Singles Day fails to spark love from China’s weary consumers

Singles Day has drawn a lukewarm response from Chinese shoppers this year, the latest indication that consumers and retailers in the world’s biggest market remain spooked by Xi Jinping’s zero-Covid policy and his crackdown on excess.

Jack Ma’s Alibaba group spent years building November 11 into the largest retail event on the planet, hiring the services of celebrities including American hip hop producer Pharrell Williams and Australian actress Nicole Kidman to stoke the hype.

However, this year Alibaba did not disclose full sales results for the first time in the shopping festival’s history but said on Saturday that the result was “in line” with the performance of 2021, implying an end to years of rapid growth.

Jacob Cooke, chief executive of WPIC Marketing + Technologies, who is based in Beijing, said the result showed that Alibaba had “clearly shifted” from celebrating excessive consumption.

“Part of that is the economic headwinds, but also the consumer market has matured and the days of 30 per cent growth . . . are far behind us,” Cooke said, adding that the “common prosperity and anti-monopoly pushes are also factors”.

According to Bain, the consultancy, Singles Day from 2014 to 2020 achieved year-on-year growth of between 25 per cent and 50 per cent. Last year growth slowed to 13 per cent.

Singles Day, originally conceived as a celebration of being single among Chinese students and numerically written as 11.11, has been a boon for global luxury brands and is a bellwether for the world’s largest consumer market.

However this year’s event came at a gloomy point for China’s economy.

Xi last month secured an unprecedented third five-year term in power, sparking fears of an erosion of market orientated reforms that underpinned decades of growth in China. Since late 2020, the Chinese president’s “common prosperity” campaign has sought to bring billionaires, including Ma, to heel, rein in private sector monopolies and eradicate a culture of excess and vice from China’s youth.

China’s 1.4bn people are also under strict coronavirus controls as the Xi administration prioritises the eradication of Covid-19 outbreaks over economic growth. While Beijing on Friday eased some quarantine and contact tracing rules, fears of citywide lockdowns persist as cases rise to their highest level in months.

He Dan, 31, who works in hospitality in Changsha, central China, estimated her income and outlays had dropped by nearly a third since the start of the pandemic.

“I’m definitely spending less . . . I can’t travel so I’ve lost consulting jobs,” she said. “My feelings for the future? I want to curse. Those stupid Covid policies.”

Shi Wei, 32, an administration professional at a multinational group in Beijing, is trying to save more and avoid spending because of the “uncertainties” related to the pandemic.

“If you are locked down at home and can’t go to work for a few months, no one knows what will happen to your job,” she said.

Still, Cooke, of WPIC, said the shopping event remained the most important day of the year for many global brands given more than RMb1tn ($140bn) of spending. Slower growth levels was a sign of market maturation.

While Alibaba is under pressure, Cooke also noted the success of Douyin, the sister app of TikTok which has 700mn daily users, and noted high demand across health and wellness, pet, outdoor and sports categories, “reflecting lifestyles changes underway in China”.

Chui Xue, an operations executive with Alibaba, said the result showed the “emergence of new consumption trends with huge untapped potential”.

“We have witnessed the resilience and vibrancy of China’s consumption sector,” he added.

HSBC analysts noted that while the consumption picture varied widely across different cities in China — largely depending on the intensity of Covid-19 restrictions — nationwide consumer confidence levels had fallen to near-record lows. Retail sales growth was “well below” pre-pandemic levels in recent months.

Nomura chief China economist Ting Lu warned that the path to reopening could be “slow, painful and bumpy”.

“Covid case numbers may rise further after the recent surge, so de facto lockdowns maybe be tougher than de jure lockdowns, as local officials still believe their performance is determined by avoiding massive infections,” he said.

Even in 2023 “the release of pent-up demand may be moderate and settle at below pre-Covid levels”.

Additional reporting by Qianer Liu and Eleanor Olcott in Hong Kong