E-commerce giant Alibaba Group Holding Ltd will probably never have another year like 2014, when it drew global attention with its record $25 billion initial public offering on the New York Stock Exchange.

But less than a year after its September listing, investors are already souring on the company as they see flaws in its business plans that may outweigh the delay of new taxes on the industry.

Ahead of the release on Thursday in New York of Alibaba's results for the fiscal fourth quarter, which ended on March 31, Bloomberg reported that about $70 billion had been wiped off the company's market capitalization since November.

Investors have become increasingly concerned about China's economic slowdown and the possible impact on consumer spending.

Shiv Putcha, an associate director at United States-based technology consultancy International Data Corp, said that the economic slowdown would not have much of a direct impact.

"What will affect Alibaba is if consumption stays flat or declines. If new buyers from underserved areas are not spending enough to compensate for declines from higher-income users, then you will see a problem."

The company did get a bit of a breather on Thursday with the announcement by the State Administration of Taxation that a draft regulation on value-added taxes on e-commerce transactions will not be released this year, as previously planned.

The SAT said the VAT regulation, which will apply to all e-commerce enterprises, will not be released until at least next year.

Jane Zhang, an analyst in the consumer technology sector at Gartner Inc, said: "The news of the delay is positive for the e-commerce sector, especially for Alibaba, since it has the biggest market share. The lack of a specific legislation for e-commerce currently allows companies to have more flexibility."

However, the transaction tax is an issue Alibaba and its competitors will eventually have to face, as the SAT said it still plans to impose new taxes on the industry.

Positive news like this from China is always welcome to investors, since Alibaba's home market remains the source of more than 95 percent of its revenues. The operator of online marketplaces has failed to replicate its domestic success in the global market.

Will Tao, an analyst at consulting firm iResearch, said: "Alibaba's main challenge is international expansion. In order to generate higher revenues in foreign markets, the company needs to cooperate with local partners and identify the differences in those markets."

The e-commerce giant is struggling to compete with the likes of Amazon.com Inc and eBay Inc in mature markets such as Europe and the United States. Efforts to expand overseas could be affected by the company's plans to seek further growth opportunities in China.

Neil Flynn, portfolio manager at Alcuin Asset Management LLP, said: "At the moment, it is not necessary for Alibaba to boost its overseas business, because there are still many growth opportunities available in China.

"Tmall Global is seeing many foreign brands opening stores, and the firm is actively developing its infrastructure network in central and western China to increase revenue from this underdeveloped yet growingly wealthy demographic."

Alibaba put much of the money raised from its IPO into research and acquisitions of startups around the world. But some analysts contend that the company has expanded too fast and too aggressively.

emmagonzalez@chinadaily.com.cn

(China Daily USA 05/08/2015 page17)