Beijing The sales of China’s major online retailers during the “618” discount weeks have increased at an unprecedented slow pace. Alibaba, JD.com and Pinduoduo sold goods worth the equivalent of almost 83 billion euros in the 18-day campaign period up to Saturday, according to the Beijing analysis house Syntun. With an increase of 0.7 percent, this is hardly more than in the previous year and makes it clear that China’s consumers are saving as a precaution even after many lockdowns have ended.
Despite high discounts, the reaction of the market was “cautious”, according to the Syntun analysis. The sales of China’s second largest online shopping event are considered an indicator of whether consumers’ desire to buy is returning after the recent slump resulting from the lockdowns. But it doesn’t look like that.
Online retailer sales growth was “lower than ever,” says analyst Ernan Cui from Beijing-based consulting firm Gavekal Dragonomics. In 2021, the increase was 26 percent compared to the previous year, and in 2020 it was almost 44 percent. Cui therefore sees no indication of a strong recovery in consumption.
In April and May, retail sales in China fell by eleven and almost seven percent, respectively. In April in particular, corona restrictions, some of which were draconian, applied in many of China’s economically strongest cities. The economic and financial metropolis of Shanghai was almost completely under lockdown for two months. Concerns about further lockdowns and the associated loss of income or even jobs mean that China’s consumers continue to hold onto their money.
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According to the Chinese government, domestic consumption should actually become an important pillar of the world’s second largest economy in order to make it less dependent on exports and government investments. In May, the government passed a package of 33 stimulus measures to support the economy. Among other things, they include incentives to buy cars and household appliances. Most economists doubt that the measures will be enough to boost the economy, let alone meet the official growth target of 5.5 percent in the current year.
Experts do not expect a strong recovery in consumption
Policy stimulus will play a crucial role in boosting domestic demand in the second half of the year, says Tommy Wu, chief China economist at Oxford Economics. He also does not expect a strong recovery. Since the state leadership is unswervingly adhering to the strict zero-Covid policy and there is always a threat of lockdowns, it is “unlikely that consumer sentiment will improve,” said the expert. Whether the political incentives will have an effect will only become apparent in the second half of the year.
At sales event 618, online buyers mainly bought household appliances. However, spending on cosmetics and perfumes fell. The shopping festival was launched in 2004 by the online retailer JD.com. What is now the second largest provider increased its sales by more than ten percent compared to the previous year. This is the lowest increase in five years. In 2021, the increase in sales was almost 30 percent.
The online retailer with the highest turnover at the sales event was the industry leader Alibaba with the Tmall platform, which, however, did not report any sales figures of its own. Live streaming e-commerce platforms such as Douyin and Kuaishou recorded above-average growth with a turnover of the equivalent of 20 billion euros.
Shopping festivals are very popular in China. Many shoppers often put off major purchases in order to secure the deep discounts available during promotional periods. However, there were already signs of weakening consumer demand during such discount weeks last year. Now the ongoing uncertainty about further lockdowns is reducing Chinese consumers’ desire to shop.
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