Synergy Creation from Acquisitions and InvestmentsJoe Tsai, Executive Vice Chairman, Alibaba Group

M&A and Investment Philosophy

® The Art of GO:

Assets on the Board are Networked

M&A and Investment Rationale:

To Build Long-term Strategic Value for Alibaba

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®

M&A and Investment Philosophy

® The Art of GO:

Assets on the Board are Networked

M&A and Investment Rationale:

To Build Long-term Strategic Value for Alibaba

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M&A and Investment Philosophy

®

LOGISTICS INFRASTRUCTURE

Technology Infrastructure

Commerce Services

M&A and Investment Rationale:

To Build Long-term Strategic Value for Alibaba

PAYMENT & FINANCIAL SERVICES INFRASTRUCTURE

TECHNOLOGY & SYSTEMS INFRASTRUCTURE

Entertainment

Note:Chess pieces with yellow background refer to either invested or acquired businesses.

The Art of GO:

Three Pronged Consumer Offerings

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Goals of Our M&A and Investments

Complementary to Our Business Strategy

Future Technology and Trends

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M&A AND INVESTMENTS

AT ALIBABA

Solidify Market Position of Core

Businesses

Tap Into New Addressable

Markets

Identify New Technology

Trends

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Evolution of Our InvestmentsBreakdown of Invested Capital by Sectors

International Expansion

Digital Media and Entertainment

Consumer Services

E-commerce / New Retail

Cloud Computing and New Technology

Logistics

Others

FY2017

International Expansion

38%

16%Digital Media and Entertainment

E-commerce/ New Retail

Consumer Services

FY2018

E-commerce/New Retail

1QFY2019

9%Logistics

Consumer Services

43%

45%

15%

E-commerce/ New Retail

26%

International Expansion

15%

9%

Digital Media and Entertainment

11%

Consumer Services

21%

6%

Cloud Computing and New Technology

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Consumer Insights (⼈人)

Cloud-based POS System

- Anytime Anywhere Access to Data -

Online and Offline Data Integration

- Upgraded User Profile -

Supply Chain & Products Synergy (货) Retail Space Redesign (场)

B2B - Hexiaoma

Omni-channel Targeting Lower Tier Cities

B2C - Taoxianda

O2O Services Targeting Local Customers

C2B - Tmall Xiafan

Expansion of Popular SKUs

Data Capture through POS System

Real Time Analytics

Sun Art Offline Shopping Data

Hema and Tmall Supermarket Data

Big Data Driven Merchandising

Sun Art Case Study

Unified Inventory System

Joint Procurement Efforts

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Technology Enhancement

Integrated with Alibaba Cloud Infrastructure

User Growth Content InvestmentDaily Average Paying Subscribers YoY Growth

Youku Case Study

Latency Rate Reduction

80%

Pre-acquisition (7/31/2016)

Post-acquisition (7/31/2018)

Technology Cost Reduction

60%

Pre-acquisition (FY2016)

Post-acquisition (FY2018)

Note:(1) Includes depreciation

of servers and bandwidth.

FY16 FY17 FY18

Building Long-term In-house Production Capability

In-House Production Spending IP Procurement Spending

2.3x 1.1x

Pre-acquisition (FY2016)

Post-acquisition (FY2018)

Pre-acquisition (FY2016)

Post-acquisition (FY2018)

100%+

200%+

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Maximize Consumer Traffic Membership Integration

“88VIP” Brings Super Members Across Alibaba Ecosystem to Ele.me

Enrichment of Delivery Scenarios

New Retail Expands Product / Service Scope

Organization Upgrade

From Central Command to Local Empowerment

• Payment Record • Credit Insights

• User Online Consumption Profiling

Delivery Volume

Time9am 12pm 3pm 9pm6pm

Ele.me Case Study

• Leading Food Delivery App in China• High Quality Organic Traffic

• User Offline Consumption Profiling

Taobao and Alipay Entry Points

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Notes:(1) Conversion rate is calculated by

daily number of buyers / DAU and it increased by 30% from Mar 31, 2018 to Aug 31, 2018.

(2) Development time reduced for products including machine learning based search and recommendation products; promotion and campaign platforms; seller App; instant message feature; chatbot and etc. It improved from Mar 31, 2018 to Aug 31, 2018.

(3) Comprehensive cost includes line haul cost saving, volume consolidation and last mile cost reduction. It decreased by 10% from Aug 31, 2016 to Aug 31, 2018.

(4) 72 hours represent the average time from drop off point in all tier 1 cities to customer door in Aug 31, 2018. 7 days lead time is as of Aug 31, 2016.

(5) Registered Taobao Collection merchants on LAZADA, as of Sep 16, 2018.

(6) Taobao Collection merchants’ listings on LAZADA, as of Sep 16, 2018.

Lazada Case Study

Technology Know-howAdoption of Alibaba Product Know-how

Integration of Technology Infrastructure

Product Development

Velocity

5xTransaction Conversion

Improvement

30%

（1） （2）

Logistics NetworkOperational Collaboration

with CainiaoMerge into Cross-border

Network of Cainiao

Cost Reduction

10% Shortened to

7

72

Days Lead Time

Hours Delivery

（3）

（4）

Better Assortment More High-quality Merchants and Products

High-quality SKUs

10mn+High-quality Merchants

200,000+

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（5） （6）

M&A Results - Win-Win Integration and Cooperation “1+1>10” Digital

Transformation

Customer Scale & Data Insights

Technology

Significant Value Creation

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Cash Outflow for Investments

Free Cash Flow

FY2016 FY2017 FY2018 3-year Cumulation

$8.4bn$8.0bn$11.3bn$10.0bn $10.5bn

$15.8bn

$30.2bn$33.8bn

Notes:(1) Represents net cash provided by operating

activities as presented in our consolidated cash flow statement less purchases of property and equipment, intangible assets and licensed copyrights (excluding acquisition of land use rights and construction in progress) and others.

(2) Represents cash outflow for investment and acquisition activities.

(3) FY2016, FY2017 and FY2018 financials are translated from RMB into US$ at RMB6.4480, RMB6.8832 and RMB6.2726 to US$1.00, respectively.

（2）

（1）

Tremendous Cash Flow Generation Enables Investments for Long-term Value Creation

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Note:Chess pieces with yellow background refer to either invested or acquired businesses.

®

LOGISTICS INFRASTRUCTURE

Technology Infrastructure

Commerce Services

PAYMENT & FINANCIAL SERVICES INFRASTRUCTURE

TECHNOLOGY & SYSTEMS INFRASTRUCTURE

Entertainment

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THANK YOU