(Bloomberg Gadfly)—Look beyond the headline figure and Alibaba Group Holding Ltd.’s massive bump in research and development spending is actually quite tame.
China’s biggest e-commerce company plans to boost expenditure to $15 billion over the next three years, it said Wednesday. In making the announcement, the House that Jack Built has coined the term DAMO: discovery, adventure, momentum and outlook. It’ll set up a new research academy bearing that moniker with labs in China, the U.S., Russia, Israel and Singapore.
That dollar number certainly looks huge and equates to roughly doubling R&D over two years. Relative to sales, though, the company is simply keeping spending in line with where it’s been for the past couple of years at a little over 10%. That’s because revenue next year is also expected to double compared with 2016.
By this measure, Alibaba has been quite a way behind both Facebook Inc. and Alphabet Inc. (aka Google) for the past few years, and even slightly adrift of Amazon.com Inc., No. 1 in the Internet Retailer 2017 Top 500.
Alibaba said the new academy aims to “increase technological collaboration worldwide, advance the development of cutting-edge technology and strive to make the world more inclusive by narrowing the technology gap.”
That statement has all the right terminology for a company hoping to be a global technology contender. Readers playing catchword bingo would be jumping out of their chairs.
But don’t be fooled by that $15 billion figure. The company would have spent as much anyway without all the song and dance. In reality, if Jack Ma truly wants Alibaba to make a splash, he’ll need to be a lot more extravagant.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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