Singles’ Day received a lukewarm response from Chinese shoppers this year, the latest indication that consumers and retailers in the world’s largest market remain fearful of Xi Jinping’s Covid-free policy and crackdown on overindulgence.
Jack Ma’s Alibaba Group spent years building the November 11th largest retail event on the planet, hiring the services of celebrities including American hip-hop producer Pharrell Williams and Australian actress Nicole Kidman to fuel the hype.
However, this year, Alibaba did not reveal full sales results for the first time in the history of the shopping festival, but said on Saturday that the result is “in line” with the performance of 2021, which means the end of years of rapid growth.
Jacob Cook, CEO of Beijing-based WPIC Marketing + Technologies, said the result showed Alibaba had “clearly shifted” from celebrating excessive consumption.
Part of that is economic headwinds, but the consumer market also has matured and days of 30 percent growth. . . “We are far behind,” Cook said, adding that “shared prosperity and the antitrust push are also factors.”
According to Bain, from 2014 to 2020, Singles Day experienced annual growth of between 25 percent and 50 percent. Growth slowed last year to 13 per cent.
Originally seen as a celebration of being alone among Chinese students and digitally written as 11.11, Singles’ Day has been a boon for global luxury brands and is a forerunner of the world’s largest consumer market.
But this year’s event came at a bleak stage for the Chinese economy.
Xi last month secured an unprecedented third five-year term in power, raising fears of an erosion of market-oriented reforms that have fueled decades of growth in China. Since late 2020, the Chinese president’s “common prosperity” campaign to attract billionaires, including Ma, has sought to control, curb private sector monopolies, and eradicate the culture of excess and vice from China’s youth.
China’s 1.4 billion people are also under strict controls over the coronavirus as the Chinese president’s administration prioritizes stemming the Covid-19 outbreak over economic growth. While Beijing on Friday relaxed some quarantine and contact tracing rules, fears of a citywide lockdown persisted with cases climbing to their highest level in months.
He Dan, 31, who works in hospitality in Changsha, central China, estimated that her income and expenses have fallen by about a third since the start of the epidemic.
“I definitely spend less… I can’t travel so I lost consulting jobs.” My feelings about the future? I want to curse. Those are stupid Covid policies.”
Shi Wei, 32, an administrative official at a multinational group in Beijing, is trying to save more and avoid spending due to “doubts” about the epidemic.
“If you’re locked up at home and can’t go to work for a few months, nobody knows what will happen to your work,” she said.
However, WPIC’s Cook said the shopping event remains the most important day of the year for many global brands due to their spending of more than RM1 trillion ($140 billion). The slowdown in growth levels was a sign of the market’s maturity.
While Alibaba was under pressure, Cook also noted the success of Douyin, TikTok’s sister app that has 700 million daily users, and noted high demand across the health and wellness, pets, outdoor, and sports categories, “reflecting the changes in lifestyles taking place in China”.
Choi Xuyi, Alibaba’s COO, said the result showed “the emergence of new consumption trends with huge untapped potential.”
“We have seen the resilience and vitality of China’s consumption sector,” he added.
HSBC analysts noted that while the consumption picture varied widely across different cities in China – depending largely on the severity of Covid-19 restrictions – levels of consumer confidence nationwide have fallen to almost all-time lows. Retail sales growth has been “significantly below” pre-pandemic levels in recent months.
Nomura’s chief Chinese economist, Ting Lu, warned that the road to reopening could be “slow, painful and bumpy”.
“Covid case numbers may rise further after the recent increase, so the actual lockdowns may be stricter than the de jure lockdowns, as local officials still believe their performance is being determined by avoiding massive infections,” he said.
Even in 2023, “the release of pent-up demand may moderate and stabilize at pre-Covid levels.”
Additional reporting by Keaner Liu and Eleanor Olcott in Hong Kong
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