Finimize - 🇨🇳 Alibaba's big AI bet

What’s going on here?

After New York turned its nose up, Shein might be taking its fast-fashion garms to the streets – or at least the stock market – of London.

What does this mean?

Plenty of clothes stores are dressing their windows with sustainable accolades to win over increasingly eco-conscious fashionistas. Not Shein: aware that plenty of shoppers will always prioritize price, the fast-fashion label churns out clothes that go for an average of $10.70. The company was confident that its rampant sales would justify an $80 to $90 billion debut on the US market. But when Shein was valued closer to $50 billion late last year, the firm ditched its affinity for low prices and checked out options in London, Hong Kong, and Singapore instead. They may be safer routes anyway: US regulations are making it tougher for companies with Chinese ties, like Shein, to keep both sides happy.

Why should I care?

The bigger picture: Here for a reason, a season, or a lifetime.

Shein’s rival Temu is trying to win over US shoppers, too. Backed by ecommerce giant Pinduoduo, the Chinese online marketplace spent $1.7 billion on marketing last year, and plans to raise that to $3 billion this year to take on the likes of Amazon, Walmart, Etsy, and Wayfair. Temu is a dab hand at catching shoppers’ eyes, but with only 14% of buyers still shopping on the site four months after their first purchase, the bargain retailer needs to work on winning their long-term loyalty.

Zooming in: China’s shopping local.

Chinese shoppers are backing homegrown companies, and that’s changing the fate of companies that have won over the sprawling and (usually) lucrative market. China’s own BYD, for example, just toppled Tesla to become the world’s top-selling electric carmaker. Local brand Luckin Coffee made more sales in China than Starbucks last year, too, showing that China's shoppers prefer decent value over Instagrammable logos – especially now that the economy’s in a pinch.

What's going on here?

Alibaba invested enough money into Moonshot AI to mark China’s single biggest startup financing round, a sure sign that it believes the OpenAI competitor can really go the distance.

What does this mean?

Alibaba’s been up against it for years, with tightening tech regulations making it even harder to make money in China’s already stuttering economy. That struggle is showing: investors have pushed the ecommerce company’s stock down three-quarters from its 2021 peak. No wonder, then, that Alibaba seems to be putting its hopes into another technology: Moonshot AI, creator of the generative AI chatbot “Kimi”, the same type of tech as OpenAI’s ChatGPT and Google’s Gemini. Alibaba’s investment won’t just buy the company a stake in a likely frontrunner in the lucrative AI sector, but the cash could speed up Moonshot’s development, potentially creating cutting-edge tools that Alibaba could use to smooth out supply chains and automate parts of the business.

Why should I care?

For markets: Saudi Arabia wants intel, stat.

Most big-money investors have fled the country, putting the least amount of money into Chinese deals last year since 2019. Saudi Arabian investors have taken that as a sign to buy, though, investing hundreds of millions into Chinese tech firms like Alibaba and SenseTime. They’ll hold out to make their money back – but they want information in the meantime, pushing the companies they’ve invested in to share their expertise with Saudi’s own technical talent.

For you personally: Burry the hatchet.

Saudi Arabian investors aren’t the only ones dipping a toe into China. The “Big Short” star Michael Burry has dunked his whole foot in, buying enough Alibaba stock to make it Scion Asset Management’s biggest holding. That may be a risky bet, but at least it’s a cheap one: the country’s tech stocks are trading at roughly half the price of US ones, an appealing backup option for those who missed the stateside surge.