China’s Singles Day, which used to be a festival of unbridled consumption, took on a completely different tone this year. Thanks to the Chinese government, consumption is no longer in vogue.
Still, both Alibaba – whose founder Jack Ma started the event – and JD.com, its top-selling competitor, achieved record sales. However, what was once only a 24-hour phenomenon on November 11th and 11th now extends over 11 days.
Alibaba said it had grossed $ 84.5 billion, the total value of products and services sold on the platform, up 8.5% year over year. That was the lowest growth rate since the event began in 2009 and far less than the 26% year-over-year growth rate in 2020. More than 290,000 brands, a record, and 900 million consumers attended this year’s event on Alibaba’s websites. According to Alibaba, 65 percent of those brands were small and medium-sized businesses.
JD.com fared better on growth as the GMV on its platform was $ 54.6 billion in the 11 days, up 28% from 2020. The company said customers from submarkets (smaller cities) accounted for 77% of sales that year. with rapid growth in home appliances, healthcare and home textiles. As in the past, electronics were a common consumer favorite. JD reported that shoppers purchased $ 15 million worth of Apple smartphones on its website in two seconds. More than 6,000 new clothing brands participated in JD’s Singles Day this year.
In addition, the volume of products sold by JD worldwide during this year’s Singles Day increased 27-fold year over year.
Chinese private sector
The Chinese Communist Party has walked a fine line for years, trying to combine unbridled capitalism with a socialist system. The Chinese private sector is amazingly successful. According to the Bloomberg Billionaires Index, China added 307 billionaires in 2020 and a new billionaire every week in 2021. China has more than 750 billionaires – more than India, Russia and Germany combined and just behind the US with 830.
Now the Chinese government is nervous about the huge income gap. Xi Jinping, the president, promotes the concept of “shared prosperity” or makes Chinese society more income-fair by reducing the wealth gap. He told billionaires that they need to give back to society by sharing their wealth.
Politics goes beyond individuals. In the past 18 months, the Chinese government has charged numerous technology and e-commerce companies with anti-competitive practices. It has fined them, canceled IPOs, and made life uncomfortable for company founders. The e-commerce platforms Alibaba, JD.com and Pinduoduo are facing tougher regulations. Officials fined Alibaba $ 2.8 billion for monopoly behavior and stopped the $ 37 billion IPO of its fintech arm Ant Group, which was being restructured.
Tencent, which has a diversified technology portfolio including the WeChat app, is also facing tighter regulation, according to an investigation. The Meituan delivery service was fined. The share price of these companies, many of which are listed on American stock exchanges, has suffered badly.
Just before 11/11 this year, China’s Ministry of Industry and Information (which monitors the internet) called executives from Alibaba, JD.com, Pinduoduo and Meituan for a meeting, warning them not to bombard consumers with marketing messages during the event, which to less promotions and less pre-event marketing.
All companies have met the new requirements. Instead of selling products for Singles Day, the companies advertised their efforts for sustainability and contributions to common prosperity. Alibaba pledged $ 15.5 billion to fund shared prosperity initiatives through 2025. It has set up a joint prosperity task force chaired by its President Daniel Zhang. Tencent has pledged $ 7.8 billion.
In a press release after Singles Day, Yang Guang, Vice President at Alibaba, said, “We also used the 11/11 capabilities as a platform to meet our social responsibilities. This year’s festival was an important milestone in our commitment to a sustainable future. “
The company also announced that Tmall, its B2C site, will promote green lifestyles by showcasing energy efficient and environmentally friendly products and giving away $ 15.7 million in green coupons to encourage consumers to adopt green lifestyles encourage.
Alibaba’s logistics arm Cainiao Network has introduced new packaging in 20 cities to reduce the event’s carbon footprint.
For its green post, JD.com announced, “Through the use of new energy vehicles, solar power systems, recyclable packages and more, JD has reduced CO2 emissions by 26,000 metric tons during this Singles Day period compared to last year. For example, during this year’s campaign, recyclable packaging was used 11.35 million times. “