The number of those bearish on the China market have swelled and grown in voice as of late, making this year’s Singles’ Day a particularly intriguing spectacle. Serving as a proverbial yardstick, the surging performance of this year’s festivities surely have not only Alibaba HQ but those in Beijing fretting over economic models breathing slightly easier, if only for the moment.
It is no secret that an air of uncertainty has crept into China forecasts. In the wake of Trump’s buffoonery, a battered stock market, the unknown trajectory of the all-important property market, whispers of steepling consumer credit taking hold and market saturation closing the window for fanciful market entrants – for many the outlook is as gloomy as a Baoding winter.
However balancing out all the cynics, bright projections around consumer behavior are still keeping the faith. Nielsen’s surveys show an increased consumer confidence – showing a 10-year high at the midpoint of 2018. While the 1 million credit cards issued every 4.5 days and widening debt-income ratios may scream debt-trap to some, they reflect the little concern China’s only-child consumers have for taking on debt armed with the knowledge of immense portfolios and inheritances supporting them.
It also bears repeating that this segment is a point of emphasis, with consumption growth estimated to make up 80% of the China’s prestigious GDP growth figure. The willingness of the average Chinese consumer to part ways with their hard-earned yuan is of critical importance to all facets of China and those engaging with it.
So with all the background noise and China heads going back and forth on hypotheticals, Singles’ Day provided a tangible glimpse into the current consumer landscape. The point of interest of the 2018 edition for the humble market researcher, was that (by Alibaba’s standards) this year’s Singles’ Day was relatively gimmick-free compared with previous years – as was detailed in our lead-up newsletter. How would it go with slightly less glam?
Quite well, it turns out. Without any flashy innovations to whirl up a frenzy, $30.8b of GMV passed through Tmall and Taobao in the 24-hour period. Growth rate went down from 39% in 2017, to 27% this year, however in a collectively slowing economy and without a driving inspiration, the result can no doubt be looked at positively. The vocabulary pushed out by western media describing the growth – be it “plunged”, “disappointing” or “all time low”, seem to come at the event with little context.
Much has been reported on the day, and a quick visit to Alizila will give you all the juicy stats and highlights. But beyond the gaudy numbers, Singles’ Day 2018 has provided some respite from the Chinese consumer doomsayers. In current economic and political conditions, it has become iconic and perhaps ‘too big to fail’, representing a consumer base that must keep chugging along. 2018 was the biggest ‘challenge’ to Alibaba yet in reaching an impressive growth target like the 27% achieved, and its tangible success inspires a confidence that a survey or murky outlook cannot provide.
As urbanization increases and spending power and sophistication continues its spread, Alibaba’s forethought in bringing convenience and accessibility to China’s lower tier cities should ensure the party will go on for a few years yet.