TheChek News Flow

Chief executive calls for action to improve planning and consent times for renewables development

Britain is not “moving fast enough” to build sufficient low-carbon energy infrastructure to reduce the country’s dependence on volatile gas imports, the chief executive of SSE has warned.

Alistair Phillips-Davies said solutions already existed that would allow Britain to end its “over-reliance” on expensive imported gas “and the regimes that control it”.

But he argued that there were too many blockages holding up the country’s progress, such as the time it takes to secure planning permission and other necessary consents for offshore wind farms.

“There is broad political and public support for clean, homegrown energy,” Philips-Davies told the Financial Times. “We have the strategies and policy papers we need. We just need to see more urgency behind efforts to clear the barriers, greenlight projects and get clean infrastructure built.”

Although most of SSE’s activities are in the UK, Philips-Davies warned that international competition was heating up as the US and Europe also pursue ambitious clean energy programmes, with generous support schemes such as the $369bn US Inflation Reduction Act wooing investors and developers.

“If the UK doesn’t act quickly, others will,” Philips-Davies said. “The US and Europe are racing to catch up.”

In the months after Russia marched into Ukraine last year, the UK government set bold new targets for technologies such as offshore wind, solar and nuclear power to increase the country’s energy security and reduce its exposure to volatile international energy markets.

The UK imports more than 60 per cent of its gas, which is used to heat homes and also fuel gas-fired power stations.

However, energy companies are becoming increasingly frustrated at the obstacles preventing them from delivering targets such as a fivefold increase in offshore wind capacity to 50 gigawatts by 2030.

“It can take more than a decade to deliver a wind farm currently — that’s far too long,” said Phillips-Davies.

Ministers last year promised to speed up planning processes but energy companies report very little progress.

Once projects have received relevant planning permissions and other consents, another problem is grid connection, according to Chris Hewett, chief executive of trade body Solar Energy UK.

He said that while 10GW of large solar projects currently had planning permission in Britain, a “significant proportion” had been told by electricity grid operators that they were unlikely to get connection dates until the second half of the decade or even the early 2030s, which is delaying construction.

“The restrictions on the grid are a drag on economic growth across the whole country,” Hewett said, blaming a combination of grid operators’ own processes and the regulatory regime whereby grid owners have to seek permission from Ofgem for their investment programmes.

Energy groups are hoping the government will take heed of recommendations made last week by Chris Skidmore, Conservative MP and former science and universities minister, who was commissioned to review the UK’s 2050 net zero emissions target. Skidmore urged reforms to local and national planning rules to “unleash” cheaper forms of electricity generation.

SSE is a big developer of offshore wind in Britain but is also vying to build one of the the UK’s first gas-fired power stations fitted with carbon capture and storage technology. It is also working on power stations that could run on low-carbon hydrogen, which does not produce carbon dioxide when burnt.

The UK business department did not immediately respond to a request for comment.

The company refuted a fake press release that said it had named a co-CEO to ensure ethical manufacturing.

Adidas was hit by a hoax on Monday when an unknown party — believed to be an activist group called The Yes Men — sent out a long press release saying the company had named a co-chief executive officer to ensure more ethical manufacturing processes.

But it wasn’t true.

Several hours later, a second release was sent, saying the first one was a hoax.

The initial release, on what appeared to be Adidas letterhead and allegedly sent from its headquarters in Herzogenaurach, Germany, said the company had named Vay Ya Nak Phoan, a former Cambodian garment worker and trade union leader, as co-CEO to serve alongside Bjørn Gulden, who took over the top slot on Jan. 1.

It also said Gulden and Phoan on Monday had signed the Pay Your Workers agreement, which was described as a “binding commitment to fair labor practices, wages and compensation in the supply chain.” The agreement, which was allegedly made with Adidas’ trade unions and labor rights organizations, was said to immediately pay 11.2 million euros in wages to Cambodian workers whose salaries were withheld by suppliers during the pandemic, rehire all workers, union members and union leaders who were fired from both Trax Apparel in Cambodia and the Pou Chen factory in Myanmar and provide them with full back pay.

The fake release was reportedly written by The Yes Men, a culture activist site, and sent from a bogus Adidas account. The activists also showed a collection of “Realitywear” from Adidas, allegedly created by Cambodian workers who wore the same clothes for six months, at Berlin Fashion Week, causing further confusion.

A spokesperson for Adidas in the U.S. said the company had no further comment on who had perpetrated the fraud, only stressing that both releases were fake. He also said to refer to the company’s stance on working conditions in its supply chain.

A low-key, transitional menswear show suggested the brand is saving its marketing and financial firepower for its next creative leader.

MILAN — Friday, Gucci opened Milan Fashion Week with its first standalone menswear show in 3 years, announced as part of a plan to reignite rapid growth at the brand. The show was also Gucci’s first outing since the departure of designer Alessandro Michele in November, however, and ended up being a low-key, transitional affair.

Signed by Gucci’s studio team, the collection still bore traces of Michele: his quirky, gender-fluid touch lived on in androgynous ensembles, like dance-rehearsal leggings paired with ankle booties. But most of the clothes were stripped of the maximalist embellishments that defined the designer’s tenure, replaced by languid, oversized tailoring which—while elegant—could have been shown by any number of Italian brands, as well as a smattering of hip-slung lacquered pants that harkened back to Tom Ford.

“The timing of the collection represents a moment of reflection, reaction and reorganisation,” which prompted the house to “investigate the idea of improvisation as an aesthetic,” Gucci said in a statement.

“The crowd-designed collection… lacked overall coherence,” with some parts of the show seeming “possibly purposefully banal,” Vogue Runway critic Luke Leitch wrote after leaving the showspace, which was adorned only with a mauve carpet, risers and a round platform for the indie rock band Marc Ribot’s Ceramic Dog.

Of course, fashion groups have a long history of trimming runway budgets between designer tenures, saving their financial firepower for the brand’s next chapter. “We can’t blame them for being in transition,” Citi analyst Thomas Chauvet said. “It makes sense that they wouldn’t want to push on a collection by the studio of a designer who’s no longer there, but rather push on the next people.”

Still, there’s more than one way to manage a transition, and Gucci’s strategy stands in stark contrast to the approach taken by rival Louis Vuitton. Since the death of menswear designer Virgil Abloh in November 2021, the LVMH flagship has invested in bigger and more memorable menswear outings than ever, paying tribute to its late designer with sprawling collections full of couture-level craftsmanship, elaborate sets and performances by music stars like conductor Gustavo Dudamel and rapper Kendrick Lamar. For its next studio-signed menswear outing, set to be shown in Paris next week, it has tapped guest designer KidSuper, as well as retaining its top stylist and set designer.

Vuitton has also kept up buzz with large-scale marketing activations that don’t depend on any designer, such as the latest chapter of its collaboration with artist Yayoi Kusama. Keeping up marketing spend has helped Vuitton reach record sales of over €20 billion last year, according to analyst estimates.

Of course, Gucci is a different brand, with a different history and set of circumstances. Last year, Gucci’s growth lagged key rivals for the third year in a row despite the brand spending around €700 million on marketing. Whereas Abloh’s products were hotter than ever following his death, consumer excitement for Michele’s aesthetic had cooled in recent seasons. But there are deeper differences, as well.

A Designer-Driven Approach

In contrast to rivals like Vuitton and Hermès, whose businesses are highly driven by accessories that carry over from season to season, Gucci retains a high exposure to ready-to-wear and footwear, and generates roughly half its revenues from seasonal products. Gucci’s creative directors historically exert high levels of control over not just products, but also the brand’s marketing message and retail concepts.

“Gucci’s DNA is established in consumers’ minds as a brand that makes strong fashion statements,” Chauvet said. When it works, the fashion-driven approach can drive explosive growth. But relying too heavily on any one designer’s vision risks instability, particularly for a company of Gucci’s scale.

Gucci owner Kering has told investors it plans to further develop a more timeless, iconic dimension to the label to sit alongside its seasonal fashion output. At its current size, Gucci’s reach extends far beyond hardcore fashion fans. And surging demand for classic items like Chanel flap bags and Hermès Birkins since the pandemic suggests there are plenty of clients who value consistency as much as novelty. A more stable, less designer-dependent strategy could insulate Gucci from another boom-and-bust cycle.

Realising this ambition won’t happen overnight, however, and at present the brand is urgently seeking a new designer. Impatient investors are hoping that Gucci will announce its new creative director before Kering presents its annual results in February. But the enduring popularity of Michele’s aesthetic among many Gucci devotees makes him a tough act to follow, and even if the group does manage to identify its new creative leadership quickly, it will likely be months before its new products arrive in stores.

In the meantime, Gucci appears to be dimming the lights ahead of what it hopes will be its next creative “big bang.” But management should be careful not to turn them down too much.

Fast-growing companies such as BYD, XPeng, Li Auto and Nio are increasingly favoured by consumers

China’s booming electric vehicle industry is forecast to further cement its global dominance this year, shrugging off US and European efforts to catch up and posing a threat to foreign groups reliant on the world’s biggest car market.

Chinese consumers will buy about 8mn to 10mn EVs in 2023, up from record sales of 6.5mn vehicles last year and 3.5mn in 2021, according to company and analyst forecasts. This compares with nearly 3mn in Europe and 2mn in the US.

“China is expected to have the largest overall sales with 35 per cent year-on-year growth in 2023, after two years of extremely rapid growth [ . . . ] To put this in perspective seven out of every 10 electric vehicles are now sold in China,” said Neil Beveridge, an analyst with Bernstein in Hong Kong.

The biggest winners from what is becoming a new golden age for China’s auto industry, analysts say, are a clutch of fast-growing local companies that are outperforming foreign carmakers.

BYD, the Warren Buffett-backed Tesla rival and widely considered China’s brightest EV star, expects sales of plug-in vehicles to reach 3mn units this year after selling more than 1.85mn last year, according to a management discussion with Citi bank. Citi analysts said the estimate was “conservative”. BYD declined to comment on the sales forecasts.

China remains one of the largest profit contributors for many international carmakers, leaving them particularly exposed if they cannot regain ground lost to domestic brands as the market rapidly shifts towards electric vehicles.

But groups such as BYD, XPeng, Li Auto and Nio, are now increasingly favoured by Chinese consumers. The market share of Chinese brands in the domestic EV segment edged higher from a staggering 78 per cent to 81 per cent last year. That compares with foreign groups enjoying 70 per cent market share about 10 years ago, before the massive surge in EVs and just after car sales in China overtook those in the US.

The pace of growth means China is on the cusp of hitting 50 per cent of car sales to be EVs by the end of 2025, becoming the first major economy to do so, according to Bernstein forecasts. BYD told Citi that the milestone, which compares with Beijing’s target of 40 per cent by 2030, could be hit this year.

This would also be far ahead of Europe, the next most advanced market for EVs, where the market share for battery cars is rising slowly. About a third of sales in the region were fully electric or plug-in hybrid — which China counts as electric “new energy vehicles” — in the final months of 2022.

EV sales in the US are lagging behind, with about 12 per cent of sales being electric, but growth is gaining pace following the introduction of huge subsidies under the Biden administration’s Inflation Reduction Act.

There have been some expectations of a slowdown in Chinese EV sales after a key subsidy delivering a discount of up to Rmb12,600 ($1,870) per vehicle expired at the end of 2022.

While carmakers raised prices in response, Raymond Tsang, a China auto expert with Bain, a consultancy, said Chinese companies still produced better and more competitively priced cars, and leveraged the benefits of China’s battery and resources sectors. Jing Daily, which tracks the Chinese luxury market, notes that even after Elon Musk’s Tesla slashed prices in China, bringing the price on its Model 3 down to about $33,515, BYD’s rival Seal sedan is still cheaper at $31,000.

“The Chinese homegrown EV players are really getting better in terms of their performance and the product portfolio [ . . . ] You are seeing not only that the Chinese products are cheaper, but they’re actually better in the eyes of many customers,” Tsang said.

Shenzhen-based BYD is also spearheading a wave of overseas expansion from Chinese companies. BYD told Citi that exports were forecast to grow as much as sixfold, to 300,000 units this year, with plans to build new factories in Asia, Europe and South America.

Against this backdrop, some foreign companies, including South Korea’s Hyundai and Japan’s Honda are quietly slimming their presence in China as sales fall, or are exiting the country completely, Tsang said.

Others, including Volkswagen and GM, are doubling down on decades of investment by spending billions of dollars to secure local partners for new technologies and resources they see as critical to compete.

In October, the German carmaker inked a €2.4bn investment in a new joint venture with Horizon Robotics, one of China’s leading designers of artificial intelligence chips.

The investment came days after the US unveiled new restrictions to stop American companies selling technology to China. It also followed the introduction of sweeping state support — largely mirroring Beijing’s EV-focused policies over the past decade — in the US and Europe to support local industry and counter China’s rise.

Despite foreign carmakers being caught squarely in geopolitical crosshairs, Tu Le, of Sino Auto Insights, an advisory company, said the VW deal showed that size and growth potential of the Chinese market still made “financial sense” for some of the biggest automakers — especially with economic growth forecast to slow in many other regions.

“It is like an addiction that is too hard to walk away from, even with the continued risk of IP sharing,” he said.

For China, investments in auto sector technology and resources have also been an important bright spot in the economy.

According to data provided to the Financial Times by Dealogic, despite last year’s lockdowns, M&A activity related to the EV sector held steady from the year prior at above $10bn across almost 50 deals. Outbound investment from Chinese EV-related groups has also remained steady.

In the wake of the removal of subsidies and a push to expand production capacity, Shi Ji, an analyst with CMBI, expected competition to become only more “bloody”.

First decline in 60 years set to have long-term consequences for domestic and global economies

China’s population fell in 2022 for the first time in decades, a historic shift that is expected to have long-term consequences for the domestic and global economies.

The world’s most populous country has long been a crucial source of labour and demand, fuelling growth in China and the world.

On Tuesday, the National Bureau of Statistics announced that the total population fell by 850,000 in 2022 to 1.41175bn, the first decline in 60 years.

“This is a truly historic turning point, an onset of a long-term and irreversible population decline,” said Wang Feng, an expert on Chinese demographic change at the University of California, Irvine.

The decline officially began last year, when deaths outstripped births, but some demographers argue that the trend is likely to have started before then.

China’s strict zero-Covid policy of containing coronavirus is widely seen to have accelerated the fall in the country’s birth rate, as couples delayed or decided against having children during the health crisis and economic slowdown. Last year, 9.56mn babies were born, down from 10.62mn the previous year.

The birth rate in 2022 was the lowest since records began more than seven decades ago — 6.77 births for every 1,000 people, down from 10.41 in 2019.

The decline has roots in Beijing’s one-child policy imposed in 1980, which limited the number of children a couple could have to below the average of 2.1 needed for a country’s population to remain stable.

Authorities scrapped the policy in 2016, replacing it with a two-child limit, but the number of births has fallen every year since then.

The national death rate was 7.37 per 1,000 people in 2022, the highest since 1970, and up from 7.09 in 2019.

Fuxian Yi, a demographer at the University of Wisconsin-Madison, estimated that China’s population started to fall in 2018, but the drop was obscured by “faulty demographic data”.

“China is facing a demographic crisis that far exceeds the imagination of Chinese authorities and the international community,” Yi said, noting that the trend would act as a long-term drag on the country’s property market, a crucial engine of growth.

“China cannot rely on the demographic dividend as a structural driver for economic growth,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. “Economic growth will have to depend more on productivity growth, which is driven by government policies.”

Some economists argue that the rise of automation will offset rising labour costs as the number of workers shrinks.

But analysts largely agree that the country’s social welfare and medical infrastructure is ill-prepared for an ageing population.

China’s sudden exit from its strict zero-Covid policy last month and the surge of infections that followed rapidly overwhelmed hospitals. Wang said this should serve as a “wake-up call for China to speed up reforms of its still highly inefficient and unequal healthcare system”.

China’s demographic turning point puts it on the same path as Japan, where the population began to decline in 2010 and has fallen every year since.

The UN has projected that China’s population will fall to 1.31bn by 2050 and 767mn by the end of the century. The 2050 estimate would make China 3.5 times larger than the US, which is projected to have 375mn people by then. It is currently 4.7 times larger than the US.

The UN’s 2022 estimates also project that India will overtake China as the world’s most populous nation this year. India’s population currently stands at 1.4066bn.

Gross domestic product misses annual target but expectations rise for recovery in 2023

China’s economy grew by just 3 per cent in 2022, underscoring the heavy costs of the government’s longstanding zero-Covid strategy before it was abruptly abandoned last month.

The country’s gross domestic product figures missed Beijing’s official growth target, which at 5.5 per cent was already the lowest in decades. Other than in 2020 at the beginning of the pandemic, when full-year GDP expanded 2.2 per cent, growth was the weakest since 1976.

Although China’s economy is expected to recover this year as it reopens to the world, Tuesday’s data highlighted the scale of the challenge that President Xi Jinping faces after growth was subordinated to a vast anti-pandemic policy apparatus for three years.

In the fourth quarter, GDP was flat compared with the third quarter and rose 2.9 per cent year on year, higher than analyst expectations of a 1.6 per cent increase. Late last year, the government tightened Covid-19 restrictions in response to multiple urban outbreaks before suddenly easing them, allowing the virus to sweep across the population uninhibited for the first time.

Economists expect growth to rebound this year compared with 2022, but policymakers face a host of challenges including Covid, a property crisis that has dragged home prices lower, a slump in exports as the global economy slows and China’s first population decline in 60 years.

“The Chinese economy is at a pivotal point, with disruptions from the protracted zero-Covid policy and its abrupt reversal likely to give way to a resurgence of at least moderate growth by Chinese standards,” said Eswar Prasad, a China finance expert at Cornell University. “Growth momentum coming out of this difficult period will depend on how much and what kind of stimulus the government employs to put the economy back on track.”

Asia-Pacific equities slipped on Tuesday following the data release, with Hong Kong’s Hang Seng index falling 1 per cent and China’s CSI 300 shedding 0.1 per cent. South Korea’s Kospi lost 0.6 per cent, and Japan’s Topix gained 0.8 per cent.

Various metrics surpassed expectations in December but reflected underlying weaknesses as estimated Covid infections soared into the hundreds of millions, straining hospitals and weighing heavily on economic activity. Retail sales dropped 1.8 per cent year on year, compared with a 5.9 per cent fall in November, while industrial output added 1.3 per cent.

Unemployment improved to 5.5 per cent from 5.7 per cent in November. Over the full year, industrial output rose 3.6 per cent, fixed asset investment rose 5.5 per cent and retail sales edged 0.2 per cent lower.

“Generally speaking, positive results have been achieved in effectively coordinating the Covid-19 prevention and control and the economic and social development in 2022,” said Kang Yi, head of China’s National Bureau of Statistics. But he added that the “foundation of the economic recovery is not solid”, citing a “complicated” international backdrop and domestic pressures.

“Data so far supports our long-held view that China’s reopening boost will be somewhat anaemic at the beginning, with consumer spending being a key laggard in the initial stages,” said Louise Loo, senior economist at Oxford Economics.

In addition to abandoning the zero-Covid constraints, policymakers have recently unveiled potential stimulus for property developers to support a sector that has been hit by a wave of defaults over the past 18 months.

Real estate investment fell by 10 per cent in 2022 as part of a property crisis that drove home sales 24 per cent lower by floor space and 27 per cent lower by dollar value.

China, Europe drive electric-vehicle expansion as U.S. gains traction

BERLIN—Electric-vehicle sales crossed a global milestone last year, achieving around 10% market share for the first time, driven mainly by strong growth in China and Europe, according to fresh data and estimates.

While EVs still make up a fraction of car sales in the U.S., their share of the total market is becoming substantial in Europe and China, and they are increasingly influencing the fortunes of the car market there as the technology goes mainstream. The surge in EV sales also contrasted with the broader car market that suffered from economic worries, inflation and production disruptions.

Global sales of fully electric vehicles totaled around 7.8 million units, an increase of as much as 68% from the previous year, according to preliminary research from LMC Automotive and EV-Volumes.com, research groups that track automotive sales.

Ralf Brandstätter, the head of Volkswagen AG’s China business, told reporters on Friday that electric vehicles would continue expanding fast and that China could soon reach a point where sales of conventional vehicles begin to permanently decline as plug-in vehicles take bigger market share.

“Last year, every fourth vehicle we sold in China was a plug-in, and this year it will be every third auto,” Mr. Brandstätter said. “We haven’t reached the tipping point yet, but we’re expecting to get there between 2025 and 2030.”

For the full year, fully electric vehicles accounted for 11% of total car sales in Europe and 19% in China, according to LMC Automotive. Combined with plug-in hybrid vehicles, which can be plugged in to recharge the battery but also have a small combustion engine, the share of electric vehicles sold in Europe rose to 20.3% of the total last year, according to EV-Volumes.com.

The U.S. lags behind China and Europe in the rollout of EVs, but last year auto makers sold 807,180 fully electric vehicles in the U.S., a rise in the share of all-electric vehicles to 5.8% of all vehicles sold from 3.2% the year before. Tesla is still the world’s dominant EV maker, but conventional auto makers are shortening its lead with new electric-model launches.

In Germany, the largest auto market in Europe, electric vehicles accounted for 25% of new vehicle production last year, according to VDA, the German automotive manufacturers association. In December, there were more EVs sold in the country than conventional cars.

New-car sales overall fell around 1% to 80.6 million vehicles, according to the LMC data, with nearly 4% growth in China helping to offset a decline of 8% in the U.S. and 7% in Europe, which was hit by the weakening global economy, soaring energy costs, supply-chain disruptions and the war in Ukraine.

Bayerische Motoren Werke AG, the German luxury-car maker, was one of many manufacturers last year to see sales of plug-in models rise even as overall sales tumbled. BMW reported a 5% decline in total new-car sales but saw EV sales more than double last year.

“We are confident that we can repeat this success next year, because we have a continued high order backlog for fully electric models,” BMW sales chief Pieter Nota, said this month, commenting on the growth in sales of electric models.

VW, Europe’s biggest manufacturer by sales, said on Thursday that overall new-car sales fell 7% to 8.3 million vehicles last year, but sales of electric vehicles rose 26% to 572,100 units. The sales figures encompass the company’s large stable of brands, including VW, sports-car maker Porsche, luxury-car brand Audi and passenger-car brands Skoda and Seat.

Other manufacturers reported a similar divide of strong growth in sales of electric cars—boosted in part by the availability of a wider array of models in addition to market leader Tesla Inc.—and weak or declining sales of conventional vehicles. Ford Motor Co., Mercedes-Benz Group AG and BMW each said their EV sales more than doubled in 2022, while their total vehicle sales declined.

European auto makers have focused their EV production and sales on home markets as they try to meet European Union emissions regulations. They also began last year to more aggressively expand their EV business in other major markets, especially China and the U.S.

In China, which accounted for around two-thirds of global sales of fully electric cars last year, domestic manufacturers are gaining ground on traditional Western auto makers and are also beginning to expand into Europe and the U.S.

Worldwide, Tesla maintained the top spot in a global ranking of manufacturers by sales of all-electric vehicles, followed by Chinese manufacturers BYD Co. and SAIC Motor Corp., and brands belonging to the VW group, according to a study published by Stefan Bratzel, director of the Center of Automotive Management, an automotive-research group in Germany.

In the U.S., Ford is the second-largest maker of EVs by sales, followed by Hyundai Motor Co. and its affiliate Kia Corp. Meanwhile, General Motors Co., VW and Nissan Motor Co. lost EV market share in the U.S. last year.

While EVs are showing signs of becoming more mainstream globally, analysts warn that repeating last year’s strong EV performance in 2023 could be difficult as economic worries weigh on consumers, and cash rebates on EVs are reduced or scrapped completely in some countries. Rising electricity prices in Europe in the wake of Russia’s attack on Ukraine have also diminished the appeal of EVs compared with gas-powered cars.

Germany witnessed a surge in last-minute EV purchases in December, as consumers rushed to take advantage of government incentives before they were cut this year. Since Jan. 1, government subsidies for the purchase of an EV with a listing price of up to 40,000 euros, equivalent to about $43,000, fell to 4,500 euros from 6,000 euros previously.

For the past couple of years, auto makers, especially in Europe, have struggled to find key components such as computer chips to maintain production in pace with demand. This mismatch between demand and supply is one reason auto makers posted lofty profits last year despite broadly weaker sales.

As the economy weakens, supply-chain problems ease and subsidies dry up, manufacturers could find it harder to maintain the high prices for new cars as they chase potentially fewer buying customers. This could result in a downward price spiral that potentially hits profits.

“Demand is likely to weaken in the coming year,” said Peter Fuss, an auto analyst with Ernst & Young. “The weak economy will cause retail and business consumers to be more reluctant. And it is possible that supply will outpace demand and we will begin to see discounts again.”

Activist investor Ryan Cohen has built a stake in Alibaba Group Holding Ltd. BABA 3.41%increase; green up pointing triangle worth hundreds of millions of dollars and is privately pushing the Chinese e-commerce giant to accelerate and further boost its share-repurchase program, according to people familiar with the matter.

Mr. Cohen, known as the meme-stock king for helping ignite explosive rallies in GameStop Corp. and others, built the stake in the second half of last year, the people said.

While the stake is small in comparison to Alibaba’s market capitalization of nearly $300 billion, Mr. Cohen has a wide following among individual investors who often follow his lead.

Mr. Cohen, with a net worth of over $2.5 billion and a portfolio of stocks including Apple Inc. as well as Wells Fargo & Co. and Citigroup Inc., first contacted Alibaba’s board in August to express his view that the company’s shares are deeply undervalued based on his belief that it can achieve double-digit sales and nearly 20% free-cash-flow growth over the next five years, the people said.

Alibaba’s shares have climbed about 67% from a multiyear low in October, with its ADRs closing at $117.01 on Friday, but are still down from a high of over $300 reached in late 2020 as technology and other shares rallied in the early days of the pandemic.

The shares have been hurt by depressed consumer sentiment in China as the country continues to grapple with Covid-19 and a sprawling clampdown on technology companies there that caused affiliate Ant Group Co. to call off its highly anticipated IPOs in Shanghai and Hong Kong.

Subsequent to Mr. Cohen’s initial communication, Alibaba in November announced its board approved expanding the company’s share-repurchase program by $15 billion, to $40 billion, while also extending it through March of 2025.

Alibaba said it had repurchased roughly $18 billion of its shares under its existing buyback plan, as of November 16.

Mr. Cohen has communicated to Alibaba’s board that the share-repurchase plan could be boosted by another $20 billion, to roughly $60 billion, the people said.

The activist investor has expressed his admiration for management’s ability to achieve earnings growth while also assembling quality assets, they added. Mr. Cohen wants to have a collaborative, long-term relationship with Alibaba, the people said.

Mr. Cohen has also conveyed his belief that Apple, in which he owns a more-than $800 million stake, could provide a road map for Alibaba, the people said. Since 2012, the iPhone maker has repurchased hundreds of billions of dollars of its shares and the stock has soared.

Share repurchases can support stocks by reducing the supply of shares traded and boosting per-share profit. Investors often take them as a bullish signal as they suggest executives are optimistic about their company’s prospects and confident in its financial position.

In August, Alibaba showed that its once-powerful growth had run out of steam, as the company failed to post revenue growth for the first time since its blockbuster 2014 U.S. listing. Revenue for its fiscal first quarter fell 0.1% from the prior year, to the equivalent of $30.7 billion, with Alibaba blaming China’s Covid-19 outbreak, which has caused disruptions to supply chains.

In its second quarter, Alibaba eked out 3% revenue growth. The company said that key categories within its commerce division, such as apparel and accessories and consumer electronics, had started to recover.

Mr. Cohen, who built his fortune on online pet retailer Chewy Inc., which he founded, has publicly shown an affinity for the Chinese economy in recent months. In June, he tweeted: “I have a crush on China.” Mr. Cohen also recently released a children’s book about his father’s travels to China for business.