Double 11 Record Sales Signal Strength of Chinese Consumption
Economics / China Economy Nov 12, 2019 - 07:07 PM GMTBy: Dan_Steinbock
On Monday, Alibaba’s Single’s Day broke all records. Chinese consumption and ecommerce signal not just continued resilience but evident strength.
By 5 pm on Monday Alibaba Group had already broken last year’s record of $31 billion. And at midnight, the new record soared to $38.3 billion – 25 percent higher than last year.
Despite the continuing - and misleading - international headlines about China’s “slowing economy” and “consumption collapse,” Alibaba’s 11th Single’s Day gala alone generated more revenues than US Black Friday and Cyber Monday combined.
Alibaba’s Singles’ Day shopping festival is not just the world’s largest of its kind. It is a vital barometer of Chinese consumption amid the US tariff wars.
Double 11 Is Regionalizing and Internationalizing
According to Alibaba, more than 200,000 brands participated in the 11th Singles D - ay promotion – or the “Double 11” as it is popularly known - with 1 million new products being offered and over 500 million users forecast to spend; that’s 100 million more than last year.
This year Alibaba deployed its highly popular online shopping platforms, Tmall and Taobao, but also business-to-business ecommerce platforms, like AliExpress, and Lazada, the shopping site favored in Southeast Asia. As business began, the top regions in mainland in terms of transactions were Guangdong, Zhejiang, Jiangsu, Shanghai and Shandong. However, Alibaba is also tapping regional, even international consumers.
In the early hours, the most active overseas buyers included Hong Kong, the US, Australia and Japan. Even before the festival on Monday, some 64 brands, such as Apple, Lancome, Dyson and L’Oreal, garnered millions of dollars in Alibaba pre-orders, with Estée Lauder garnering a record $143 million.
Double 11 is now a big win-win opportunity not just for China but for international exporters from advanced and developing countries alike.
Ecom Success Reflects Chinese Cost-Efficiency, Innovation
In China, ecommerce explosion began in the mid-2010s. But as business has mobilized in the past half a decade, transactions occur smoothly with smartphones and volumes are soaring.
Today Chinese consumers use smartphones to browse top online shopping sites, such as Alibaba’s Taobao.com, and submit orders. It is the net effect of 15-20 years of innovation by Chinese smartphones, mobile operators and ecommerce giants.
In the early 2000s, NTT DoCoMo probably had the best mobile services, but since the Japanese operator failed to internationalize, it lost its edge. The Finnish Nokia developed popular 2G, even 3G services, but moved too slowly into smartphones.
That’s how Apple’s iPhone captured the early lead in smartphones. Yet, it could not respond to a new generation of Chinese smartphones by Huawei and its peers - Xiaomi, Vivo, and Oppo – which now dominate 75 percent of the global smartphone market and are more cost-efficient and more innovative. Nor could the US companies, despite their early lead in the fixed-line Internet, match the co-innovation of Chinese operators and ecommerce giants, such as Alibaba.
That’s why Chinese pioneers are already launching 5G services, while pioneering 6G platforms. And that’s also why the White House keeps resorting to anti-competitive means seeking to undermine Huawei’s legitimate success.
Explosion of Chinese online consumption
Through the 16 months of US tariffs, international headlines have predicted doom and gloom in China. And yet, Chinese industrial production picked up in September, despite reduced export growth. Third-quarter data reflected resilience of consumption. And while US trade wars have made consumers cost-conscious, retail sales climbed to 7.8 percent, thanks to slate of policy supports.
Alibaba’s success and the new Double 11 record mimic the broader consumption trends in China. The same goes for urbanization. As the growth momentum in the mainland has been shifting from the coastal first-tier cities to lower-tiered cities, gains in purchasing power in small-and-medium size cities drove Double 11 sales.
When Alibaba’s ecommerce gala began on Monday, the China International Import Expo (CIIE) had just ended in Shanghai. In that bonanza, the value of intended deals exceeded $71 billion, up 23 percent from the first expo in 2018 – mimicking Alibaba’s sales triumph.
The Double 11 and Shanghai CIIE records and the consumption data in the past few quarters offer abundant evidence that Chinese consumption is far more resilient and stronger than ideological eadlines in the West presume.
Dr. Dan Steinbock is the founder of Difference Group and has served at the India, China and America Institute (US), Shanghai Institute for International Studies (China) and the EU Center (Singapore). For more, see http://www.differencegroup.net/
© 2019 Copyright Dan Steinbock - All Rights Reserved
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