidiaries relating to China commerce, International commerce and Cloud businesses. • Alibaba.com China Limited 阿里巴巴網絡中國有限公司, a limited liability company incorporated under the laws of Hong Kong, which is the direct wholly-owned subsidiary of Alibaba.com Investment Holding Limited and mainly operates back office and administrative functions. • Alibaba Investment Limited, a company incorporated with limited liability under the laws of the British Virgin Islands, which is our wholly-owned subsidiary and a holding company for strategic investments and major subsidiaries relating to Digital media and entertainment business. • Alibaba Group Services Limited, a limited liability company incorporated under the laws of Hong Kong, which is our wholly-owned subsidiary and operates as our treasury center in Hong Kong. • Taobao (China) Software Co., Ltd. 淘宝（中国）软件有限公司, a limited liability company incorporated under the laws of the PRC, which is a direct wholly-owned subsidiary of Taobao China Holding Limited, and provides software and technology services for Taobao. • Zhejiang Tmall Technology Co., Ltd. 浙江天猫技术有限公司, a limited liability company incorporated under the laws of the PRC, which is a direct wholly-owned subsidiary of Taobao China Holding Limited, and provides software and technology services for Tmall. • Alibaba (China) Technology Co., Ltd. 阿里巴巴（中国）网络技术有限公司, a limited liability company incorporated under the laws of the PRC, which is jointly owned by Taobao (China) Software Co., Ltd., Zhejiang Tmall Technology Co., Ltd. and Alibaba.com China Limited, and mainly operates our wholesale marketplaces and cross-border commerce retail and wholesale businesses. • Alibaba (China) Co., Ltd. 阿里巴巴（中国）有限公司, a limited liability company incorporated under the laws of the PRC, which is a direct wholly-owned subsidiary of Alibaba Group Services Limited, and is mainly involved in our strategic cooperation.
According to the Cybersecurity Review Measures, the purchase of cyber products and services including core network equipment, high-performance computers and servers, mass storage devices, large databases and application software, network security equipment, cloud computing services, and other products and services that have an important impact on the security of critical information infrastructure which affects or may affect national security is subject to cybersecurity review by the Cybersecurity Review Office.
According to the Cybersecurity Review Measures, the purchase of cyber products and services including core network equipment, high-performance computers and servers, mass storage devices, large databases and application software, network security equipment, cloud computing services, and other products and services that have an important impact on the security of critical information 104 Table of Contents infrastructure which affects or may affect national security is subject to cybersecurity review by the Cybersecurity Review Office.
If our VIE structure were to be deemed as a method of foreign investment under any future laws, regulations and rules, and if any of our business operations were to fall under the “Negative List” for foreign investment, we would need to take further actions in order to comply with these laws, regulations and rules, which may materially and adversely affect our current corporate structure, business, financial condition and results of operations.
If the VIE structure adopted by us were to be deemed as a method of foreign investment under any future laws, regulations and rules, and if any of our business operations were to fall under the “Negative List” for foreign investment, we would need to take further actions in order to comply with these laws, regulations and rules, which may materially and adversely affect our current corporate structure, business, financial condition and results of operations.
Tmall has driven the digitalization and transformation of brands and retailers by enabling them to digitalize their operations, engage, acquire and retain consumers, increase brand recognition, innovate product offerings, manage supply chains and enhance operational efficiency.
Tmall has driven the digitalization and transformation of brands and retailers by enabling them to digitalize their operations, engage, acquire and retain consumers, increase brand recognition, innovate product offerings, manage supply chains and enhance operating efficiency.
We believe the Alibaba Ecosystem offers the most comprehensive range of products and services among global commerce platforms to meet the diverse demands of our massive and growing consumer base across different segments. We have developed a digital commerce infrastructure that offers an upgraded consumer experience by seamlessly integrating online and offline capabilities for our marketplaces and direct sales businesses.
We believe our ecosystem offers the most comprehensive range of products and services among global commerce platforms to meet the diverse demands of our massive and diversified consumer base across different segments. We have developed a digital commerce infrastructure that offers an upgraded consumer experience by seamlessly integrating online and offline capabilities for our marketplaces and direct sales businesses.
On December 31, 2021, the Cyberspace Administration of China, the MIIT, the Ministry of Public Security and the Ministry of State Security jointly promulgated the Administrative Provisions on Internet Information Service Algorithm Recommendation, or the Algorithm Recommendation Provisions, which came into effect on March 1, 2022.
On December 31, 2021, the Cyberspace Administration of China, the MIIT, the Ministry of Public Security and the SAMR jointly promulgated the Administrative Provisions on Internet Information Service Algorithm Recommendation, or the Algorithm Recommendation Provisions, which came into effect on March 1, 2022.
VIE equity holders under the Enhanced VIE Structure Under the Enhanced VIE Structure, a variable interest entity is typically held by a PRC limited liability company, instead of individuals. This PRC limited liability company is directly or indirectly owned by two PRC limited partnerships, each of which holds 50% of the equity interest.
VIE equity holders under the Enhanced VIE Structure Under the Enhanced VIE Structure, a VIE is typically held by a PRC limited liability company, instead of individuals. This PRC limited liability company is directly or indirectly owned by two PRC limited partnerships, each of which holds 50% of the equity interest.
The Draft Cyber Data Security Regulations also provide that operators of large Internet platforms with headquarters, operation centers or R&D centers overseas shall report to the Cybersecurity Administration of China and relevant authorities.
The Draft Cyber Data Security Regulations also provide that operators of large Internet platforms with headquarters, operation centers or R&D centers overseas shall report to the Cyberspace Administration of China and relevant authorities.
Through Taobao, consumers can also find long-tail products on Idle Fish, our consumer-to-consumer community and marketplace in China, as well as other products and consumer services, which may also be accessed through their respective independent mobile apps. Merchants on Taobao are primarily individuals and small businesses. Merchants can create storefronts and listings on Taobao free of charge.
Through Taobao, consumers can also find long-tail products on Xianyu, our consumer-to-consumer community and marketplace in China, as well as other products and consumer services, which may also be accessed through their respective independent mobile apps. Merchants on Taobao are primarily individuals and small businesses. Merchants can create storefronts and listings on Taobao free of charge.
In addition, online livestreaming marketing platforms are also required to establish and maintain risk management systems to guard against high-risk marketing activities, including taking measures such as pop-up warnings, limiting traffic, suspending livestreaming, and prominently alerting users of the risks involved in transactions that are conducted outside livestreaming platforms.
In addition, online livestreaming marketing platforms are also required to 97 Table of Contents establish and maintain risk management systems to guard against high-risk marketing activities, including taking measures such as pop-up warnings, limiting traffic, suspending livestreaming, and prominently alerting users of the risks involved in transactions that are conducted outside livestreaming platforms.
In addition, the relevant EIT laws and regulations also provide that entities recognized as Software Enterprises are able to enjoy a tax holiday consisting of a two-year-exemption commencing from their first profitable calendar year and a 50% reduction in ordinary tax rate for the following three 116 Table of Contents calendar years.
In addition, the relevant EIT laws and regulations also provide that entities recognized as Software Enterprises are able to enjoy a tax holiday consisting of a two-year-exemption commencing from their first profitable calendar year and a 50% reduction in ordinary tax rate for the following three calendar years.
Moreover, any profits, distributions or dividends (after deduction of relevant tax expenses) received by the variable interest entity equity holder also belong to and shall be paid to our subsidiary. The exclusive call option agreements remain in effect until the equity interest or assets that are the subject of these agreements are transferred to our subsidiary.
Moreover, any profits, distributions or dividends (after deduction of relevant tax expenses) received by the VIE equity holder also belong to and shall be paid to our subsidiary. The exclusive call option agreements remain in effect until the equity interest or assets that are the subject of these agreements are transferred to our subsidiary.
China Commerce Wholesale 1688.com, China’s largest integrated domestic wholesale marketplace in 2021 by net revenue, according to Analysys, connects wholesale buyers and sellers across a wide range of categories.
China Commerce Wholesale 1688.com, China’s largest integrated domestic wholesale marketplace in 2022 by net revenue, according to Analysys, connects wholesale buyers and sellers across a wide range of categories.
China Commerce Wholesale 1688.com 1688.com, China’s largest integrated domestic wholesale marketplace in 2021 by net revenue, according to Analysys, provides sourcing and online transaction services by connecting manufacturers and wholesale sellers to wholesale buyers in China.
China Commerce Wholesale 1688.com 1688.com, China’s largest integrated domestic wholesale marketplace in 2022 by net revenue, according to Analysys, provides sourcing and online transaction services by connecting manufacturers and wholesale sellers to wholesale buyers in China.
The current industry entry clearance requirements governing investment activities in the PRC by foreign investors are set out in two categories, namely the Negative List and the Encouraged Industry Catalogue for Foreign Investment (2020 version), or the 2020 Encouraged Industry Catalogue, both of which were promulgated by the NDRC and the MOFCOM and took effect in January 2022 and January 2021 respectively.
The current industry entry clearance requirements governing investment activities in the PRC by foreign investors are set out in two categories, namely the Negative List and the Encouraged Industry Catalogue for Foreign Investment (2022 version), or the 2022 Encouraged Industry Catalogue, both of which were promulgated by the NDRC and the MOFCOM and took effect in January 2022 and January 2023 respectively.
These major subsidiaries have obtained all material approvals required for their business operations. The Negative List does not apply to our major subsidiaries that are registered and domiciled in Hong Kong S.A.R., the British Virgin Islands or the Cayman Islands, and operate outside of China.
These major subsidiaries have obtained all material approvals required for their business operations. The Negative List does not apply to our major subsidiaries that are registered and domiciled in Hong Kong S.A.R., the British Virgin Islands or the Cayman Islands, and operate outside of Chinese mainland.
Operating Results — Variable Interest Entity Financial Information.” Contractual Arrangements among Our Subsidiaries, Variable Interest Entities and the Variable Interest Entity Equity Holders Due to legal restrictions on foreign ownership and investment in, among other areas, value-added telecommunications services, which include the operations of ICPs, we, similar to all other entities with foreign-incorporated holding company structures operating in our industry in China, operate our Internet businesses and other businesses in which foreign investment is restricted or prohibited in the PRC through various contractual arrangements with VIEs that are incorporated and owned by PRC citizens or by PRC entities owned and/or controlled by PRC citizens.
Key Information — The VIE Structure Adopted by Our Company— Variable Interest Entity Financial Information.” Contractual Arrangements among Our Subsidiaries, Variable Interest Entities and the Variable Interest Entity Equity Holders Due to legal restrictions on foreign ownership and investment in, among other areas, value‑added telecommunications services, which include the operations of ICPs, we, similar to all other entities with foreign‑incorporated holding company structures operating in our industry in China, operate our Internet businesses and other businesses in which foreign investment is restricted or prohibited in the PRC through various contractual arrangements with VIEs that are incorporated and owned by PRC citizens or by PRC entities owned and/or controlled by PRC citizens.
Each variable interest entity equity holders has agreed that the following amounts, to the extent in excess of the original registered capital that they contributed to the variable interest entity (after deduction of relevant tax expenses), belong to and shall be paid to our relevant subsidiaries: (i) proceeds from the transfer of its equity interests in the variable interest entity, (ii) proceeds received in connection with a capital decrease in the variable interest entity, and (iii) distributions or liquidation residuals from the disposal of its equity interests in the variable interest entity upon termination or liquidation.
Each VIE equity holders has agreed that the following amounts, to the extent in excess of the original registered capital that they contributed to the VIE (after deduction of relevant tax expenses), belong to and shall be paid to our relevant subsidiaries: (i) proceeds from the transfer of its equity interests in the VIE, (ii) proceeds received in connection with a capital decrease in the VIE, and (iii) distributions or liquidation residuals from the disposal of its equity interests in the VIE upon termination or liquidation.
Under the Enhanced VIE Structure, the designated subsidiary, on the one hand, and the corresponding VIE and the multiple layers of legal entities above the VIE, as well as the natural persons described above, on the other hand, enter into contractual arrangements, which are substantially similar to the contractual arrangements we have historically used for variable interest entities.
Under the Enhanced VIE Structure, the designated subsidiary, on the one hand, and the corresponding VIE and the multiple layers of legal entities above the VIE, as well as the natural persons described above, on the other hand, enter into contractual arrangements, which are substantially similar to the contractual arrangements we have historically used for VIEs.
If business operators fail to comply with the mandatory filing requirement, the PRC State Administration for Market Regulation, or the SAMR, is empowered to terminate the transaction, require the disposal of relevant assets, shares or businesses within certain period, or take any other necessary measures to restore the pre-concentration status, and may also impose fines of up to 10% of the previous year’s turnover of the filing obligor if the concentration has or may have the effect of eliminating or restricting competition, or fines of up to RMB 5 million if the concentration does not have such effect.
If business operators fail to comply with the mandatory filing requirement, the PRC State Administration for Market Regulation, or the SAMR, is empowered to terminate the transaction, require the disposal of relevant assets, shares or businesses within certain period, or take any other necessary measures to restore the pre-concentration status, and may also impose fines of up to 50% of the previous year’s turnover of the filing obligor if the concentration has or may have the effect of eliminating or restricting competition, or fines of up to RMB25 million if the concentration does not have such effect.
The uniqueness of our technology lies in the unparalleled large-scale application environment due to the scale of our businesses as well as our diverse range of product and service offerings. By continuously applying our technology across our businesses, we generate knowledge and innovations that drive improvements and further technological development.
The uniqueness of our technology lies in the unparalleled large-scale application 87 Table of Contents environment due to the scale of our businesses as well as our diverse range of product and service offerings. By continuously applying our technology across our businesses, we generate knowledge and innovations that drive improvements and further technological development.
ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company Alibaba Group Holding Limited is an exempted company incorporated with limited liability under the laws of the Cayman Islands on June 28, 1999, and we conduct our business through our subsidiaries and variable interest entities.
ITEM 4. INFORM ATION ON THE COMPANY A. History and Development of the Company Alibaba Group Holding Limited is an exempted company incorporated with limited liability under the laws of the Cayman Islands on June 28, 1999, and we conduct our business through our subsidiaries and variable interest entities.
Risk Factors — Risks Related to Doing Business in the People’s Republic of China — There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations, and changes in policies, laws, rules and regulations in the PRC could adversely affect us” and “—We may need additional capital but may not be able to obtain it on favorable terms or at all.” Regulation We operate in an increasingly complex legal and regulatory environment.
Risk Factors — Risks Related to Doing Business in the People’s Republic of China — There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations, and changes in policies, laws, rules and regulations in the PRC could adversely affect us” and “— Risks Related to Our Business and Industry — We may need additional capital but may not be able to obtain it on favorable terms or at all.” 93 Table of Contents Regulation We operate in an increasingly complex legal and regulatory environment.
According to the Draft Overseas Listing Regulations, if we fail to complete the filing procedures with the CSRC for any of our follow-on offerings or fall within any of the circumstances where our follow-on offering is prohibited by the State Council of the PRC, our offering application may be discontinued and we may be subject to penalties, sanctions and fines imposed by the CSRC and relevant departments of the State Council of the PRC.
According to the Overseas Listing Trial Measures, if we fail to complete the filing procedures with the CSRC for any of our follow-on offerings or fall within any of the circumstances where our follow-on offering is prohibited by the State Council of the PRC, our offering application may be discontinued and we may be subject to penalties, sanctions and fines imposed by the CSRC and relevant departments of the State Council of the PRC.
We are also actively exploring new consumption models, formats and technologies to create next-generation experience for our users. Over the years, we have established a comprehensive infrastructure for digital commerce with diversified fulfillment models. Through Cainiao, we aim to establish a hybrid delivery network covering intracity, intercity and supply chain services.
We are also actively exploring new consumption models, formats and technologies to create better shopping experience for our users. Over the years, we have established a comprehensive infrastructure for digital commerce with diversified fulfillment models. Through Cainiao, we aim to establish a hybrid delivery network covering intracity, intercity and supply chain services.
Our annual report and some of the other information submitted by us to the SEC may be accessed through this website. Such information can also be found on our investor relations website at https://alibabagroup.com/en/ir/home .
Our annual report and some of the other information submitted by us to the SEC may be accessed through this website. Such information can also be found on our investor relations website at https://www.alibabagroup.com/en-US/investor-relations .
As the brands and offerings on Tmall continue to grow and diversify, we continue to improve our ability to accurately target and meet different consumer demands. In the twelve months ended March 31, 2022, Tmall was the largest third-party online and mobile commerce platform for brands and retailers in the world in terms of GMV, according to Analysys.
As the brands and offerings on Tmall continue to grow and diversify, we continue to improve our ability to accurately target and meet different consumer demands. In the twelve months ended March 31, 2023, Tmall is the largest third-party online and mobile commerce platform for brands and retailers in the world in terms of GMV, according to Analysys.
As a result of the contractual arrangements with the variable interest entities and their shareholders, we include the financial results of each of the variable interest entities in our consolidated financial statements in accordance with U.S. GAAP. The VIE structure involves risks and is subject to uncertainties under PRC laws and regulations. See “Item 3. Key Information - D.
As a result of the contractual arrangements with the VIEs and their shareholders, we include the financial results of each of the VIEs in our consolidated financial statements in accordance with U.S. GAAP. The VIE structure involves risks and is subject to uncertainties under PRC laws and regulations. See “Item 3. Key Information - D.
During fiscal year 2022, buyers who sourced business opportunities or completed transactions on Alibaba.com were located across over 190 countries.
During fiscal year 2023, buyers who sourced business opportunities or completed transactions on Alibaba.com were located across over 190 countries.
Beyond Türkiye, Trendyol has expanded internationally by leveraging its product sourcing capabilities and supply chain advantages in Türkiye, enabling Turkish merchants to serve global consumers with a wide selection of products through more than 50 third-party e-commerce platforms across six continents.
Beyond Türkiye, Trendyol has expanded internationally by leveraging its product sourcing capabilities and supply chain advantages in Türkiye, enabling Turkish merchants to serve global consumers with a wide selection of products through 80 third-party e-commerce platforms across six continents.
According to QuestMobile, DingTalk is the largest business efficiency mobile app in China by monthly active users in March 2022. 88 Table of Contents Our strategic initiative to integrate DingTalk with Alibaba Cloud aims to empower DingTalk with our cloud capabilities and big data analytics to facilitate the digital transformation of enterprises and organizations.
According to QuestMobile, DingTalk is the largest business efficiency mobile app in China by monthly active users in March 2023. 85 Table of Contents Our strategic initiative to integrate DingTalk with Alibaba Cloud aims to empower DingTalk with our cloud capabilities and big data analytics to facilitate the digital transformation of enterprises and organizations.
ICPs are also required to properly maintain the user personal information, and in case of any leak or likely 111 Table of Contents leak of the user’s personal information, ICPs must take remedial measures immediately and report any material leak to the telecommunications regulatory authority.
ICPs are also required to properly maintain the user personal information, and in case of any leak or likely leak of the user’s personal information, ICPs must take remedial measures immediately and report any material leak to the telecommunications regulatory authority.
While the variable interest entities hold licenses and approvals and assets for regulated activities that are necessary for our business operations, as well as certain equity investments in businesses, to which foreign investments are typically restricted or prohibited under applicable PRC law, our subsidiaries hold the significant majority of our assets and operations and capture the significant majority of our revenue.
While the VIEs hold licenses and approvals and assets for regulated activities that are necessary for our business operations, as well as certain equity investments in businesses, to which foreign investments are typically restricted or prohibited under applicable PRC law, our subsidiaries hold the significant majority of our assets and operations and capture the significant majority of our revenue.
Each subsidiary is entitled to exercise its right to dispose of the variable interest entity equity holders’ pledged interests in the equity of the variable interest entity and has priority in receiving payment by the application of proceeds from the auction or sale of the pledged interests, in the event of any breach or default under the loan agreement or other structure contracts, if applicable.
Each subsidiary is entitled to exercise its right to dispose of the VIE equity holders’ pledged interests in the equity of the VIE and has priority in receiving payment by the application of proceeds from the auction or sale of the pledged interests, in the event of any breach or default under the loan agreement or other structure contracts, if applicable.
Circular 16 provides that discretionary foreign exchange settlement applies to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds, and the 117 Table of Contents corresponding Renminbi obtained from foreign exchange settlement is not restricted from being used to extend loans to related parties or repay the inter-company loans (including advances by third parties).
Circular 16 provides that discretionary foreign exchange settlement applies to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds, and the corresponding Renminbi obtained from foreign exchange settlement is not restricted from being used to extend loans to related parties or repay the inter-company loans (including advances by third parties).
Failure to comply with EU laws, including failure under the GDPR and other laws relating to the security of personal data may result in fines up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding financial year, if greater, and other administrative penalties including criminal liability.
Failure to comply with EU laws, including failure under the GDPR and other laws relating to the security of personal data may result in fines up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding financial year, if greater, and other administrative penalties including criminal liability. 112 Table of Contents C.
We also empower enterprises with our leading cloud infrastructure and services and enhanced work collaboration capabilities to facilitate their digital transformation and to support the growth of their businesses. Our businesses are comprised of China commerce, International commerce, Local consumer services, Cainiao, Cloud, Digital media and entertainment, and Innovation initiatives and others.
We also empower enterprises with our leading cloud infrastructure and services and enhanced work collaboration capabilities to facilitate their digital transformation and to support the growth of their businesses. For fiscal year 2023, our businesses are comprised of China commerce, International commerce, Local consumer services, Cainiao, Cloud, Digital media and entertainment, and Innovation initiatives and others.
Any such circumstance may subject us to fines and other regulatory, civil or criminal liabilities, and we may be ordered by the competent PRC authorities to suspend relevant operations, which could materially and adversely affect our business, financial condition, results of operations and prospects.
Any such circumstance may subject us to fines and other regulatory, civil or criminal liabilities, and we may be ordered by the competent PRC authorities to suspend relevant operations, which could materially and adversely affect our business, financial condition, results of operations and prospects. Please see “— D.
Ltd., Rajax Network Technology (Shanghai) Co., Ltd., Zhejiang Alibaba Cloud Computing Ltd. and Beijing Youku Technology Co., Ltd., our respective subsidiaries, on the other hand.
Ltd., Rajax Network Technology (Shanghai) Co., Ltd., Zhejiang Alibaba Cloud Computing Ltd. and Beijing Youku Technology Co., Ltd., our corresponding subsidiaries, on the other hand.
Sellers may also purchase additional value-added services to manage product listings and facilitate transaction processes, such as upgraded storefront management tools, CRM SaaS services, P4P marketing services, trade assurance and fulfillment services, mainly including logistics and custom clearance services. In the twelve months ended March 31, 2022, value-added services contributed the majority of Alibaba.com’s total revenue.
Sellers may also purchase additional value-added services to manage product listings and facilitate transaction processes, such as upgraded storefront management tools, customer relationship management SaaS services, P4P marketing services, trade assurance and fulfillment services, mainly including logistics and custom clearance services. In the twelve months ended March 31, 2023, value-added services contributed the majority of Alibaba.com’s total revenue.
In the opinion of Fangda Partners, our PRC legal counsel: ● the ownership structures of the representative VIEs in China and our corresponding subsidiaries do not and will not violate any applicable PRC law, regulation, or rule currently in effect; and ● the contractual arrangements between the representative VIEs, the variable interest entity equity holders and our corresponding subsidiaries governed by PRC laws are valid, binding and enforceable in accordance with their terms and applicable PRC laws, rules, and regulations currently in effect, and will not violate any applicable PRC law, regulation, or rule currently in effect.
In the opinion of Fangda Partners, our PRC legal counsel: • the ownership structures of the representative VIEs in China and our corresponding subsidiaries do not and will not violate any applicable PRC law, regulation, or rule currently in effect; and • the contractual arrangements between the representative VIEs, the VIE holders and our corresponding subsidiaries governed by PRC laws are valid, binding and enforceable in accordance with their terms and applicable PRC laws, rules, and regulations currently in effect, and will not violate any applicable PRC law, regulation, or rule currently in effect.
Under these laws, rules and regulations, foreign-invested enterprises may pay dividends only out of their accumulated profit, if any, as determined in accordance with PRC accounting standards and regulations.
Under these laws, rules and regulations, foreign-invested enterprises may pay dividends only out of their accumulated profit, if any, as determined in accordance 111 Table of Contents with PRC accounting standards and regulations.
Insights we gain from our commerce businesses and our proprietary data technology enable us to deliver relevant digital media and entertainment content to consumers. This synergy delivers a superior entertainment experience, increases customer loyalty and improves monetization for content providers across the ecosystem.
Insights we gain from our commerce businesses and our proprietary data technology enable us to deliver relevant 74 Table of Contents digital media and entertainment content to consumers. This synergy delivers a superior entertainment experience, increases customer loyalty and improves monetization for content providers across the ecosystem.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

156 edited+226 added−61 removed148 unchanged
Biggest change(2) Each ADS represents eight Shares. 138 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended March 31, ​ 2020 2021 2022 ​ ​ % ​ % ​ % ​ (as percentage of revenue) Revenue ​ China commerce ​ 69 70 69 International commerce ​ 7 ​ 7 ​ 7 Local consumer services ​ 6 ​ 5 ​ 5 Cainiao ​ 4 ​ 5 ​ 5 Cloud ​ 8 ​ 8 ​ 9 Digital media and entertainment ​ 6 4 4 Innovation initiatives and others ​ — 1 1 Total ​ 100 100 100 Cost of revenue ​ (55) (59) (63) Product development expenses ​ (9) (8) (7) Sales and marketing expenses ​ (10) (11) (14) General and administrative expenses ​ (5) (8) (4) Amortization and impairment of intangible assets ​ (3) (1) (1) Impairment of goodwill ​ — — (3) Income from operations ​ 18 13 8 Interest and investment income, net ​ 15 10 (1) Interest expense ​ (1) (1) (1) Other income, net ​ 1 1 1 Income before income tax and share of results of equity method investees ​ 33 23 7 Income tax expenses ​ (4) (4) (3) Share of results of equity method investees ​ (1) 1 2 Net income ​ 28 20 6 Net loss attributable to noncontrolling interests ​ 1 1 2 Net income attributable to Alibaba Group Holding Limited ​ 29 21 8 Accretion of mezzanine equity ​ — — — Net income attributable to ordinary shareholders ​ 29 21 8 ​ Segment Information for Fiscal Years 2020, 2021 and 2022 The tables below set forth certain financial information of our operating segments for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended March 31, 2022 ​ ​ ​ ​ ​ ​ Local ​ ​ ​ ​ ​ Digital media ​ Innovation ​ ​ ​ ​ ​ ​ ​ ​ China ​ International ​ consumer ​ ​ ​ ​ ​ and ​ initiatives ​ ​ ​ ​ ​ ​ ​ ​ commerce ​ commerce ​ services ​ Cainiao ​ Cloud ​ entertainment ​ and others ​ Unallocated (1) ​ Consolidated ​ RMB RMB RMB RMB RMB RMB RMB RMB RMB US$ ​ ​ (in millions, except percentages) Revenue ​ 592,705 61,078 43,491 ​ 46,107 ​ 74,568 ​ 32,272 2,841 — 853,062 134,567 Income (Loss) from operations ​ 172,219 (10,655) (30,485) ​ (3,920) ​ (5,167) ​ (7,019) (9,424) (35,911) 69,638 10,985 Add: Share-based compensation expense ​ 7,078 1,569 2,556 ​ 1,396 ​ 6,297 ​ 1,520 1,839 1,716 23,971 3,782 Add: Amortization of intangible assets ​ 2,817 95 6,154 ​ 1,059 ​ 16 ​ 809 456 241 11,647 1,837 Add: Impairment of goodwill ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ 25,141 ​ 25,141 ​ 3,966 Adjusted EBITA ​ 182,114 (8,991) (21,775) ​ (1,465) ​ 1,146 ​ (4,690) (7,129) (8,813) 130,397 20,570 Adjusted EBITA margin ​ 31% ​ (15)% ​ (50)% ​ (3)% ​ 2% ​ (15)% ​ (251)% ​ — 15% ​ 139 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended March 31, 2021 ​ ​ ​ ​ ​ ​ Local ​ ​ ​ ​ ​ Digital media ​ Innovation ​ ​ ​ ​ ​ ​ China ​ International ​ consumer ​ ​ ​ ​ ​ and ​ initiatives ​ ​ ​ ​ ​ ​ commerce ​ commerce ​ services ​ Cainiao ​ Cloud ​ entertainment ​ and others ​ Unallocated (1) ​ Consolidated ​ RMB RMB RMB RMB RMB RMB RMB RMB RMB ​ (in millions, except percentages) Revenue ​ 501,683 48,851 35,442 ​ 37,258 ​ 60,558 ​ 31,186 2,311 — 717,289 Income (Loss) from operations ​ 197,135 (9,361) (29,100) ​ (3,964) ​ (12,479) ​ (10,321) (7,802) (34,430) 89,678 Add: Share-based compensation expense ​ 14,505 4,223 4,972 ​ 1,956 ​ 10,205 ​ 3,281 2,518 8,460 50,120 Add: Amortization of intangible assets ​ 1,922 ​ 206 ​ 7,852 ​ 1,195 ​ 23 ​ 922 ​ 83 ​ 224 ​ 12,427 Add: Anti-monopoly Fine (2) ​ — — — ​ — ​ — ​ — — 18,228 18,228 Adjusted EBITA ​ 213,562 (4,932) (16,276) ​ (813) ​ (2,251) ​ (6,118) (5,201) (7,518) 170,453 Adjusted EBITA margin ​ 43% ​ (10)% ​ (46)% ​ (2)% ​ (4)% ​ (20)% ​ (225)% ​ — 24% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended March 31, 2020 ​ ​ ​ ​ ​ ​ Local ​ ​ ​ ​ ​ Digital media ​ Innovation ​ ​ ​ ​ ​ ​ China ​ International ​ consumer ​ ​ ​ ​ ​ and ​ initiatives ​ ​ ​ ​ ​ ​ commerce ​ commerce ​ services ​ Cainiao ​ Cloud ​ entertainment ​ and others ​ Unallocated (1) ​ Consolidated ​ RMB RMB RMB RMB RMB RMB RMB RMB RMB ​ (in millions, except percentages) Revenue ​ 351,977 33,917 29,660 ​ 22,233 ​ 40,301 ​ 29,094 2,529 — 509,711 Income (Loss) from operations ​ 174,561 (7,615) (26,289) ​ (5,218) ​ (9,662) ​ (15,389) (6,661) (12,297) 91,430 Add: Share-based compensation expense ​ 9,409 2,996 3,027 ​ 961 ​ 6,231 ​ 2,566 2,308 4,244 31,742 Add: Amortization and impairment of intangible assets ​ 845 279 8,245 ​ 2,373 ​ 25 ​ 1,377 86 158 13,388 Add: Impairment of goodwill ​ — — — ​ — ​ — ​ — — 576 576 Adjusted EBITA ​ 184,815 (4,340) (15,017) ​ (1,884) ​ (3,406) ​ (11,446) (4,267) (7,319) 137,136 Adjusted EBITA margin ​ 53% ​ (13)% ​ (51)% ​ (8)% ​ (8)% ​ (39)% ​ (169)% ​ — 27% Starting from the quarter ended December 31, 2021, our CODM started to review information under a new reporting structure, and segment reporting has been updated to conform to this change, which also provides greater transparency in our business progress and financial performance.
Biggest changeSee “— Critical Accounting Policies and Estimates — Share-based Compensation Expense and Valuation of the Underlying Awards” below for additional information regarding our share-based compensation expense. 128 Table of Contents Results of Operations The following tables set out our consolidated results of operations for the periods indicated: Year ended March 31, 2021 2022 2023 RMB RMB RMB US$ (in millions, except per share data) Revenue China commerce 501,379 591,580 582,731 84,852 International commerce 48,851 61,078 69,204 10,077 Local consumer services 35,746 44,616 50,112 7,297 Cainiao 37,258 46,107 55,681 8,108 Cloud 60,558 74,568 77,203 11,242 Digital media and entertainment 31,186 32,272 31,482 4,584 Innovation initiatives and others 2,311 2,841 2,274 331 Total 717,289 853,062 868,687 126,491 Cost of revenue (421,205 ) (539,450 ) (549,695 ) (80,042 ) Product development expenses (57,236 ) (55,465 ) (56,744 ) (8,263 ) Sales and marketing expenses (81,519 ) (119,799 ) (103,496 ) (15,070 ) General and administrative expenses (55,224 ) (31,922 ) (42,183 ) (6,142 ) Amortization and impairment of intangible assets (12,427 ) (11,647 ) (13,504 ) (1,967 ) Impairment of goodwill — (25,141 ) (2,714 ) (395 ) Income from operations 89,678 69,638 100,351 14,612 Interest and investment income, net 72,794 (15,702 ) (11,071 ) (1,612 ) Interest expense (4,476 ) (4,909 ) (5,918 ) (862 ) Other income, net 7,582 10,523 5,823 848 Income before income tax and share of results of equity method investees 165,578 59,550 89,185 12,986 Income tax expenses (29,278 ) (26,815 ) (15,549 ) (2,264 ) Share of results of equity method investees 6,984 14,344 (8,063 ) (1,174 ) Net income 143,284 47,079 65,573 9,548 Net loss attributable to noncontrolling interests 7,294 15,170 7,210 1,050 Net income attributable to Alibaba Group Holding Limited 150,578 62,249 72,783 10,598 Accretion of mezzanine equity (270 ) (290 ) (274 ) (40 ) Net income attributable to ordinary shareholders 150,308 61,959 72,509 10,558 Earnings per share attributable to ordinary shareholders: (1) Basic 6.95 2.87 3.46 0.50 Diluted 6.84 2.84 3.43 0.50 Earnings per ADS attributable to ordinary shareholders: (1) Basic 55.63 22.99 27.65 4.03 Diluted 54.70 22.74 27.46 4.00 (1) Each ADS represents eight Shares. 129 Table of Contents Year ended March 31, 2021 2022 2023 % % % (as percentage of revenue) Revenue China commerce 70 69 67 International commerce 7 7 8 Local consumer services 5 5 6 Cainiao 5 5 6 Cloud 8 9 9 Digital media and entertainment 4 4 4 Innovation initiatives and others 1 1 — Total 100 100 100 Cost of revenue (59 ) (63 ) (63 ) Product development expenses (8 ) (7 ) (7 ) Sales and marketing expenses (11 ) (14 ) (12 ) General and administrative expenses (8 ) (4 ) (5 ) Amortization and impairment of intangible assets (1 ) (1 ) (1 ) Impairment of goodwill — (3 ) — Income from operations 13 8 12 Interest and investment income, net 10 (1 ) (1 ) Interest expense (1 ) (1 ) (1 ) Other income, net 1 1 — Income before income tax and share of results of equity method investees 23 7 10 Income tax expenses (4 ) (3 ) (1 ) Share of results of equity method investees 1 2 (1 ) Net income 20 6 8 Net loss attributable to noncontrolling interests 1 2 — Net income attributable to Alibaba Group Holding Limited 21 8 8 Accretion of mezzanine equity — — — Net income attributable to ordinary shareholders 21 8 8 Segment Information for Fiscal Years 2021, 2022 and 2023 The tables below set forth certain financial information of our operating segments for the periods indicated: Year ended March 31, 2023 China commerce (1) International commerce Local consumer services (1) Cainiao Cloud Digital media and entertainment Innovation initiatives and others Unallocated (2) Consolidated RMB RMB RMB RMB RMB RMB RMB RMB RMB US$ (in millions, except percentages) Revenue 582,731 69,204 50,112 55,681 77,203 31,482 2,274 — 868,687 126,491 Income (Loss) from operations 172,191 (8,429 ) (23,302 ) (3,622 ) (5,151 ) (4,638 ) (9,409 ) (17,289 ) 100,351 14,612 Add: Share-based compensation expense 7,969 2,716 3,672 2,218 6,561 1,756 1,658 4,281 30,831 4,489 Add: Amortization and impairment of intangible assets 4,702 93 5,609 1,013 12 1,008 844 223 13,504 1,967 Add: Impairment of goodwill — — — — — — — 2,714 2,714 395 Add: Equity-settled donation expense — — — — — — — 511 511 75 Adjusted EBITA 184,862 (5,620 ) (14,021 ) (391 ) 1,422 (1,874 ) (6,907 ) (9,560 ) 147,911 21,538 Adjusted EBITA margin 32 % (8 )% (28 )% (1 )% 2 % (6 )% (304 )% N/A 17 % 130 Table of Contents Year ended March 31, 2022 China commerce (1) International commerce Local consumer services (1) Cainiao Cloud Digital media and entertainment Innovation initiatives and others Unallocated (2) Consolidated RMB RMB RMB RMB RMB RMB RMB RMB RMB (in millions, except percentages) Revenue 591,580 61,078 44,616 46,107 74,568 32,272 2,841 — 853,062 Income (Loss) from operations 172,536 (10,655 ) (30,802 ) (3,920 ) (5,167 ) (7,019 ) (9,424 ) (35,911 ) 69,638 Add: Share-based compensation expense 7,078 1,569 2,556 1,396 6,297 1,520 1,839 1,716 23,971 Add: Amortization of intangible assets 2,817 95 6,154 1,059 16 809 456 241 11,647 Add: Impairment of goodwill — — — — — — — 25,141 25,141 Adjusted EBITA 182,431 (8,991 ) (22,092 ) (1,465 ) 1,146 (4,690 ) (7,129 ) (8,813 ) 130,397 Adjusted EBITA margin 31 % (15 )% (50 )% (3 )% 2 % (15 )% (251 )% N/A 15 % Year ended March 31, 2021 China commerce (1) International commerce Local consumer services (1) Cainiao Cloud Digital media and entertainment Innovation initiatives and others Unallocated (2) Consolidated RMB RMB RMB RMB RMB RMB RMB RMB RMB (in millions, except percentages) Revenue 501,379 48,851 35,746 37,258 60,558 31,186 2,311 — 717,289 Income (Loss) from operations 197,232 (9,361 ) (29,197 ) (3,964 ) (12,479 ) (10,321 ) (7,802 ) (34,430 ) 89,678 Add: Share-based compensation expense 14,505 4,223 4,972 1,956 10,205 3,281 2,518 8,460 50,120 Add: Amortization of intangible assets 1,922 206 7,852 1,195 23 922 83 224 12,427 Add: Anti-monopoly Fine (3) — — — — — — — 18,228 18,228 Adjusted EBITA 213,659 (4,932 ) (16,373 ) (813 ) (2,251 ) (6,118 ) (5,201 ) (7,518 ) 170,453 Adjusted EBITA margin 43 % (10 )% (46 )% (2 )% (4 )% (20 )% (225 )% N/A 24 % (1) Beginning on October 1, 2022, we reclassified the results of our Instant Supermarket Delivery (全能超市) business, which was previously reported under China commerce segment, to Local consumer services segment following the strategy refinement of Instant Supermarket Delivery business to focus on building customer mindshare for grocery delivery services through Ele.me platform.
Cloud Our Cloud businesses primarily generate revenue from the provision of public cloud services and hybrid cloud services to our domestic and international enterprise customers. • Public cloud services , where we generate revenue from a wide range of cloud services, including elastic computing, storage, network, database, big data, security, proprietary servers, among others.
Cloud Our Cloud businesses primarily generate revenue from the provision of public cloud services and hybrid cloud services to our domestic and international enterprise customers: • Public cloud services , where we generate revenue from a wide range of cloud services, including, among others, elastic computing, storage, network, database, big data, security and proprietary servers.
Capital Expenditures Our capital expenditures have been incurred primarily in relation to (i) the acquisition of computer equipment and construction of data centers relating to our Cloud business and the operation of our mobile platforms and websites; (ii) the acquisition of land use rights and construction of corporate campuses and office facilities and (iii) the acquisition of infrastructure for logistics services and direct sales businesses.
Capital Expenditures Our capital expenditures have been incurred primarily in relation to (i) the acquisition of computer equipment and construction of data centers relating to our Cloud business and the operation of our mobile platforms and websites; (ii) the acquisition of infrastructure for logistics services and direct sales businesses; and (iii) the acquisition of land use rights and construction of corporate campuses and office facilities.
We also generate revenue through on-demand delivery services, including delivery of meals, food, groceries, FMCG, flowers and pharmaceutical products, for merchants and customers through Fengniao Logistics, Ele.me’s on-demand delivery network. In addition, our “To-destination” businesses mainly generate revenue from Amap and Fliggy. Amap charges a software service fee and technology service fee to enterprise customers.
We also generate revenue through on-demand delivery services, including delivery of meals, food, groceries, FMCG, flowers and pharmaceutical products, for merchants and customers through Fengniao Logistics, Ele.me’s on-demand delivery network. In addition, our “To-destination” businesses mainly generate revenue from Amap and Fliggy. Amap primarily charges a software service fee and technology service fee to enterprise customers.
The determination of whether an observable transaction is orderly and whether the investment involved is identical or similar to our investment, and the amount of fair value adjustment requires significant judgment. 164 Table of Contents Impairment Assessment on Goodwill and Intangible Assets We test annually, or whenever events or circumstances indicate that the carrying value of assets exceeds the recoverable amounts, whether goodwill and intangible assets have suffered any impairment in accordance with the accounting policy stated in note 2 to our audited consolidated financial statements included in this annual report.
The determination of whether an observable transaction is orderly and whether the investment involved is identical or similar to our investment, and the amount of fair value adjustment requires significant judgment. 147 Table of Contents Impairment Assessment on Goodwill and Intangible Assets We test annually, or whenever events or circumstances indicate that the carrying value of assets exceeds the recoverable amounts, whether goodwill and intangible assets have suffered any impairment in accordance with the accounting policy stated in note 2 to our audited consolidated financial statements included in this annual report.
We do not expect that the adoption of this guidance will have a material impact on the financial position, results of operations and cash flows. 160 Table of Contents In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.
We do not expect that the adoption of this guidance will have a material impact on the financial position, results of operations and cash flows. 143 Table of Contents In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.
Hong Kong Profits Tax Our company’s subsidiaries incorporated in Hong Kong were subject to Hong Kong profits tax at a rate of 16.5% in fiscal years 2020, 2021 and 2022. PRC Income Tax Under the EIT Law, the standard enterprise income tax rate is 25%. Entities qualifying as High and New Technology Enterprises enjoy a preferential tax rate of 15%.
Hong Kong Profits Tax Our company’s subsidiaries incorporated in Hong Kong were subject to Hong Kong profits tax at a rate of 16.5% in fiscal years 2021, 2022 and 2023. PRC Income Tax Under the EIT Law, the standard enterprise income tax rate is 25%. Entities qualifying as High and New Technology Enterprises enjoy a preferential tax rate of 15%.
For the calendar years of 2020 and 2021, Alibaba (China) Technology Co., Ltd., Taobao (China) Software Co., Ltd., Zhejiang Tmall Technology Co., Ltd., and Alibaba (China) Co., Ltd. did not obtain the KSE status and therefore applied an EIT rate of 15% as High and New Technology Enterprises and Alibaba (Beijing) Software Services Co., Ltd. applied an EIT rate of 12.5% (50% reduction in the standard statutory rate) as a Software Enterprise.
For the calendar years of 2020, 2021 and 2022, Alibaba (China) Technology Co., Ltd., Taobao (China) Software Co., Ltd., Zhejiang Tmall Technology Co., Ltd., and Alibaba (China) Co., Ltd. did not obtain the KSE status and therefore applied an EIT rate of 15% as High and New Technology Enterprises and Alibaba (Beijing) Software Services Co., Ltd. applied an EIT rate of 12.5% (50% reduction in the standard statutory rate) as a Software Enterprise for the calendar years of 2020 and 2021 and applied an EIT rate of 15% as High and New Technology Enterprise for the calendar year of 2022.
The amendments require an acquirer recognizes and measures contract assets and contract liabilities acquired in a business combination at the acquisition date in accordance with ASC 606 as if it had originated the contracts. This guidance also provide certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts in a business combination.
The amendments require an acquirer recognizes and measures contract assets and contract liabilities acquired in a business combination at the acquisition date in accordance with ASC 606 as if it had originated the contracts. This guidance also provides certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts in a business combination.
Judgment is required to determine the weighting and impact of the abovementioned factors and changes to this determination can significantly affect the results of the impairment tests. 165 Table of Contents Impairment Assessment on Equity Securities Equity securities without readily determinable fair values that are accounted for using the measurement alternative are subject to periodic impairment reviews.
Judgment is required to determine the weighting and impact of the abovementioned factors and changes to this determination can significantly affect the results of the impairment tests. 148 Table of Contents Impairment Assessment on Equity Securities Equity securities without readily determinable fair values that are accounted for using the measurement alternative are subject to periodic impairment reviews.
Local Consumer Services We generate revenue from Local consumer services primarily through platform commissions and on-demand delivery services by our “To-home” businesses. Our revenue from platform commissions is mainly contributed by transactions on Ele.me, where merchants pay a commission based on a percentage of the transaction value. The commission percentages vary depending on product category.
Local Consumer Services We generate revenue from Local consumer services primarily through platform commissions and on-demand delivery services by our “To-home” business. Our revenue from platform commissions is mainly contributed by transactions on Ele.me, where merchants pay a commission based on a percentage of the transaction value. The commission percentages vary depending on product category.
Revenue recognition for P4P marketing services, in-feed marketing services and display marketing services on our marketplaces does not require us to exercise significant judgment or estimate. 162 Table of Contents For certain arrangements, we apply significant judgment in determining whether we are acting as the principal or agent in a transaction.
Revenue 145 Table of Contents recognition for P4P marketing services, in-feed marketing services and display marketing services on our marketplaces does not require us to exercise significant judgment or estimate. For certain arrangements, we apply significant judgment in determining whether we are acting as the principal or agent in a transaction.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS A. Operating Results The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes included in this annual report and in particular, “Item 4. Information on the Company — B.
ITEM 5. OPERATING AND FINAN CIAL REVIEW AND PROSPECTS A. Operating Results The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes included in this annual report and in particular, “Item 4. Information on the Company — B.
A lower withholding tax rate of 5% is applicable for direct foreign investors incorporated in Hong Kong with at least 25% equity interest in the PRC company and meeting the relevant conditions or requirements pursuant to the tax arrangement between mainland China and Hong Kong S.A.R.
A lower withholding tax rate of 5% is applicable for direct foreign investors incorporated in Hong Kong with at least 25% equity interest in the PRC company and meeting the relevant conditions or requirements pursuant to the tax arrangement between Chinese mainland and Hong Kong S.A.R.
On the consumer side, leveraging these insights and technologies, as well as our supply chain capabilities, we also generate revenue from product sales for our direct sales businesses. 129 Table of Contents The revenue of our China commerce retail business primarily consists of customer management revenue and direct sales and other revenue.
On the consumer side, leveraging these insights and technologies, as well as our supply chain capabilities, we also generate revenue from product sales for our direct sales businesses. 120 Table of Contents The revenue of our China commerce retail business primarily consists of customer management revenue and direct sales and other revenue.
The new guidance is required to be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. This guidance is effective for the Company for the year ending March 31, 2025 and interim reporting periods during the year ending March 31, 2025. Early adoption is permitted.
The new guidance is required to be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. This guidance is effective for us for the year ending March 31, 2025 and interim reporting periods during the year ending March 31, 2025. Early adoption is permitted.
Customer management revenue is generally generated from businesses and advertising agencies and the monetization model is substantially similar to the customer management revenue for our China commerce retail business. 131 Table of Contents Innovation Initiatives and Others Tmall Genie primarily generates revenue from product sales.
Customer management revenue is generally generated from businesses and advertising agencies and the monetization model is substantially similar to the customer management revenue for our China commerce retail business. 122 Table of Contents Innovation Initiatives and Others Tmall Genie primarily generates revenue from product sales.
We revise our estimated forfeiture rate if actual forfeitures significantly differ from the initial estimates. 163 Table of Contents To the extent the actual forfeiture rate is different from what we have anticipated, share-based compensation expense related to these awards will be different.
We revise our estimated forfeiture rate if actual forfeitures significantly differ from the initial estimates. 146 Table of Contents To the extent the actual forfeiture rate is different from what we have anticipated, share-based compensation expense related to these awards will be different.
Four of our subsidiaries in China, Alibaba (China) Technology Co., Ltd., Taobao (China) Software Co., Ltd., Zhejiang Tmall Technology Co., Ltd., and Alibaba (China) Co., Ltd, which are our wholly-owned entities primarily involved in the operations of wholesale marketplaces, Taobao, Tmall, and technology, software research and development and relevant services, respectively, were recognized as Key Software Enterprises in calendar years of 2018 and 2019 and they were subject to an EIT rate of 10%.
Four of our subsidiaries in China, Alibaba (China) Technology Co., Ltd., Taobao (China) Software Co., Ltd., Zhejiang Tmall Technology Co., Ltd., and Alibaba (China) Co., Ltd, which are our wholly-owned entities primarily involved in the operations of wholesale marketplaces, Taobao, Tmall, and technology, software research and development and relevant services, respectively, were recognized as Key Software Enterprises in calendar year of 2019 and they were subject to an EIT rate of 10%.
We have prepared our consolidated financial statements in accordance with U.S. GAAP. Our fiscal year ends on March 31 and references to fiscal years 2020, 2021 and 2022 are to the fiscal years ended March 31, 2020, 2021 and 2022, respectively.
We have prepared our consolidated financial statements in accordance with U.S. GAAP. Our fiscal year ends on March 31 and references to fiscal years 2021, 2022 and 2023 are to the fiscal years ended March 31, 2021, 2022 and 2023, respectively.
As of March 31, 2022, we have accrued the withholding tax on substantially all of the distributable earnings of the PRC subsidiaries, except for those undistributed earnings that we intend to invest indefinitely in the PRC.
As of March 31, 2023, we have accrued the withholding tax on substantially all of the distributable earnings of the PRC subsidiaries, except for those undistributed earnings that we intend to invest indefinitely in the PRC.
The Company does not expect that the adoption of this guidance will have a material impact on the financial position, results of operations and cash flows. C. Research and Development, Patents and Licenses, etc. Research and Development We have built our core technologies for our online and mobile commerce and cloud businesses in-house.
We do not expect that the adoption of this guidance will have a material impact on the financial position, results of operations and cash flows. C. Research and Development, Patents and Licenses, etc. Research and Development We have built our core technologies for our online and mobile commerce and cloud businesses in-house.
Comparison of Fiscal Years 2020 and 2021 For a discussion of our results of operations for the fiscal year ended March 31, 2020 compared with the fiscal year ended March 31, 2021, see “Item 5. Operating and Financial Review and Prospects — A.
Comparison of Fiscal Years 2021 and 2022 For a discussion of our results of operations for the fiscal year ended March 31, 2021 compared with the fiscal year ended March 31, 2022, see “Item 5. Operating and Financial Review and Prospects — A.
Adjusted EBITA represents net income before (i) interest and investment income, net, interest expense, other income, net, income tax expenses and share of results of equity method investees, (ii) certain non-cash expenses, consisting of share-based compensation expense, amortization and impairment of intangible assets and impairment of goodwill, and (iii) Anti-monopoly Fine, which we do not believe are reflective of our core operating performance during the periods presented.
Adjusted EBITA represents net income before (i) interest and investment income, net, interest expense, other income, net, income tax expenses and share of results of equity method investees, (ii) certain non‑cash expenses, consisting of share‑based compensation expense, amortization and impairment of intangible assets and impairment of goodwill, and (iii) Anti-monopoly Fine, as well as equity-settled donation expense, which we do not believe are reflective of our core operating performance during the periods presented.
Our debt financing primarily consists of unsecured senior notes and bank borrowings, including an aggregate of US$8.0 billion unsecured senior notes issued in November 2014, of which US$5.05 billion was repaid in 2017, 2019 and 2021, an aggregate of US$7.0 billion unsecured senior notes issued in December 2017, an aggregate of US$5.0 billion unsecured senior notes issued in February 2021, a five-year term loan facility of US$4.0 billion drawn down in fiscal year 2017, the maturity of which has been extended to May 2024 in May 2019, as well as a US$6.5 billion revolving credit facility which we have not yet drawn.
Our debt financing primarily consists of unsecured senior notes and bank borrowings, including an aggregate of US$8.0 billion unsecured senior notes issued in November 2014, of which US$5.05 billion was repaid in 2017, 2019 and 2021, an aggregate of US$7.0 billion unsecured senior notes issued in December 2017, of which US$0.7 billion was repaid in June 2023, an aggregate of US$5.0 billion unsecured senior notes issued in February 2021, a five-year term loan facility of US$4.0 billion drawn down in fiscal year 2017, the maturity of which has been extended to May 2024 in May 2019 and has been further extended to May 2028 in July 2023, as well as a US$6.5 billion revolving credit facility which we have not yet drawn.
Revenue is recognized net of VAT in our consolidated income statement. 136 Table of Contents PRC Withholding Tax Pursuant to the EIT Law, a 10% withholding tax is generally levied on dividends declared by companies in China to their non-resident enterprise investors.
Revenue is recognized net of VAT in our consolidated income statement. PRC Withholding Tax Pursuant to the EIT Law, a 10% withholding tax is generally levied on dividends declared by companies in China to their non-resident enterprise investors.
Interest Expense Our interest expense is comprised of interest payments and amortization of upfront fees and incidental charges primarily associated with our US$8.0 billion unsecured senior notes issued in November 2014, of which US$5.05 billion was repaid in 2017, 2019 and 2021, the US$4.0 billion five-year term loan facility drawn down in fiscal year 2017, an aggregate of US$7.0 billion unsecured senior notes issued in December 2017, as well as an aggregate of US$5.0 billion unsecured senior notes issued in February 2021.
Interest Expense Our interest expense is comprised of interest payments and amortization of upfront fees and incidental charges primarily associated with our US$8.0 billion unsecured senior notes issued in November 2014, of which US$5.05 billion was repaid in 2017, 2019 and 2021, the US$4.0 billion five-year term loan facility drawn down in fiscal year 2017 and extended in 2023, an aggregate of US$7.0 billion unsecured senior notes issued in December 2017, of which US$700 million was repaid in June 2023, as well as an aggregate of US$5.0 billion unsecured senior notes issued in February 2021.
We derive majority of our revenue from our China commerce segment, which accounted for 69%, 70% and 69% of our total revenue in fiscal years 2020, 2021 and 2022, respectively, while International commerce segment, Local consumer services segment, Cainiao segment, Cloud segment, Digital media and entertainment segment, and Innovation initiatives and others segment contributed in aggregate 31%, 30% and 31% in fiscal years 2020, 2021 and 2022, respectively.
We derive majority of our revenue from our China commerce segment, which accounted for 70%, 69% and 67% of our total revenue in fiscal years 2021, 2022 and 2023, respectively, while International commerce segment, Local consumer services segment, Cainiao segment, Cloud segment, Digital media and entertainment segment, and Innovation initiatives and others segment contributed in aggregate 30%, 31% and 33% in fiscal years 2021, 2022 and 2023, respectively.
Revenue from customer management services is primarily derived from P4P marketing services. 130 Table of Contents International Commerce International Commerce Retail We generate revenue from our International commerce retail businesses primarily through logistics services, direct sales, commissions on transactions and P4P marketing services. We generate logistics services and direct sales revenue primarily from Lazada and Trendyol.
Revenue from customer management services is primarily derived from P4P marketing services. 121 Table of Contents International Commerce International Commerce Retail We generate revenue from our International commerce retail businesses primarily through logistics services, direct sales, commissions on transactions and P4P marketing services. We generate logistics services and direct sales revenue primarily from Lazada, Trendyol and AliExpress.
The valuations of these investments are categorized within Level 3, and are estimated based on valuation methods using the observable transaction price at the transaction date and other unobservable inputs including volatility, as well as rights and obligations of the securities.
The valuations of these investments are categorized within Level 3, and are estimated based on valuation methods using the observable transaction price at the transaction date and considering the rights and obligations of the securities and other unobservable inputs including volatility.
We have incurred impairment charges in the past and may incur impairment charges in the future. Recent Investment, Acquisition and Strategic Alliance Activities In addition to organic growth, we have made, or have entered into agreements to make, strategic investments, acquisitions and alliances that are intended to further our strategic objectives.
We have incurred impairment charges in the past and may incur impairment charges in the future. 123 Table of Contents Recent Investment, Acquisition and Strategic Alliance Activities In addition to organic growth, we have made, or have entered into agreements to make, strategic investments, acquisitions and alliances that are intended to further our strategic objectives.
Excluding share-based compensation expense, revaluation and disposal gains/losses of investments, impairment of goodwill and investments, as well as the deferred tax effects on basis differences arising from equity method investees, our effective tax rate would have been 21% in fiscal year 2022.
Excluding share-based compensation expense, revaluation and disposal gains/losses of investments, impairment of goodwill and investments, as well as the deferred tax effects on basis differences arising from equity method investees, our effective tax rate would have been 17% in fiscal year 2023.
Therefore, our subsidiaries directly capture the significant majority of profits and associated cash flow from operations, without having to rely on contractual arrangements to transfer cash flow from the variable interest entities to our subsidiaries. In fiscal years 2020, 2021 and 2022, the significant majority of our revenues were generated by our subsidiaries. See “Item 4.
Therefore, our subsidiaries directly capture the significant majority of profits and associated cash flow from operations, 142 Table of Contents without having to rely on contractual arrangements to transfer cash flow from the variable interest entities to our subsidiaries. In fiscal years 2021, 2022 and 2023, the significant majority of our revenues were generated by our subsidiaries. See “Item 4.
Risk Factors — Restrictions on currency exchange or outbound capital flows may limit our ability to utilize our PRC revenue effectively.” Under the PRC Enterprise Income Tax Law, a withholding tax of 5% to 10% is generally levied on dividends declared by companies in China to their non-resident enterprise investors.
Risk Factors — Risks Related to Doing Business in the People’s Republic of China — Restrictions on currency exchange or outbound capital flows may limit our ability to utilize our PRC revenue effectively.” Under the PRC Enterprise Income Tax Law, a withholding tax of 5% to 10% is generally levied on dividends declared by companies in China to their non-resident enterprise investors.
Interest on the unsecured senior notes is payable semi-annually. Except for the sustainability notes we set aside for an aggregate principal amount of US$1.0 billion, we have used the proceeds from the issuance of the remaining unsecured senior notes for general corporate purposes, including working capital needs, repayment of offshore debt and potential acquisitions of or investments in complementary businesses.
Except for the sustainability notes we set aside for an aggregate principal amount of US$1.0 billion, we have used the proceeds from the issuance of the remaining unsecured senior notes for general corporate purposes, including working capital needs, repayment of offshore debt and potential acquisitions of or investments in complementary businesses.
This disproportionate relationship results in what is known as a variable interest, and the entity in which we have the variable interest is referred to as a variable interest entity. We consolidate a variable interest entity if we are determined to be the primary beneficiary of the variable interest entity.
This disproportionate relationship results in what is known as a variable interest, and the entity in which we have the variable interest is referred to as a variable interest entity. We consolidate a variable interest entity if we are determined to be the primary beneficiary of the variable interest entity for accounting purposes only.
Cash Flows from Financing Activities Net cash used in financing activities in fiscal year 2022 was RMB64,449 million (US$10,167 million) and was primarily reflected cash used in repurchase of ordinary shares of RMB61,225 million (US$9,658 million) and repayment of unsecured senior note of US$1,500 million, partially offset by the net cash inflow from transactions with noncontrolling interests of RMB3,953 million (US$624 million).
Net cash used in financing activities in fiscal year 2022 was RMB64,449 million and was primarily reflected cash used in repurchase of ordinary shares of RMB61,225 million and repayment of unsecured senior note of US$1,500 million, partially offset by the net cash inflow from transactions with noncontrolling interests of RMB3,953 million.
Free cash flow represents net cash provided by operating activities as presented in our consolidated cash flow statement less purchases of property and equipment (excluding acquisition of land use rights and construction in progress relating to office campuses) and other intangible assets, as well as adjustments to exclude from net cash provided by operating activities the consumer protection fund deposits from merchants on our marketplaces.
Free cash flow represents net cash provided by operating activities as presented in our consolidated cash flow statement less purchases of property and equipment (excluding acquisition of land use rights and construction in progress relating to office campuses) and intangible assets (excluding those acquired through acquisitions), as well as adjustments to exclude from net cash provided by operating activities the buyer protection fund deposits from merchants on our marketplaces.
Adjustments for non-cash items primarily included depreciation and impairment of property and equipment, and operating lease cost relating to land use rights of RMB27,808 million (US$4,386 million), impairment of goodwill, intangible assets and licensed copyrights of RMB25,886 million (US$4,083 million), share-based compensation expense of RMB23,971 million (US$3,782 million) and loss related to equity securities and other investments of RMB20,479 million (US$3,230 million).
Adjustments for non-cash items primarily included depreciation and impairment of property and equipment, and operating lease cost relating to land use rights of RMB27,808 million, impairment of goodwill, intangible assets and licensed copyrights of RMB25,886 million, share-based compensation expense of RMB23,971 million and loss related to equity securities and other investments of RMB20,479 million.
(2) This represents Ant Group share-based awards granted to our employees, which is subject to mark-to-market accounting treatment.
(2) This represents Ant Group share-based awards granted to our employees, which is subject to mark-to-market accounting treatment. (3) This represents share-based awards of our subsidiaries.
In addition, registered share capital and capital reserve accounts are also restricted from distribution. As of March 31, 2022, these restricted net assets totaled RMB165.6 billion (US$26.1 billion). See note 23 to our audited consolidated financial statements included in this annual report. Also see “Item 3. Key Information — D.
In addition, registered share capital and capital reserve accounts are also restricted from distribution. As of March 31, 2023, these restricted net assets totaled RMB194.6 billion (US$28.3 billion). See note 23 to our audited consolidated financial statements included in this annual report. Also see “Item 3. Key Information — D.
Our reported segments are described below: ● China commerce. China commerce segment mainly includes our China commerce retail businesses such as Taobao, Tmall, Taobao Deals, Taocaicai, Freshippo, Tmall Supermarket, Sun Art, Tmall Global and Alibaba Health, as well as wholesale business including 1688.com. ● International commerce.
China commerce segment mainly includes our China commerce retail businesses such as Taobao, Tmall, Taobao Deals, Taocaicai, Freshippo, Tmall Supermarket, Sun Art, Tmall Global and Alibaba Health, as well as wholesale business including 1688.com. • International commerce.
(2) Diluted earnings per share is derived from net income attributable to ordinary shareholders for computing diluted earnings per share divided by weighted average number of shares on a diluted basis. Diluted earnings per ADS is derived from the diluted earnings per share after adjustment to the ordinary share-to-ADS ratio.
(2) Diluted earnings per share is derived from dividing net income attributable to ordinary shareholders by the weighted average number of shares, on a diluted basis. Diluted earnings per ADS is derived from the diluted earnings per share after adjusting for the ordinary share-to-ADS ratio.
Short-term investments include investments in fixed deposits with original maturities between three months and one year and certain investments in wealth management products, marketable debt securities and other investments whereby we have the intention to redeem within one year.
Short-term investments include investments in fixed deposits with original maturities between three months and one year and certain investments in wealth management products, marketable debt securities and other investments whereby we have the intention to redeem within one year. Other treasury investments include investments in fixed deposits and certificates of deposits with original maturities over one year for treasury purposes.
Cash Flows from Investing Activities Net cash used in investing activities in fiscal year 2022 was RMB198,592 million (US$31,327 million), and was primarily attributable to an increase in short-term investments by RMB106,984 million (US$16,876 million), capital expenditures of RMB53,309 million (US$8,409 million) primarily in connection with the acquisitions of land use rights, property and equipment, and cash outflow of RMB52,848 million (US$8,337 million) for investment and acquisition activities, partially offset by cash inflow of RMB15,468 million (US$2,440 million) from disposal of investments.
Net cash used in investing activities in fiscal year 2022 was RMB198,592 million, and was primarily attributable to an increase in short-term investments by RMB106,984 million, capital expenditures of RMB53,309 million primarily in connection with the acquisitions of land use rights, property and equipment, and cash outflow of RMB52,848 million for investment and acquisition activities, partially offset by cash inflow of RMB15,468 million from disposal of investments.
Our non-GAAP net income, which excludes the effect of share-based compensation expense, amortization and impairment of intangible assets, impairment of investments and goodwill, gain or loss on deemed disposals/disposals/revaluation of investments, and certain other items as adjusted for tax effects, increased by 30% from RMB132,479 million in fiscal year 2020 to RMB171,985 million in fiscal year 2021.
Our non-GAAP net income, which excludes the effect of share-based compensation expense, amortization and impairment of intangible assets, impairment of investments and goodwill, gain or loss on deemed disposals/disposals/revaluation of investments and certain other items, as adjusted for tax effects, decreased by 21% from RMB171,985 million in fiscal year 2021 to RMB136,388 million in fiscal year 2022.
As of March 31, 2022, we also had other bank borrowings of RMB21,754 million (US$3,432 million), primarily used for our capital expenditures in relation to the construction of corporate campuses, office facilities and infrastructure for logistics business, and for other working capital purposes. See note 20 to our audited consolidated financial statements included in this annual report for further information.
As of March 31, 2023, we also had other bank borrowings of RMB32,096 million (US$4,674 million), primarily used for our capital expenditures in relation to the construction of corporate campuses, office facilities and infrastructure for logistics business, and for other working capital purposes. See note 20 to our audited consolidated financial statements included in this annual report for further information.
Related Party Transactions — Agreements and Transactions Related to Ant Group and Its Subsidiaries — Our Commercial Arrangements with Ant Group and Alipay — Share-based Award Arrangements.” We recognized share-based compensation expense of RMB31,742 million, RMB50,120 million and RMB23,971 million (US$3,782 million) in fiscal years 2020, 2021 and 2022, respectively, representing 6%, 7% and 3% of our revenue in those respective periods.
Related Party Transactions — Agreements and Transactions Related to Ant Group and Its Subsidiaries — Our Commercial Arrangements with Ant Group and Alipay — Share-based Award Arrangements.” We recognized share-based compensation expense of RMB50,120 million, RMB23,971 million and RMB30,831 million (US$4,489 million) in fiscal years 2021, 2022 and 2023, respectively, representing 7%, 3% and 4% of our revenue in those respective periods.
As of March 31, 2022, we have accrued the withholding tax on substantially all of the earnings distributable by our subsidiaries in China, except for those being reserved for permanent reinvestment in China of RMB176.4 billion (US$27.8 billion). Share-based Compensation Our equity incentive plans provide the granting of share-based awards to eligible grantees.
As of March 31, 2023, we have accrued the withholding tax on substantially all of the earnings distributable by our subsidiaries in China, except for those being reserved for permanent reinvestment in China of RMB233.6 billion (US$34.0 billion). Share-based Compensation Our equity incentive plans provide the granting of share-based awards to eligible grantees.
Cainiao segment mainly includes our domestic and international one-stop-shop logistics services and supply chain management solutions. ● Cloud. Cloud segment is comprised of Alibaba Cloud and DingTalk (previously reported under the Innovation initiatives and others segment). ● Digital media and entertainment.
Cainiao segment mainly includes our domestic and international one-stop-shop logistics services and supply chain management solutions. • Cloud. Cloud segment is comprised of Alibaba Cloud and DingTalk. • Digital media and entertainment.
Non-GAAP diluted earnings per share represents non-GAAP net income attributable to ordinary shareholders for computing non-GAAP diluted earnings per share divided by the weighted average number of shares outstanding during the periods on a diluted basis for computing non-GAAP diluted earnings per share.
Non‑GAAP diluted earnings per share represents non‑GAAP net income attributable to ordinary shareholders divided by the weighted average number of shares for computing non-GAAP diluted earnings per share, on a diluted basis. Non-GAAP diluted earnings per ADS represents non-GAAP diluted earnings per share after adjusting for the ordinary share-to-ADS ratio.
International commerce segment mainly includes our international commerce retail and wholesale businesses such as Lazada, AliExpress, Trendyol, Daraz and Alibaba.com. ● Local consumer services . Local consumer services segment mainly includes location-based businesses, such as Ele.me, Taoxianda, Amap (previously reported under the Innovation initiatives and others segment), Fliggy and Koubei. ● Cainiao .
International commerce segment mainly includes our international commerce retail and wholesale businesses such as Lazada, AliExpress, Trendyol, Daraz and Alibaba.com. • Local consumer services . Local consumer services segment mainly includes location-based businesses, such as Ele.me, Amap, Fliggy and Koubei. • Cainiao .
(3) Non-GAAP diluted earnings per share is derived from non-GAAP net income attributable to ordinary shareholders for computing non-GAAP diluted earnings per share divided by the weighted average number of shares outstanding during the periods on a diluted basis for computing non-GAAP diluted earnings per share.
(3) Non-GAAP diluted earnings per share is derived from dividing non-GAAP net income attributable to ordinary shareholders by the weighted average number of outstanding shares for computing non-GAAP diluted earnings per share, on a diluted basis. Non-GAAP diluted earnings per ADS is derived from the non-GAAP diluted earnings per share after adjusting for the ordinary share-to-ADS ratio.
Cost of Revenue The principal components of our cost of revenue include: cost of inventories; logistics costs; expenses associated with the operation of our mobile platforms and websites, such as depreciation and maintenance expenses for our servers and computers, call centers and other equipment, as well as bandwidth and co-location fees; salaries, bonuses, benefits and share-based compensation expense relating to customer service, mobile platform and platform operation personnel as well as payment processing consultants; traffic acquisition costs paid to third-party marketing affiliates either at a fixed price or on a revenue-sharing basis; content acquisition costs paid to third parties and production costs of original content for our online media properties; payment processing fees paid to Alipay or other financial institutions; and other miscellaneous costs. 134 Table of Contents Product Development Expenses Product development expenses primarily include salaries, bonuses, benefits and share-based compensation expense for research and development personnel and other expenses that are directly attributable to the development of new technologies and products for our businesses, such as the development of the Internet infrastructure, applications, operating systems, software, databases and networks.
Cost of Revenue The principal components of our cost of revenue include: cost of inventories; logistics costs; expenses associated with the operation of our mobile platforms and websites, such as depreciation and maintenance expenses for our servers and computers, call centers and other equipment, as well as bandwidth and co-location fees; salaries, bonuses, benefits and share-based compensation expense relating to customer service, mobile platform and platform operation personnel as well as payment processing consultants; traffic acquisition costs paid to third-party marketing affiliates either at a fixed price or on a revenue-sharing basis; content acquisition costs paid to third parties and production costs of original content for our online media properties; payment processing fees paid to Alipay or other financial institutions; and other miscellaneous costs.
Adjusted EBITDA represents net income before (i) interest and investment income, net, interest expense, other income, net, income tax expenses and share of results of equity method investees, (ii) certain non-cash expenses, consisting of share-based compensation expense, depreciation and impairment of property and equipment, operating lease cost relating to land use rights, amortization and impairment of intangible assets and impairment of goodwill, and (iii) Anti-monopoly Fine, which we do not believe are reflective of our core operating performance during the periods presented.
Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. 131 Table of Contents Adjusted EBITDA represents net income before (i) interest and investment income, net, interest expense, other income, net, income tax expenses and share of results of equity method investees, (ii) certain non‑cash expenses, consisting of share‑based compensation expense, amortization and impairment of intangible assets, depreciation and impairment of property and equipment, operating lease cost relating to land use rights, and impairment of goodwill, and (iii) Anti-monopoly Fine, as well as equity-settled donation expense, which we do not believe are reflective of our core operating performance during the periods presented.
Risk Factors — We rely to a significant extent on dividends, loans and other distributions on equity paid by our operating subsidiaries in China.” Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to certain restrictions on currency exchange or outbound capital flows. See “Item 3. Key Information – D.
Risk Factors — Risks Related to Doing Business in the People’s Republic of China — We rely to a significant extent on dividends, loans and other distributions on equity paid by our operating subsidiaries in China.” Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to certain restrictions on currency exchange or outbound capital flows.
General and Administrative Expenses General and administrative expenses consist mainly of salaries, bonuses, benefits and share-based compensation expense for our management and administrative employees, office facilities and other support overhead costs, professional services fees, provision for doubtful debts on receivables, charitable contributions, as well as non-recurring items, such as a fine imposed pursuant to China’s Anti-monopoly Law (the “Anti-monopoly Fine”) in fiscal year 2021.
Sales and Marketing Expenses Sales and marketing expenses primarily consist of online and offline advertising expenses, promotion expenses, salaries, bonuses, benefits and share-based compensation expense for our employees engaged in sales and marketing functions, and sales commissions paid for membership and user acquisition for our marketplaces and platforms. 125 Table of Contents General and Administrative Expenses General and administrative expenses mainly consist of salaries, bonuses, benefits and share-based compensation expense for our management and administrative employees, office facilities and other support overhead costs, professional services fees, provision for doubtful debts on receivables, charitable contributions, as well as non-recurring items, such as a fine imposed pursuant to China’s Anti-monopoly Law (the “Anti-monopoly Fine”) in fiscal year 2021.
As of March 31, 2022, we have accrued the withholding tax on substantially all of the earnings distributable by our subsidiaries in China, except for those being reserved for permanent reinvestment in China of RMB176.4 billion (US$27.8 billion).
As of March 31, 2023, we have accrued the withholding tax on substantially all of the earnings distributable by our subsidiaries in China, except for those being reserved for permanent reinvestment in China of RMB233.6 billion (US$34.0 billion).
We periodically review changes in technology and industry conditions, asset retirement activity and residual values to determine adjustments to estimated remaining useful lives and depreciation and amortization rates. Actual economic lives may differ from estimated useful lives. Periodic reviews could result in a change in estimated useful lives and therefore depreciation and amortization expenses in future periods.
We periodically review changes in technology and industry conditions, asset retirement activity and residual values to determine adjustments to estimated remaining useful lives and depreciation and amortization rates. Actual economic lives may differ from estimated useful lives.
These non-GAAP financial measures presented here do not have standardized meanings prescribed by U.S. GAAP and may not be comparable to similarly-titled measures presented by other companies. Other companies may calculate similarly-titled measures differently, limiting their usefulness as comparative measures to our data.
These non‑GAAP financial measures presented here do not have standardized meanings prescribed by U.S. GAAP and may not be comparable to similarly titled measures presented by other companies.
In addition, the recent Russia-Ukraine conflict has resulted in significant disruptions to supply chains, logistics and business activities in the region that have negatively affected our international commerce business and Cainiao’s logistic business and may have other unforeseen, unpredictable effects. The estimates or assumptions related to the impacts of the conflict on economic conditions also require our significant judgment.
In addition, the recent Russia-Ukraine conflict has resulted in significant disruptions to supply chains, logistics and business activities in the region that have negatively affected our international commerce business and Cainiao’s logistic business and may have other unforeseen, unpredictable effects.
Entities recognized as Software Enterprises are exempt from the EIT for two years beginning from their first profitable calendar year and are entitled to a 50% reduction in EIT for the following three consecutive calendar years. Furthermore, entities recognized as Key Software Enterprises within the PRC national plan enjoy a preferential EIT rate of 10%.
Entities recognized as Software Enterprises are exempt from the EIT for two years beginning from their first profitable calendar year and are entitled to a 50% reduction in EIT for the following three consecutive calendar years.
During fiscal year 2022, we recorded a RMB25,141 million (US$3,966 million) impairment of goodwill in relation to the Digital media and entertainment segment and a reversal of share-based compensation expense of RMB13,046 million (US$2,058 million) related to the mark-to-market adjustment of Ant Group share-based awards granted to our employees.
During fiscal year 2022, we recorded a RMB25,141 million impairment of goodwill in relation to the Digital media and entertainment segment and a RMB13,046 million reversal of share-based compensation expense related to the mark-to-market adjustment of Ant Group share-based awards granted to our employees. All of these impacts were excluded from our non-GAAP measures of profitability.
Comparative figures are presented in the same manner accordingly. (2) “Direct sales and others” revenue under China commerce retail primarily represents our direct sales businesses, comprising mainly Sun Art, Tmall Supermarket and Freshippo, where revenue and the cost of inventory are recorded on a gross basis.
(2) Direct sales and others revenue under China commerce retail businesses primarily represents our direct sales businesses, comprising mainly Sun Art, Tmall Supermarket, Freshippo, and Alibaba Health’s direct sales businesses where revenue and the cost of inventory are recorded on a gross basis.
We also enter into confidentiality and invention assignment agreements with all of our employees, and we rigorously control access to our proprietary technology and information. As of March 31, 2022, we had 10,045 issued patents and 8,996 publicly filed patent applications in China and 3,897 issued patents and 4,093 publicly filed patent applications in various other countries and jurisdictions globally.
We also enter into confidentiality and invention assignment agreements with all of our employees, and we rigorously control access to our proprietary technology and information. As of March 31, 2023, we had 11,483 issued patents and 12,818 publicly filed patent applications in China and 5,338 issued patents and 3,370 publicly filed patent applications in various other countries and jurisdictions globally.
In addition, we have a revolving credit facility, which we have not yet drawn as of the date of this annual report. Other Income, Net Other income, net, primarily consists of input VAT super-credit, exchange gain or loss and government grants, as well as royalty fees and software technology service fees paid by Ant Group.
In addition, we have a US$6.5 billion revolving credit facility, which we have not yet drawn as of the date of this annual report. Other Income, Net Other income, net, primarily consists of input VAT super-credit, exchange gain or loss and government grants.
The interest rate for this credit facility is calculated based on LIBOR plus 95 basis points. This loan facility is reserved for future general corporate and working capital purposes (including funding our acquisitions). In June 2021, the terms of this facility were amended and the amount of the credit facility was increased to US$6.5 billion.
This loan facility is reserved for future general corporate and working capital purposes (including funding our acquisitions). In June 2021, the terms of this facility were amended and the amount of the credit facility was increased to US$6.5 billion. The expiration date of the credit facility was extended to June 2026.
Although we expect our margins to be negatively affected by acquisitions of target companies with lower or negative margins, such as our acquisitions and consolidations of Lazada, Cainiao Network, Ele.me, Koala and Sun Art, we do not expect our investment activities to have any significant negative impact on our liquidity or operations.
Although we expect our margins to be negatively affected by acquisitions of target companies with lower or negative margins, we do not expect our investment activities to have any significant negative impact on our liquidity or operations.
Applicable PRC law permits payment of dividends to us by our operating subsidiaries in China only out of their retained earnings, if any, determined in accordance with PRC accounting standards and regulations.
Under PRC laws and regulations, our PRC subsidiaries are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets to us. Applicable PRC law permits payment of dividends to us by our operating subsidiaries in China only out of their retained earnings, if any, determined in accordance with PRC accounting standards and regulations.
The following table sets forth an analysis of share-based compensation expense by function for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended March 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ RMB RMB RMB US$ ​ ​ (in millions) Cost of revenue ​ 7,322 11,224 5,725 903 Product development expenses ​ 13,654 21,474 11,035 1,741 Sales and marketing expenses ​ 3,830 5,323 3,050 481 General and administrative expenses ​ 6,936 12,099 4,161 657 Total ​ 31,742 50,120 23,971 3,782 ​ The following table sets forth an analysis of share-based compensation expense by type of awards: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended March 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ RMB RMB RMB US$ ​ ​ (in millions) Alibaba Group share-based awards (1) 26,216 29,317 30,576 4,823 Ant Group share-based awards (2) 1,261 17,315 (11,585) (1,827) Others (3) 4,265 3,488 4,980 786 Total ​ 31,742 50,120 23,971 3,782 (1) This represents Alibaba Group share-based awards granted to our employees.
The following table sets forth an analysis of share-based compensation expense by function for the periods indicated: 127 Table of Contents Year ended March 31, 2021 2022 2023 RMB RMB RMB US$ (in millions) Cost of revenue 11,224 5,725 5,710 831 Product development expenses 21,474 11,035 13,514 1,968 Sales and marketing expenses 5,323 3,050 3,710 540 General and administrative expenses 12,099 4,161 7,897 1,150 Total 50,120 23,971 30,831 4,489 The following table sets forth an analysis of share-based compensation expense by type of awards: Year ended March 31, 2021 2022 2023 RMB RMB RMB US$ (in millions) Alibaba Group share-based awards (1) 29,317 30,576 24,900 3,626 Ant Group share-based awards (2) 17,315 (11,585 ) 668 97 Others (3) 3,488 4,980 5,263 766 Total 50,120 23,971 30,831 4,489 (1) This represents Alibaba Group share-based awards granted to our employees.
For further information on non-GAAP financial measures we use in evaluating our operating results and for financial and operational decision-making purposes, see “— Non-GAAP Measures.” Our Operating Segments We organize and report our business in seven operating segments: ● China commerce; ● International commerce; ● Local consumer services; ● Cainiao; ● Cloud; ● Digital media and entertainment; and ● Innovation initiatives and others.
Non-GAAP net income increased by 4% to RMB141,379 million (US$20,586 million) in fiscal year 2023. 118 Table of Contents For further information on non-GAAP financial measures we use in evaluating our operating results and for financial and operational decision-making purposes, see “— Non-GAAP Measures.” Our Operating Segments We organize and report our business in seven operating segments: • China commerce; • International commerce; • Local consumer services; • Cainiao; • Cloud; • Digital media and entertainment; and • Innovation initiatives and others.
ASC 848 provides optional expedients and exceptions for applying U.S. GAAP on contract modifications and hedge accounting to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform, if certain criteria are met.
GAAP on contract modifications and hedge accounting to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform, if certain criteria are met. These optional expedients and exceptions provided in ASC 848 are effective for us from January 1, 2020 through December 31, 2024.
These optional expedients and exceptions provided in ASC 848 are effective for us from January 1, 2020 through December 31, 2022. We have elected the optional expedients for certain existing interest rate swaps that are designated as cash flow hedges, which did not have a material impact on the financial position, results of operations and cash flows.
We have elected the optional expedients for certain existing interest rate swaps that are designated as cash flow hedges, which did not have a material impact on the financial position, results of operations and cash flows.
Risk Factors — Risks Related to Our Business and Industry — We face risks relating to our acquisitions, investments and alliances.” We did not have significant strategic investment or acquisition (excluding equity transactions in subsidiaries) in fiscal year 2022 and the period through the date of this annual report. 133 Table of Contents Intangible Assets and Goodwill When we make an acquisition, consideration that exceeds the acquisition date amounts of the acquired assets and liabilities is allocated to intangible assets and goodwill.
Risk Factors — Risks Related to Our Business and Industry — We face risks relating to our acquisitions, investments and alliances.” We did not have significant strategic investment or acquisition (excluding equity transactions in subsidiaries) in fiscal year 2023 and the period through the date of this annual report.
Revenue from membership fees are primarily fixed annual fees from the sale of China TrustPass memberships for paying members to reach customers, provide quotations and transact.
China Commerce Wholesale We generate revenue from our China commerce wholesale business primarily through membership fees, value-added services and customer management services. Revenue from membership fees are primarily fixed annual fees from the sale of China TrustPass memberships for paying members to reach customers, provide quotations and transact.
We expect that our share-based compensation expense will continue to be affected by changes in the fair value of the underlying awards and the quantity of awards we grant in the future. See “— Critical Accounting Policies and Estimates — Share-based Compensation Expense and Valuation of the Underlying Awards” below for additional information regarding our share-based compensation expense.
We expect that our share-based compensation expense will continue to be affected by changes in the fair value of the underlying awards and the quantity of awards we grant in the future.
Other revenue also includes annual fees received from Ant Group or its affiliates in relation to the SME loans business that we transferred to Ant Group in February 2015. This annual fee is payable for seven years starting in 2015, and has ended in December 2021.
Other revenue also includes annual fees received from Ant Group or its affiliates in relation to the SME loans business that we transferred to Ant Group in February 2015.
We present three different income measures, namely adjusted EBITDA, adjusted EBITA and non-GAAP net income in order to provide more information and greater transparency to investors about our operating results. 140 Table of Contents We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic corporate transactions, including investing in our new business initiatives, making strategic investments and acquisitions and strengthening our balance sheet.
We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic corporate transactions, including investing in our new business initiatives, making strategic investments and acquisitions and strengthening our balance sheet.
Without the effect of share-based compensation expenses, cost of revenue as a percentage of revenue would have increased from 57% in fiscal year 2021 to 62% in fiscal year 2022.
Without the effect of share-based compensation expense, general and administrative expenses as a percentage of revenue would have increased from 3% in fiscal year 2022 to 4% in fiscal year 2023.
The expiration date of the credit facility was extended to June 2026. Under the amended terms of the facility, the interest rate on any outstanding utilized amount will be calculated based on LIBOR plus 80 basis points. We have not yet drawn down this facility.
Under the terms of the amended facility, the interest rate on any outstanding utilized amount was calculated based on LIBOR plus 80 basis points. In May 2023, we amended the pricing of the outstanding utilized amount to SOFR with a credit adjustment spread plus 80 basis points. We have not yet drawn down this facility.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRelated Party Transaction Description ​ ​ ​ ​ SoftBank ​ ● Amended voting agreement among us, Joe Tsai and SoftBank, and, solely for limited purposes, Jack Ma, which, among others, provides that SoftBank and Joe Tsai will vote their shares in favor of the Alibaba Partnership director nominees, and provides SoftBank with the right to nominate a director. ​ ​ ​ ● Various investments involving SoftBank. ​ Ant Group and its affiliates ​ ● The SAPA, which was amended in 2018, 2019, 2020 and 2022, pursuant to which we received a 33% equity interest in Ant Group, and which sets forth, among other things, our rights in Ant Group. ​ ​ ​ ● The Alipay commercial agreement, pursuant to which Alipay provides payment and escrow services to us. ​ 184 Table of Contents Related Party Transaction Description ​ ​ ​ ​ ​ ​ ● The 2014 IPLA, an amendment to which was subsequently entered into in 2019 upon our receipt of the 33% equity interest in Ant Group, or the Amended IPLA, provides that we and our subsidiaries license to Ant Group and/or its subsidiaries certain intellectual property rights and provide various software technology services, and, prior to our receipt of the 33% equity interest in Ant Group, Ant Group paid us profit share payments; pursuant to the SAPA, a cross-license agreement was entered into in September 2019 upon our receipt of the 33% equity interest in Ant Group. ​ ​ ​ ● We and Ant Group cooperate with each other with respect to the enforcement of each other’s rights and the provision of certain financial services to our customers and merchants in connection with the SME loan business. ​ ​ ​ ● We granted Ant Group a license for it to continue to use certain trademarks and domain names. ​ ​ ​ ● Various investments involving Ant Group. ​ ​ ​ ● We have granted share-based awards to employees of Ant Group; Junhan, a major equity holder of Ant Group, and Ant Group have granted share-based awards to our employees.
Biggest changeAnt Group and its affiliates • The SAPA, which was amended in 2018, 2019, 2020 and 2022, pursuant to which we received a 33% equity interest (on a fully diluted basis) in Ant Group, and which sets forth, among other things, our rights in Ant Group. • The Alipay commercial agreement, pursuant to which Alipay provides payment and escrow services to us. • The 2014 IPLA, an amendment to which was subsequently entered into in 2019 upon our receipt of the 33% equity interest (on a fully diluted basis) in Ant Group, or the Amended IPLA, provides that we and our subsidiaries license to Ant Group and/or its subsidiaries certain intellectual property rights and provide various software technology services, and, prior to our receipt of the 33% equity interest (on a fully diluted basis) in Ant Group, Ant Group paid us profit share payments; pursuant to the SAPA, a cross-license agreement was entered into in September 2019 upon our receipt of the 33% equity interest (on a fully diluted basis) in Ant Group. • We and Ant Group cooperate with each other with respect to the enforcement of each other’s rights and the provision of certain financial services to our customers and merchants in connection with the SME loan business. • We granted Ant Group a license for it to continue to use certain trademarks and domain names. • Various investments involving Ant Group. • We have granted share-based awards to employees of Ant Group; Junhan, a major equity holder of Ant Group, and Ant Group have granted share-based awards to our employees.
Documents to Implement Transfers of IP Contemplated by SAPA (As Amended) In connection with the 2020 Amendments, we entered into a number of agreements pursuant to which we transferred to Ant Group certain intellectual property exclusively relating to the business of Ant Group in connection with the IPO of Ant Group, which transfers were contemplated by the SAPA, as amended in 2018 and 2019.
Documents to Implement Transfers of IP Contemplated by SAPA In connection with the 2020 Amendments, we entered into a number of agreements pursuant to which we transferred to Ant Group certain intellectual property exclusively relating to the business of Ant Group in connection with the IPO of Ant Group, which transfers were contemplated by the SAPA, as amended in 2018 and 2019.
Certain Restrictions on the Transfer of Ant Group Equity Interests Under the SAPA (as amended), certain parties thereto, including us in some cases, are subject to restrictions on the transfer of equity interests in Ant Group, including: ● following our receipt of the Issuance and until the earlier of the completion of a qualified IPO of Ant Group or the termination of the independent director rights provided in the SAPA, without the prior written consent of our company, none of Jack Ma, Joe Tsai (if he holds any equity interest at that time), Junao, Junhan or Ant Group may knowingly transfer any equity in Ant Group to a third-party who would thereby acquire more than 50% of the voting or economic rights in, or assets of, Ant Group; and ● following our receipt of the Issuance and until the completion of a qualified IPO of Ant Group, any transfer of equity interests in Ant Group by Junao or Junhan, on the one hand, or our company, on the other hand, will be subject to a right of first refusal by the other party.
Certain Restrictions on the Transfer of Ant Group Equity Interests Under the SAPA, certain parties thereto, including us in some cases, are subject to restrictions on the transfer of equity interests in Ant Group, including: • following our receipt of the Issuance and until the earlier of the completion of a qualified IPO of Ant Group or the termination of the independent director rights provided in the SAPA, without the prior written consent of our company, none of Jack Ma, Joe Tsai (if he holds any equity interest at that time), Junao, Junhan or Ant Group may knowingly transfer any equity in Ant Group to a third-party who would thereby acquire more than 50% of the voting or economic rights in, or assets of, Ant Group; and • following our receipt of the Issuance and until the completion of a qualified IPO of Ant Group, any transfer of equity interests in Ant Group by Junao or Junhan, on the one hand, or our company, on the other hand, will be subject to a right of first refusal by the other party.
We have also agreed to permit Ant Group to provide technology services in facilitation of the operations of any payment or financial services business to financial institutions and merchants using Ant Group’s payment services, except that Ant Group may not provide any IaaS-related cloud services, and we are allowed to provide services and products relating to payment accounts outside of Mainland China that Ant Group is unable to provide to us or our customers and to provide and distribute credit and insurance in cooperation with financial services business operators to facilitate businesses on our platforms, among other things. 191 Table of Contents Corporate Governance Provisions The SAPA, as amended, provides that we and Ant Group will recommend one independent nominee who, subject to the vetting by the nomination and remuneration committee of the board of Ant Group, to the extent required by such committee’s charter (subject to any amendments required by any applicable law or requested by any applicable governmental authority), and subject further to the vetting by applicable governmental authorities, as required by applicable law, will be nominated as a member of its board and serve on the board’s audit committee, and Jack Ma, Joe Tsai (in case he holds any equity interest in Ant Group), Junhan and Junao will agree to vote the equity interests in Ant Group controlled by them in favor of the nomination.
We have also agreed to permit Ant Group to provide technology services in facilitation of the operations of any payment or financial services business to financial institutions and merchants using Ant Group’s payment services, except that Ant Group may not provide any IaaS-related cloud services, and we are allowed to provide services and products relating to payment accounts outside of Chinese mainland that Ant Group is unable to provide to us or our customers and to provide and distribute credit and insurance in cooperation with financial services business operators to facilitate businesses on our platforms, among other things. 175 Table of Contents Corporate Governance Provisions The SAPA provides that we and Ant Group will recommend one independent nominee who, subject to the vetting by the nomination and remuneration committee of the board of Ant Group, to the extent required by such committee’s charter (subject to any amendments required by any applicable law or requested by any applicable governmental authority), and subject further to the vetting by applicable governmental authorities, as required by applicable law, will be nominated as a member of its board and serve on the board’s audit committee, and Jack Ma, Joe Tsai (in case he holds any equity interest in Ant Group), Junhan and Junao will agree to vote the equity interests in Ant Group controlled by them in favor of the nomination.
We are not permitted to approve certain actions to be taken under the SAPA (as amended) and related agreements before we obtain the consent from the Independent Committee. Upon the Issuance in September 2019, we nominated two of our officers who have been elected to the board of Ant Group pursuant to our rights under the SAPA (as amended).
We are not permitted to approve certain actions to be taken under the SAPA and related agreements before we obtain the consent from the Independent Committee. Upon the Issuance in September 2019, we nominated two of our officers who have been elected to the board of Ant Group pursuant to our rights under the SAPA.
We have agreed to provide a guarantee for a term loan facility of HK$7.7 billion (US$1.0 billion) in favor of Cingleot, a company that is partially owned by Cainiao Network, in connection with a logistic center development project at the Hong Kong International Airport.
We have agreed to provide a guarantee for a term loan facility of HK$7.7 billion (US$1.0 billion) in favor of Cingleot, a company that is partially owned by us, in connection with a logistic center development project at the Hong Kong International Airport.
In addition, Junhan and Ant Group have the right to repurchase the vested awards (or any underlying equity for the settlement of the vested awards) granted by them, as applicable, from the holders upon an initial public offering of Ant Group or the termination of the holders’ employment with us at a price to be determined based on the then fair market value of Ant Group.
In addition, Junhan and Ant Group have the right to repurchase 179 Table of Contents the vested awards (or any underlying equity for the settlement of the vested awards) granted by them, as applicable, from the holders upon an initial public offering of Ant Group or the termination of the holders’ employment with us at a price to be determined based on the then fair market value of Ant Group.
Our related party transaction policy, code of business conduct and our other corporate governance policies are subject to periodic review and revision by our board. Summary of Major Related Party Transactions We have entered into various commercial arrangements with certain of our investees, Ant Group and its affiliates, pursuant to which we receive and provide certain services to these parties.
Our related party transaction policy, code of business conduct and our other corporate governance policies are subject to periodic review and revision by our board. 169 Table of Contents Summary of Major Related Party Transactions We have entered into various commercial arrangements with certain of our investees, Ant Group and its affiliates, pursuant to which we receive and provide certain services to these parties.
Pursuant to the 2020 Amendments, the following rights under the SAPA, as amended in 2018 and 2019, will terminate upon the completion of a qualified IPO of Ant Group: ● our rights to participate in any qualified IPO of Ant Group or Alipay; ● the Independent Committee’s approval rights over: ● voluntary transfers of any equity securities of Alipay; ● increases to the size of Ant Group board resulting in the number of board seats exceeding a certain number; and ● any Alipay IPO.
Pursuant to the 2020 Amendments, the following rights under the SAPA, as amended in 2018 and 2019, will terminate upon the completion of a qualified IPO of Ant Group: • our rights to participate in any qualified IPO of Ant Group or Alipay; • the Independent Committee’s approval rights over: 176 Table of Contents • voluntary transfers of any equity securities of Alipay; • increases to the size of Ant Group board resulting in the number of board seats exceeding a certain number; and • any Alipay IPO.
In addition to these pre-emptive rights and the pre-emptive rights funded payments, under the SAPA (as amended), in certain circumstances we are permitted to exercise pre-emptive rights through an alternative arrangement that will further protect us from dilution.
In addition to these pre-emptive rights and the pre-emptive rights funded payments, under the SAPA, in certain circumstances we are permitted to exercise pre-emptive rights through an alternative arrangement that will further protect us from dilution.
See “—Commercial Arrangements with Investees and Ant Group and Its Affiliates.” 195 Table of Contents Agreements Entered into in 2020 Arrangements to Acquire Further Shares in an IPO of Ant Group In 2020, we entered into certain agreements with Ant Group, pursuant to which we may subscribe for additional shares in Ant Group as part of an IPO of Ant Group, such that we may continue to hold an equity interest not exceeding 33% in Ant Group upon the completion of such IPO of Ant Group.
See “— Commercial Arrangements with Investees and Ant Group and Its Affiliates.” Agreements Entered into in 2020 Arrangements to Acquire Further Shares in an IPO of Ant Group In 2020, we entered into certain agreements with Ant Group, pursuant to which we may subscribe for additional shares in Ant Group as part of an IPO of Ant Group, such that we may continue to hold an equity interest not exceeding 33% in Ant Group upon the completion of such IPO of Ant Group.
The amounts relating to these services provided and received represent less than 1% of our revenue and total costs and expenses, respectively, for the years ended March 31, 2020, 2021 and 2022.
The amounts relating to these services provided and received represent less than 1% of our revenue and total costs and expenses, respectively, for the years ended March 31, 2021, 2022 and 2023.
The relevant amendments were entered into or agreed to facilitate our acquisition of a 33% equity interest in Ant Group. On August 24, 2020, we further amended the SAPA, the Alipay commercial agreement and certain other agreements, referred to as the 2020 Amendments.
The relevant amendments were entered into or agreed to facilitate our acquisition of a 33% equity interest (on a fully diluted basis) in Ant Group. On August 24, 2020, we further amended the SAPA, the Alipay commercial agreement and certain other agreements, referred to as the 2020 Amendments.
If the IPO of Ant Group is withdrawn or rejected by governmental authority or is not completed within a certain period of time, the change will be unwound and our right will be restored. 193 Table of Contents Pursuant to the 2022 Amendments, our right to such one-time payment will no longer be restored.
If the IPO of Ant Group is withdrawn or rejected by governmental authority or is not completed within a certain period of time, the change will be unwound and our right will be restored. Pursuant to the 2022 Amendments, our right to such one-time payment will no longer be restored.
Financial and Accounting Treatment upon Issuance of Equity Interest in Ant Group There was no material operational and economic impact on us as a result of our receipt of the 33% equity interest in Ant Group in 2019, but we changed our accounting for our relationship with Ant Group as a result of the Issuance.
Financial and Accounting Treatment upon Issuance of Equity Interest in Ant Group There was no material operational and economic impact on us as a result of our receipt of the 33% equity interest (on a fully diluted basis) in Ant Group in 2019, but we changed our accounting for our relationship with Ant Group as a result of the Issuance.
We have also included Shares that the person has the right to acquire within 60 days of this annual report, including through the vesting of RSUs and the exercise of any option. These Shares, however, are not included in the computation of the percentage ownership of any other person.
We have also included Shares that the person has the right to acquire within 60 days of this annual report, including through the vesting of RSUs and options. These Shares, however, are not included in the computation of the percentage ownership of any other person.
See “— Commercial Arrangements with Investees and Ant Group and Its Affiliates.” In addition, as disclosed in greater detail in the following paragraphs, we have entered into certain major related party transactions in fiscal years 2020, 2021 and 2022, which are summarized in the table below.
See “— Commercial Arrangements with Investees and Ant Group and Its Affiliates.” In addition, as disclosed in greater detail in the following paragraphs, we have entered into or continued certain major related party transactions in fiscal years 2021, 2022 and 2023, which are summarized in the table below.
Commitments of Jack Ma to Alibaba Group Jack Ma, formerly one of our directors, has confirmed the following commitments to our board of directors: ● He intends to reduce and thereafter limit his direct and indirect economic interest in Ant Group over time (for the avoidance of doubt, other than the equity stake in Ant Group held by our company), to a percentage that does not exceed his and his affiliates’ interest in our company immediately prior to our initial public offering and that the reduction will occur in a manner by which neither Jack Ma nor any of his affiliates would receive any economic benefit; ● He will donate all of his Yunfeng GP Distributions to, or for the benefit of, the Alibaba Group Charitable Fund or other entities identified by him that serve charitable purposes; ● Other than his income tax obligations arising from recognition of income from Yunfeng GP Distributions, he will not claim any charitable deductions with respect to donations of his Yunfeng GP Distributions against his other income tax obligations; and ● If required by us, while he remains an Alibaba executive, he will assume for our benefit legal ownership of investment vehicles, holding companies and variable interest entities that further our business interests in Internet, media and telecom related businesses and, in this case, he will disclaim all economic benefits from his ownership and enter into agreements to transfer any benefits to us (or as we may direct) when permitted by applicable law.
Commitments of Jack Ma to Alibaba Group Jack Ma, formerly one of our directors, has confirmed the following commitments to our board of directors: • He intends to reduce and thereafter limit his direct and indirect economic interest in Ant Group over time (for the avoidance of doubt, other than the equity stake in Ant Group held by our company), to a percentage that does not exceed his and his affiliates’ interest in our company immediately prior to our initial public offering and that the reduction will occur in a manner by which neither Jack Ma nor any of his affiliates would receive any economic benefit; • He will donate all of his Yunfeng GP Distributions to, or for the benefit of, the Alibaba Group Charitable Fund or other entities identified by him that serve charitable purposes; • Other than his income tax obligations arising from recognition of income from Yunfeng GP Distributions, he will not claim any charitable deductions with respect to donations of his Yunfeng GP Distributions against his other income tax obligations; and • If required by us, while he remains an Alibaba executive, he will assume for our benefit legal ownership of investment vehicles, holding companies and variable interest entities that further our business interests in Internet, media and telecom related businesses and, in this case, he will disclaim all economic benefits from his ownership and enter into agreements to transfer any benefits to us (or as we may direct) when permitted by applicable law. 180 Table of Contents Transactions with Other Investees We have extended loans to certain of our investees for working capital and other uses in conjunction with our investments.
Investments Involving SoftBank We have invested in businesses in which SoftBank or one or more of its affiliates is a shareholder or co-invested with SoftBank or one or more of its affiliates in other businesses. SoftBank has also invested in businesses in which we or our controlled entities are shareholders.
Investments Involving SoftBank We have invested in businesses in which SoftBank or one or more of its affiliates is a shareholder or co‑invested with SoftBank or one or more of its affiliates in other businesses. SoftBank has also invested in businesses in which we are shareholders.
As of the date of this annual report, HK$3,413 million (US$436 million) was drawn down by that entity under this facility. We have also co-invested with certain of our investees in other businesses. For example, we have made co-investments with Hangzhou Hanyun Xinling Equity Investment Fund Partnership and New Retail Strategic Opportunities Fund, L.P.
As of the date of this annual report, HK$5,233 million (US$669 million) was drawn down by that entity under this facility. We have also co‑invested with certain of our investees in other businesses. For example, we have made co‑investments with Hangzhou Hanyun Xinling Equity Investment Fund Partnership and New Retail Strategic Opportunities Fund, L.P.
Ant Group also completed several rounds of equity financing. In September 2019, we received a newly issued 33% equity interest in Ant Group following the satisfaction of the closing conditions set forth in the SAPA, as amended in 2018 and 2019.
Ant Group also completed several rounds of equity financing. In September 2019, we received a newly issued 33% equity interest (on a fully diluted basis) in Ant Group following the satisfaction of the closing conditions set forth in the SAPA, as amended in 2018 and 2019.
Issuance of Equity Interest In September 2019, following the satisfaction of the closing conditions, we received through an onshore PRC subsidiary the issuance of a 33% equity interest in Ant Group pursuant to the SAPA, as amended in 2018 and 2019, or the Issuance.
Issuance of Equity Interest In September 2019, following the satisfaction of the closing conditions, we received through an onshore PRC subsidiary the issuance of a 33% equity interest (on a fully diluted basis) in Ant Group pursuant to the SAPA, as amended in 2018 and 2019, or the Issuance.
In fiscal year 2022, these costs and expenses accounted for 1.7% of our costs and expenses. Certain of our investees have also entered into commercial arrangements with us in connection with certain marketing services they provide to our business.
In fiscal year 2023, these costs and expenses accounted for 1.9% of our costs and expenses. Certain of our investees have also entered into commercial arrangements with us in connection with certain marketing services they provide to our business.
On July 25, 2022, we and Ant Group further amended the SAPA and the Alipay commercial agreement (such further amendments, the “2022 Amendments”), with certain amendments to take effect on August 13, 2022.
On July 25, 2022, we and Ant Group further amended the SAPA and the Alipay commercial agreement (such further amendments, the “2022 Amendments”), with certain amendments that took effect on August 13, 2022.
The fee rates for the immediately preceding year remain in effect until such time as the annual approval by the Independent Committee has been obtained. In fiscal years 2020, 2021 and 2022, service fees in connection with the payment services provided by Alipay under this agreement amounted to RMB8,723 million, RMB10,598 million and RMB11,824 million (US$1,865 million), respectively.
The fee rates for the immediately preceding year remain in effect until such time as the annual approval by the Independent Committee has been obtained. In fiscal years 2021, 2022 and 2023, service fees in connection with the payment services provided by Alipay under this agreement amounted to RMB10,598 million, RMB11,824 million and RMB12,484 million (US$1,818 million), respectively.
We believe that the acquisition of the 33% equity interest in Ant Group has strengthened our strategic relationship pursuant to the series of agreements initially reached with Ant Group in 2014.
We believe that the acquisition of the 33% equity interest (on a fully diluted basis) in Ant Group has strengthened our strategic relationship pursuant to the series of agreements initially reached with Ant Group in 2014.
However, pursuant to the 2020 Amendments and the 2022 Amendments, if a qualified IPO of Ant Group has not been completed within the prescribed period of time, the foregoing rights will no longer be subject to termination upon the completion of a qualified IPO of Ant Group.
Pursuant to the 2020 Amendments, these provisions would terminate upon the completion of a qualified IPO of Ant Group. 174 Table of Contents However, pursuant to the 2020 Amendments and the 2022 Amendments, if a qualified IPO of Ant Group has not been completed within the prescribed period of time, the foregoing rights will no longer be subject to termination upon the completion of a qualified IPO of Ant Group.
Certain of our investees have entered into commercial arrangements with us in connection with certain logistics services they provide to us. In fiscal years 2020, 2021 and 2022, we incurred costs and expenses of RMB8,265 million, RMB11,068 million and RMB13,120 million (US$2,070 million), respectively, for these logistics services.
Certain of our investees have entered into commercial arrangements with us in connection with certain logistics services they provide to us. In fiscal years 2021, 2022 and 2023, we incurred costs and expenses of RMB11,068 million, RMB13,120 million and RMB14,750 million (US$2,148 million), respectively, for these logistics services.
In fiscal years 2020, 2021 and 2022, we incurred costs and expenses of RMB1,146 million, RMB1,394 million and RMB976 million (US$154 million), respectively, for these marketing services. In fiscal year 2022, these costs and expenses accounted for 0.1% of our costs and expenses.
In fiscal years 2021, 2022 and 2023, we incurred costs and expenses of RMB1,394 million, RMB976 million and RMB382 million (US$56 million), respectively, for these marketing services. In fiscal year 2023, these costs and expenses accounted for 0.1% of our costs and expenses.
Transactions and Agreements with SoftBank Amended Voting Agreement We entered into a voting agreement, which was amended and restated in December 2021, or the amended voting agreement.
Amended Voting Agreement We entered into a voting agreement, which was amended and restated in December 2021, or the amended voting agreement.
As of March 31, 2022, Junhan and Junao held more than 50% of Ant Group’s equity interest, we held 33% and other shareholders held the remaining equity interest. The general partner of Junhan and Junao is an entity that was previously wholly-owned by Jack Ma.
As of March 31, 2023, Junhan and Junao held approximately 31% and 22% of Ant Group’s equity interest, respectively, we held 33% and other shareholders held the remaining equity interest. The general partner of Junhan and Junao is an entity that was previously wholly-owned by Jack Ma.
In fiscal years 2020, 2021 and 2022, we recognized revenue of RMB1,400 million, RMB1,732 million and RMB1,728 million (US$273 million), respectively, in connection with these logistics services. In fiscal year 2022, this revenue accounted for 0.2% of our revenue. We have also entered into commercial arrangements with certain of our investees related to cloud services.
We have entered into commercial arrangements with certain of our investees related to logistics services. In fiscal years 2021, 2022 and 2023, we recognized revenue of RMB1,732 million, RMB1,728 million and RMB1,140 million (US$166 million), respectively, in connection with these logistics services. In fiscal year 2023, this revenue accounted for 0.1% of our revenue.
Termination of Alibaba Rights Under the SAPA, as amended in 2018 and 2019, certain of our rights with respect to Ant Group were terminated upon our receipt of the Issuance. 192 Table of Contents In addition, the SAPA, as amended in 2018 and 2019, provides that, in connection with Ant Group or Alipay commencing an IPO process, we and Ant Group will discuss in good faith the amendment or termination of our rights to the extent necessary or advisable to achieve an efficient and successful IPO.
In addition, the SAPA, as amended in 2018 and 2019, provides that, in connection with Ant Group or Alipay commencing an IPO process, we and Ant Group will discuss in good faith the amendment or termination of our rights to the extent necessary or advisable to achieve an efficient and successful IPO.
Other than the related party transactions summarized above, the aggregate payments we received from other related parties accounted for less than 1% of total revenue in each of the fiscal years 2020, 2021 and 2022.
In fiscal year 2023, this revenue accounted for 0.2% of our revenue. 171 Table of Contents Other than the related party transactions summarized above, the aggregate payments we received from other related parties accounted for less than 1% of total revenue in each of the fiscal years 2021, 2022 and 2023.
We have been informed by Ant Group that the proposed reduction of Jack Ma’s economic interest is expected to be accomplished through a combination of future share-based awards to employees and dilutive issuances of equity in Ant Group, among others; ● from time to time, additional economic interests in Ant Group in the form of interests similar to share appreciation rights issued by Junhan will be transferred to employees of Ant Group and our employees; and ● Ant Group may raise equity capital from investors in the future in order to finance its business expansion, with the effect that the shareholding of Junao and Junhan in Ant Group will be reduced through dilution (the amount of dilution would depend on future valuations and the amount of equity capital to be raised). 188 Table of Contents Our Commercial Arrangements with Ant Group and Alipay After the divestment of our interest in and control over Alipay, we entered into a framework agreement in July 2011, or the 2011 framework agreement, with SoftBank, Altaba, Alipay, Ant Group, Jack Ma and Joe Tsai and certain of their affiliates.
We have been informed by Ant Group that the proposed reduction of Jack Ma’s economic interest is expected to be accomplished through a combination of future share-based awards to employees and dilutive issuances of equity in Ant Group, among others; • from time to time, additional economic interests in Ant Group in the form of interests similar to share appreciation rights issued by Junhan will be transferred to employees of Ant Group and our employees; and • Ant Group may raise equity capital from investors in the future in order to finance its business expansion, with the effect that the shareholding of Junao and Junhan in Ant Group will be reduced through dilution (the amount of dilution would depend on future valuations and the amount of equity capital to be raised).
Box N 3944, Nassau, Bahamas, and over which, Joe Tsai, as a director of Parufam Limited, has been delegated sole voting and disposition power and (iv) 137,539,168 ordinary shares held by PMH Holding Limited, a British Virgin Islands corporation with its registered address at Trident Chambers, P.O.
Box N-492, Nassau, The Bahamas, and over which, Joe Tsai, as a director of Parufam Limited, has been delegated sole voting and disposition power and (iv) 113,539,168 ordinary shares held by PMH Holding Limited, a British Virgin Islands corporation with its registered address at Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands, and over which, Joe Tsai, as sole director of PMH Holding Limited, has voting and dispositive power.
These individuals have waived any leasing fees for the use of such aircraft in connection with the performance of their duties as our directors and executive officers, and we have agreed to assume the cost of maintenance, crew and operation of the aircraft where the cost is allocated for business purposes.
He has waived any leasing fees for the use of such aircraft in connection with the performance of his duties, and we have agreed to assume the cost of maintenance, crew and operation of the aircraft where the cost is allocated for business purposes.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A.
ITEM 7. MAJ OR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A.
It is expected that the net settlement amount would be insignificant to us. Transactions with Entities Affiliated with Our Directors and Officers Jack Ma, formerly one of our directors, Joe Tsai, our executive vice chairman, and J. Michael Evans, our president and director, have purchased their own aircraft for both business and personal use.
It is expected that the net settlement amount would be insignificant to us. Transactions with Entities Affiliated with Our Directors and Officers Joe Tsai, our executive vice chairman, has purchased his own aircraft for both business and personal use.
Compensation — Equity Incentive Plans.” C. Interests of Experts and Counsel Not applicable.
Compensation — Equity Incentive Plan.” C. Interests of Experts and Counsel Not applicable. 181 Table of Contents
Other than the foregoing, the aggregate service fees we paid to other related parties accounted for less than 1% of total costs and expenses in each of fiscal years 2020, 2021 and 2022.
Other than the foregoing, the aggregate service fees we paid to other related parties accounted for less than 1% of total costs and expenses in each of fiscal years 2021, 2022 and 2023. The following table summarizes the services fees received from Ant Group and its affiliates in fiscal years 2021, 2022 and 2023.
To our knowledge, 7,184,171,019 ordinary shares (equivalent to 898,021,377 ADSs), representing approximately 34% of our total outstanding shares, were held by 187 record shareholders with registered addresses in the United States, including brokers and banks that hold securities in street name on behalf of their customers.
To our knowledge, 6,571,492,864 ordinary shares (equivalent to 821,436,608 ADSs), representing approximately 32.3% of our total outstanding shares, were held by 184 record shareholders with registered addresses in the United States, including brokers and banks that hold securities in street name on behalf of their customers.
In fiscal year 2020, we recognized a one-time gain of RMB71.6 billion in relation to the receipt of the 33% equity interest in Ant Group. Subsequent to the Issuance, we record our proportionate share of results of Ant Group in “Share of results of equity method investees” in our consolidated income statements on a one quarter in-arrears basis.
Subsequent to the Issuance, we record our proportionate share of results of Ant Group in “Share of results of equity method investees” in our consolidated income statements on a one quarter in-arrears basis.
In addition, Jack Ma, his wife, certain trusts established for the benefit of his family and certain entities controlled by Jack Ma and his wife have committed, or are expected to commit, funds to the general partners or as limited partners of certain Yunfeng Funds. 196 Table of Contents Jack Ma has either non-voting interests or has waived the exercise of his voting power with respect to his interests in each of the investment advisor entities and the managing entities of certain Yunfeng Funds.
He also holds minority interests in certain investment advisor entities of certain Yunfeng Funds. In addition, Jack Ma, his wife, certain trusts established for the benefit of his family and certain entities controlled by Jack Ma and his wife have committed, or are expected to commit, funds to the general partners or as limited partners of certain Yunfeng Funds.
Neither party is required to pay any fees in consideration for the services provided by the other party, and apart from the provision of these services, there will be no other exchange of value in connection with this agreement. The cooperation agreement has an initial term of five years, with automatic renewals upon expiry for additional five-year periods.
Neither party is required to pay any fees in 178 Table of Contents consideration for the services provided by the other party, and apart from the provision of these services, there will be no other exchange of value in connection with this agreement.
Since 2020, we stopped paying any costs for the aircraft of Jack Ma and J. Michael Evans. Relationship with Investment Funds Affiliated with Jack Ma Jack Ma currently holds minority interests in the general partners of a number of Yunfeng investment funds, in which he is entitled to receive a portion of carried interest proceeds.
Relationship with Investment Funds Affiliated with Jack Ma Jack Ma currently holds minority interests in the general partners of a number of Yunfeng investment funds, in which he is entitled to receive a portion of carried interest proceeds. We refer to these funds collectively as the Yunfeng Funds.
(both of which are our investees that focus on retail-related businesses) in a number of companies, including Red Star Macalline Group Corporation Limited and Sun Art. 197 Table of Contents Other Commercial Transactions with Investees Other than the transactions disclosed above, we also have commercial arrangements with certain of our investees and other related parties in which: ● we recorded cost and expenses paid to investees for cloud computing services, content acquisition, purchase of inventory and various other services; and ● we recorded income generated from investees for providing marketing, commission and other services.
Other Commercial Transactions with Investees Other than the transactions disclosed above, we also have commercial arrangements with certain of our investees and other related parties in which: • we recorded cost and expenses paid to investees for cloud computing services, content acquisition, purchase of inventory and various other services; and • we recorded income generated from investees for providing marketing, commission and other services.
Following our receipt of the Issuance, we no longer received any profit share payments from Ant Group. Following the Issuance, we accounted for our equity interest in Ant Group under the equity method and recorded it in “Investment in equity method investees” on our consolidated balance sheet.
Following the Issuance, we accounted for our equity interest in Ant Group under the equity method and recorded it in “Investments in equity method investees” on our consolidated balance sheet.
From time to time, we expect to enter into similar commercial arrangements with respect to cooperation matters and the provision of services between us and Ant Group and to our respective customers.
The cooperation agreement has an initial term of five years, with automatic renewals upon expiry for additional five-year periods. From time to time, we expect to enter into similar commercial arrangements with respect to cooperation matters and the provision of services between us and Ant Group and to our respective customers.
Major Shareholders The following table sets forth information with respect to beneficial ownership of our ordinary shares as of July 15, 2022, except otherwise noted, by: ● each of our directors and executive officers; ● our directors and executive officers as a group; and ● each person known to us to beneficially own 5% or more of our ordinary shares. 182 Table of Contents Beneficial ownership is determined in accordance with the rules and regulations of the SEC and includes the power to direct the voting or the disposition of the securities or to receive the economic benefit of the ownership of the securities.
Major Shareholders The following table sets forth information with respect to beneficial ownership of our ordinary shares as of July 12, 2023, except otherwise noted, by: • each of our directors and executive officers; • our directors and executive officers as a group; and • each person known to us to beneficially own 5% or more of our ordinary shares.
We believe this transaction reasonably reflects the reduction in Ant Group’s contingent payment obligations to us since 2011 when the pledges were first created, the valuation of which was conducted with help from an independent financial advisor, and the increased financial strength and creditworthiness of Ant Group. 190 Table of Contents Pre-emptive Rights Following our receipt of equity interest in Ant Group, we have pre-emptive rights to participate in other issuances of equity securities by Ant Group and certain of its affiliates prior to a qualified IPO of Ant Group.
We believe this transaction reasonably reflects the reduction in Ant Group’s contingent payment obligations to us since 2011 when the pledges were first created, the valuation of which was conducted with help from an independent financial advisor, and the increased financial strength and creditworthiness of Ant Group.
In fiscal years 2020, 2021 and 2022, the annual fees we received from Ant Group and its affiliates in connection with the SME loan business amounted to RMB954 million, RMB954 million and RMB708 million (US$112 million), respectively.
In fiscal years 2021, 2022 and 2023, the annual fees we received from Ant Group and its affiliates in connection with the SME loan business amounted to RMB954 million, RMB708 million and nil, respectively. For regulatory reasons, we retained approximately RMB1,225 million of the existing SME loan portfolio upon the completion of the transfer of the SME loan business.
Share-based Award Arrangements Certain of our employees hold share-based awards granted by Junhan and Ant Group, and certain employees of Ant Group hold share-based awards granted by us. These awards will be settled by respective grantors upon disposal of these awards by the holders, vesting or exercise of these awards, depending on the forms of these awards.
These awards will be settled by respective grantors upon disposal of these awards by the holders, vesting or exercise of these awards, depending on the forms of these awards.
Pursuant to the SAPA, as amended in 2018 and 2019, the consideration we paid to receive the newly issued 33% equity interest in Ant Group was fully funded by payments from Ant Group and its subsidiaries to us in consideration for certain intellectual property and assets that we transferred under the SAPA, as amended in 2018 and 2019. 189 Table of Contents In connection with the receipt of the Issuance, we entered into a cross license agreement with Ant Group providing for a license by each of Ant Group and us to each other of certain patents, trademarks, software and other technologies (including but not limited to patents and software transferred at the Issuance closing).
Pursuant to the SAPA, as amended in 2018 and 2019, the consideration we paid to receive the newly issued 33% equity interest (on a fully diluted basis) in Ant Group was fully funded by payments from Ant Group and its subsidiaries to us in consideration for certain intellectual property and assets that we transferred under the SAPA, as amended in 2018 and 2019.
Pursuant to the 2022 Amendments, from August 13, 2023, with respect to any payment processing and escrow services to be provided by Ant Group to us outside of Mainland China, the fee rates and payment-related terms for such services will no longer be governed by the Alipay commercial agreement and will instead be agreed upon between Ant Group and us separately. ​ Ancillary Agreements In connection with our entry into the original SAPA in 2014, we also entered into the 2014 IPLA, a data sharing agreement, an amended and restated shared services agreement, a SME loan cooperation framework agreement and a trademark agreement, each of which is described below.
Pursuant to the 2022 Amendments, from August 13, 2023, with respect to any payment processing and escrow services to be provided by Ant Group to us outside of Chinese mainland, the fee rates and payment-related terms for such services will no longer be governed by the Alipay commercial agreement and will instead be agreed upon between Ant Group and us separately.
While the profit share payments have terminated under the Amended IPLA, Ant Group may in certain circumstances continue to make certain royalty payments to us (as agreed to by Ant Group and the Independent Committee), which may be used as pre-emptive rights funded payments under the SAPA, as described in “— Pre-emptive Rights” above. 194 Table of Contents Additionally, pursuant to the Amended IPLA, Ant Group and its subsidiaries will receive expanded rights to apply for, register and manage certain intellectual property related to their businesses, subject to certain continuing restrictions and our rights, and we will cease to provide certain software technology services to Ant Group and its subsidiaries.
While the profit share payments have terminated under the Amended IPLA, Ant Group may in certain circumstances continue to make certain royalty payments to us (as agreed to by Ant Group and the Independent Committee), which may be used as pre-emptive rights funded payments under the SAPA, as described in “— Pre-emptive Rights” above.
The following table summarizes the services fees received from Ant Group and its affiliates in fiscal years 2020, 2021 and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended March 31, ​ ​ 2020 2021 2022 Related Party Transaction RMB RMB RMB US$ ​ ​ ​ (in millions) Ant Group Software technology services fee and license fee (1) 3,835 — — — Ant Group and its affiliates Annual fee for SME loan business (2) 954 954 708 112 ​ Administrative and support services 1,224 1,208 1,165 184 ​ Cloud services fee 1,872 3,916 5,536 873 ​ Marketplace software technology services fee and others 2,075 2,427 2,358 372 Notes: (1) Terminated in September 2019 following our receipt of a 33% equity interest in Ant Group.
Year ended March 31, Related Party Transaction 2021 2022 2023 RMB RMB RMB US$ (in millions) Ant Group and its affiliates Annual fee for SME loan business (1) 954 708 — — Administrative and support services 1,208 1,165 565 82 Cloud services fee 3,916 5,536 8,409 1,224 Marketplace software technology services fee and others 2,427 2,358 2,831 412 Note: (1) Pursuant to our agreement with Ant Group, we received these annual fees for a term of seven years, commencing in 2015 and ending in 2021.
For regulatory reasons, we retained approximately RMB1,225 million of the existing SME loan portfolio upon the completion of the transfer of the SME loan business. These loans have been repaid. We do not intend to conduct any new SME loan business going forward.
These loans have been repaid. We do not intend to conduct any new SME loan business going forward.
Apart from the 2018, 2019, 2020 and 2022 amendments to our agreements with Ant Group described below, the key terms of our agreements with Ant Group and Alipay from the 2014 restructuring remain substantially unchanged.
Apart from the 2018, 2019, 2020 and 2022 amendments to our agreements with Ant Group described below, the key terms of our agreements with Ant Group and Alipay from the 2014 restructuring remain substantially unchanged. 173 Table of Contents Sale of SME Loan Business and Certain Other Assets Pursuant to the SAPA, we sold certain securities and assets primarily relating to our SME loan business and other related services to Ant Group in February 2015.
The calculations of percentage ownership in the table below are based on 21,185,107,544 ordinary shares (equivalent to 2,648,138,443 ADSs) outstanding as of July 15, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beneficial ownership ​ Beneficial ownership ​ ​ ​ Name (Ordinary shares) ​ (ADSs) (3) ​ Percent ​ Directors and Executive Officers: ​ Daniel Yong ZHANG ​ * ​ * ​ * ​ Joseph C.
The calculations of percentage ownership in the table below are based on 20,374,238,040 ordinary shares (equivalent to 2,546,779,755 ADSs) outstanding as of July 12, 2023. Name Beneficial ownership (Ordinary shares) Beneficial ownership (ADSs) (3) Percent Directors and Executive Officers: Daniel Yong ZHANG * * * Joseph C. TSAI (1) 281,675,752 35,209,469 1.4% J.
Peter Port, Guernsey GY1 4EE, that has granted Joe Tsai a revocable proxy over these shares and which is wholly-owned by Joe and Clara Tsai Foundation, (iii) 147,385,672 ordinary shares held by Parufam Limited, a Bahamas corporation with its registered address at Suite 200B, 2nd Floor, Centre of Commerce, One Bay Street, P.O.
(1) Represents (i) 443,736 ordinary shares held directly by Joe Tsai, (ii) 20,307,176 ordinary shares held by Joe and Clara Tsai Foundation Limited, a company incorporated under the law of the Island of Guernsey with its registered address at PO Box 186, Royal Chambers, St Julian's Avenue, St Peter Port, Guernsey GY1 4HP, that has granted Joe Tsai a revocable proxy over these shares and which is wholly-owned by Joe and Clara Tsai Foundation, (iii) 147,385,672 ordinary shares held by Parufam Limited, a Bahamas corporation with its registered address at 303 Shirley Street, P.O.
We have one class of ordinary shares, and each holder of our ordinary shares is entitled to one vote per share. 183 Table of Contents As of July 15, 2022, 21,185,107,544 of our ordinary shares (equivalent to 2,648,138,443 ADSs) were outstanding.
We have one class of ordinary shares, and each holder of our ordinary shares is entitled to one vote per share. As of July 12, 2023, 20,374,238,040 of our ordinary shares (equivalent to 2,546,779,755 ADSs) were outstanding.
Transactions with Other Investees We have extended loans to certain of our investees for working capital and other uses in conjunction with our investments. As of March 31, 2022, the aggregate outstanding balance of these loans was RMB3,000 million (US$473 million), with remaining terms of up to four years and interest rates of up to 10% per annum.
As of March 31, 2023, the aggregate outstanding balance of these loans was RMB2,345 million (US$341 million), with remaining terms of up to four years and interest rates of up to 10% per annum.
Pursuant to the SAPA, as amended in 2018 and 2019, upon the Issuance we also entered into the Amended IPLA, a cross license agreement and various intellectual property transfer agreements in connection with, and to implement, the contemplated intellectual property and asset transfers described in “— Issuance of Equity Interest” above.
It is intended that we and Ant Group will, to the extent necessary for each party to provide services to our respective customers, instead negotiate the terms of data sharing arrangements on a case-by-case basis and as permitted by applicable laws and regulations. 177 Table of Contents Pursuant to the SAPA, as amended in 2018 and 2019, upon the Issuance we also entered into the Amended IPLA, a cross license agreement and various intellectual property transfer agreements in connection with, and to implement, the contemplated intellectual property and asset transfers described in “— Issuance of Equity Interest” above.
We may continue to co-invest with SoftBank, invest in businesses in which SoftBank is already an existing investor, and may also bring SoftBank as an investor into new businesses or businesses in which we are an existing investor. 187 Table of Contents Agreements and Transactions Related to Ant Group and Its Subsidiaries Ownership of Ant Group and Alipay We originally established Alipay in December 2004 to operate our payment services business.
We may continue to co‑invest with SoftBank, invest in businesses in which SoftBank is already an existing investor, and may also bring SoftBank as an investor into new businesses or businesses in which we are an existing investor.
The economic interests in Junao are held in the form of limited partnership interests by certain members of the Alibaba Partnership.
These economic interests are in the form of limited partnership interests and interests similar to share appreciation rights tied to potential appreciation in the value of Ant Group. The economic interests in Junao are held in the form of limited partnership interests by certain members of the Alibaba Partnership and Ant Group's management.
We, Junhan and Ant Group agreed to settle with each other the cost associated with certain share-based awards granted to each other’s employees upon vesting. ​ Jack Ma, Joe Tsai, and J.
We, Junhan and Ant Group agreed to settle with each other the cost associated with certain share-based awards granted to each other’s employees upon vesting. Our executive vice chairman • We agreed to assume the cost of maintenance, crew and operation of personal aircraft of our executive vice chairman where the cost is allocated for business purposes.
According to public disclosure by SoftBank, SoftBank has entered into forward contracts and margin loans using a portion of our shares. (3) Each ADS represents eight ordinary shares.
As of July 12, 2023, none of the subsidiaries of SoftBank Group Corp. holding our ordinary shares beneficially owned more than 5% of our outstanding ordinary shares. According to public disclosure by SoftBank, SoftBank has entered into forward contracts using our shares. (3) Each ADS represents eight Shares.
In fiscal years 2020, 2021 and 2022, we recognized revenue of RMB1,548 million, RMB2,411 million and RMB1,826 million (US$288 million), respectively, for these cloud services. In fiscal year 2022, this revenue accounted for 0.2 % of our revenue.
We have also entered into commercial arrangements with certain of our investees related to cloud services. In fiscal years 2021, 2022 and 2023, we recognized revenue of RMB2,411 million, RMB1,826 million and RMB1,462 million (US$213 million), respectively, for these cloud services.
Upon the Issuance, and our transfer of certain intellectual property to Ant Group and its subsidiaries, the profit share arrangement under the 2014 IPLA was terminated. For the years ended March 31, 2020, 2021 and 2022, the profit share payments recorded in “Other income, net” in our consolidated income statements amounted to RMB3,835 million, nil and nil, respectively.
Upon the Issuance, and our transfer of certain intellectual property to Ant Group and its subsidiaries, the profit share arrangement under the 2014 IPLA was terminated, and we no longer received any profit share payments from Ant Group.
Michael EVANS * * * ​ Maggie Wei WU * * * ​ Kabir MISRA * * * ​ Chee Hwa TUNG * * * ​ Walter Teh Ming KWAUK * * * ​ Jerry YANG * * * ​ Wan Ling MARTELLO * * * ​ Weijian SHAN ​ * ​ * ​ * ​ Toby Hong XU ​ * ​ * ​ * ​ Judy Wenhong TONG * * * ​ Li CHENG * * * ​ Sara Siying YU ​ * ​ * ​ * ​ Jessie Junfang ZHENG * * * ​ Trudy Shan DAI ​ * ​ * ​ * ​ All directors and executive officers as a group 441,562,978 55,195,372 2.1% ​ Greater than 5% Beneficial Owners: ​ ​ ​ ​ ​ ​ ​ SoftBank (2) 5,067,408,616 633,426,077 23.9% ​ Notes: * This person beneficially owns less than 1% of our outstanding ordinary shares.
Michael EVANS * * * Maggie Wei WU * * * Jerry YANG * * * Wan Ling MARTELLO * * * Weijian SHAN * * * Irene Yun-Lien LEE * * * Albert Kong Ping NG * * * Kabir MISRA * * * Toby Hong XU * * * Jane Fang JIANG * * * Zeming WU * * * Sara Siying YU * * * Trudy Shan DAI * * * Yongfu YU * * * Fan JIANG * * * Lin WAN * * * Luyuan FAN * * * All directors and executive officers as a group 447,894,628 55,986,829 2.2% Greater than 5% Beneficial Owners: SoftBank (2) 2,839,209,112 354,901,139 13.9% 168 Table of Contents Notes: * This person beneficially owns less than 1% of our outstanding ordinary shares.
Joe Tsai’s business address is 26/F Tower One, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong S.A.R., the People’s Republic of China. (2) Represents ordinary shares owned directly and indirectly by SoftBank Group Corp., with its registered office at 1-7-1, Kaigan, Minato-Ku, Tokyo, 105-7537, Japan.
Joe Tsai does not have any pecuniary interests in the 20,307,176 ordinary shares held by Joe and Clara Tsai Foundation Limited. Joe Tsai’s business address is 26/F Tower One, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong S.A.R., the People’s Republic of China.
As of July 15, 2022, none of the subsidiaries of SoftBank Group Corp. holding our ordinary shares beneficially owned more than 5% of our outstanding ordinary shares, with the exception of Skywalk Finance GK, with its registered office at 1-7-1, Kaigan, Minato-Ku, Tokyo, 105-7537, Japan, which beneficially owned 1,360,000,000, or 6.4% of our outstanding ordinary shares.
(2) Represents ordinary shares owned indirectly by SoftBank Group Corp., with its registered office at 1-7-1, Kaigan, Minato-Ku, Tokyo, 105-7537, Japan. These ordinary shares are beneficially owned via direct or indirect subsidiaries of SoftBank Group Corp.
In June 2010, the PBOC issued new regulations that required non-bank payment companies to obtain a license in order to operate in China. These regulations provided specific guidelines for license applications only for domestic PRC-owned entities.
Agreements and Transactions Related to Ant Group and Its Subsidiaries Ownership of Ant Group and Alipay We originally established Alipay in December 2004 to operate our payment services business. In June 2010, the PBOC issued new regulations that required non-bank payment companies to obtain a license in order to operate in China.
The amended voting agreement, by and among us, Joe Tsai and SoftBank, and, solely for limited purposes, Jack Ma, provides SoftBank with the right to nominate one director to our board of directors who will, subject to certain conditions, have the right to receive notices and materials for all meetings of our committees and to join these meetings as an observer, which rights are also reflected in our Memorandum and Articles of Association.
The terms of the amended voting agreement, by and among us, Joe Tsai and SoftBank, and, solely for limited purposes, Jack Ma, provides, amongst other things, that for so long as SoftBank owns 15% or more of our outstanding shares, SoftBank has the right to nominate one director to our board of directors, Softbank will vote their shares in favor of Alibaba Partnership director nominees and Joe Tsai will vote his shares in favor of the SoftBank director nominee.
Removed
(1) Represents (i) 294,400 ordinary shares held directly by Joe Tsai, (ii) 20,307,176 ordinary shares held by Joe and Clara Tsai Foundation Limited, a company incorporated under the law of the Island of Guernsey with its registered address at Helvetia Court, South Esplanade, St.
Added
Beneficial ownership is determined in accordance with the rules and regulations of the SEC and includes the power to direct the voting or the disposition of the securities or to receive the economic benefit of the ownership of the securities.
Removed
Box 146, Road Town, Tortola, British Virgin Islands, and over which, Joe Tsai, as sole director of PMH Holding Limited, has voting and dispositive power.
Added
Related Party Transaction Description SoftBank • Amended voting agreement among us, Joe Tsai and SoftBank, and, solely for limited purposes, Jack Ma, which, among others, provides that SoftBank has the right to nominate a director, and that Softbank and Joe Tsai will vote their shares in favor of Alibaba Partnership director nominees and the Softbank director nominee, respectively.
Removed
Excludes shares held by SoftBank representing SoftBank’s share ownership in excess of 30% of our outstanding ordinary shares as of the most recent record date with respect to any shareholders action, over which Joe Tsai has voting power pursuant to the amended and restated voting agreement that we, Joe Tsai and SoftBank have entered into as described in “Item 7.

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