Alibaba Group Holding Ltd.'s cloud computing business will likely turn profitable this financial year, as the coronavirus pandemic helps accelerate a shift to the use of online business tools, the company said Wednesday.

The crisis has changed the way people work and learn and how firms operate, creating growth opportunities for cloud storage providers including the Chinese technology giant, Alibaba Chairman Daniel Zhang added during the company's annual Investor Day briefing. He said the pandemic was speeding up China's transition away from a reliance on investment and exports to an economy driven by domestic demand and consumer spending.

"The basic growth driver for us now is how to leverage on China's consumption power and move forward," he said, adding that the company aims to create 100 million jobs globally by 2036.

Mr. Zhang, whose company is often seen as a barometer for Chinese consumer spending, said supply chains, manufacturing capacity and consumption in the country had returned to pre-Covid levels.

Alibaba, which owns China's two most popular online shopping sites and derives the bulk of its revenue from e-commerce activity, runs the largest public cloud service provider by market share in China.

Alibaba Cloud captured about 40% of China's $4.3 billion in spending on cloud infrastructure services in the second quarter this year, more than double that of its nearest competitors Huawei Technologies Co. and Tencent Holdings Ltd., according to industry researcher Canalys. Cloud infrastructure spending surged 70% from a year earlier thanks to government stimulus, and as Chinese enterprises and individuals shifted more daily activities online, Canalys said.

Alibaba's expansion has also been helped by Chinese government regulation, which prevents foreign cloud service providers from expanding in the country without a local partner. Still, Alibaba's cloud unit, which forms less than a tenth of the firm's total revenues, has been loss-making since its introduction in 2009. The Chinese e-commerce giant reported a loss of 1.8 billion yuan ($264.1 million) from Alibaba Cloud in the three months ended June, its fiscal first quarter. 



  --Raffaele Huang, Liza Lin