HONG KONG (AP) — Alice Zhang, a 29-year-old marketer residing in Guangzhou, China, has reported substantial cuts in her spending during the annual "Singles' Day" shopping festival, spending approximately 3,000 yuan ($421) this year compared to her expenditures last year. This shift is attributed to a pay cut exceeding 20%, prompting consumers like Zhang to choose more affordable options and forgo purchases of new shoes.
The "Singles' Day" festival, which began as a one-day sales event initiated by Alibaba in 2009, has evolved into China's equivalent of Black Friday, known as "Double 11" in Chinese. Starting earlier this year on October 9 and concluding this week, the festival is a key indicator of consumer spending health in China's economy, closely monitored by economists and analysts.
According to Chinese retail data provider Syntun, as of October 31, the combined gross sales during this year's Singles' Day reached over 1 trillion yuan ($140 billion). However, projections for 2024 estimated a sales increase of about 26% year-on-year to 1.44 trillion yuan, leaving uncertainty regarding consumer appetite and spending habits in the aftermath of the pandemic and ongoing property market issues.
Enhancing domestic consumption and business investments remain high priorities for the Chinese Communist Party. Economists indicate that spending on essential items remains stable, but purchases of bigger items decline as shoppers shift to prioritize necessities due to their tight financial circumstances. Confidence among households is reported to be low, as stated by Lynn Song, chief economist for Greater China at ING Bank.
The early launch of the festival reflects the challenges faced by online retailers who aim to stimulate consumer spending amid economic sluggishness. Shaun Rein, managing director at the China Market Research Group, explained that major e-commerce platforms, including Alibaba and JD.com, are attempting to encourage purchases. However, he noted that many consumers have expressed dissatisfaction with the perceived strength of the discounts offered this year, leading to a growing sense of "consumer fatigue."
Moreover, many consumers are hesitant to spend excessively. For example, Zhang Shijun, a 45-year-old vocational trainer in Beijing, mentioned that besides daily necessities, he sees no need for significant purchases. Similarly, Sonia Song, a freelance media worker in Guangzhou, indicates that she invests more time comparing prices across various online platforms to ensure she is securing the best deals, showcasing an increased level of scrutiny regarding perceived discounts.
To further weaken the appeal of Singles' Day discounts, the Chinese government is providing rebates to individuals trading in home appliances and vehicles for purchases of new models. According to ING's Lynn Song, if consumers have already purchased items at discounted rates earlier in the year, they are less inclined to be lured by subsequent discounts, affecting overall spending patterns.
As the competition widens, Chinese e-commerce giants are investing efforts towards expanding online sales beyond their domestic market, particularly targeting Southeast Asian nations like Thailand, Vietnam, and the Philippines, as noted by Bain & Company. This shift comes in the wake of the U.S. ending its "de minimis" tariff exemption for small shipments, impacting some retailers but allowing Chinese companies to explore new international markets.
For those still inclined to spend, items related to health and beauty are predicted to see favorable performance in sales this year. Consumers like Gao Liang, a fitness club employee in Beijing, illustrate the trend of reduced spending due to decreased income, reflecting a broader sentiment among consumers who have tightened their budgets amidst economic uncertainty.
