ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintSite TitleTitle ChevronIcon Twitter
Business

Singles' Day paints bright but hazy picture of Chinese spending

An ad for the Alibaba group's Tmall.com in Shanghai.

SHANGHAI -- Chinese e-tailers' sales this Friday -- "Singles' Day" -- could hint at coming shifts in the nation's consumer spending and the overall economy. But one day or data point rarely tells the whole story, as bricks-and-mortar sellers left behind by online commerce show.

High point

Alibaba Group Holding, one of China's leading e-commerce companies, celebrated Nov. 11 in style last year at an event space in Beijing. A huge screen displayed a running tally of sales during the day, along with a ranking of such popular brands as Unicharm, H&M and Fast Retailing's Uniqlo.

Singles' Day, named for the string of 1s that Nov. 11 adds to the calendar, has risen above its lonely origins in recent years to become one of online retailers' largest sales events of the year. Advertising for Alibaba's Tmall.com platform has popped up around Shanghai of late. Meanwhile, tour boats on the Huangpu River running through the city feature electronic ads for rival JD.com. These and other retailers have held a number of sales since October, preparing shoppers for the main event this month.

China's real gross domestic product grew 6.7% on the year for the July-September quarter, indicating that the economy as a whole is regaining its composure after recent turbulence. But risk factors lurk just below the surface, with a bubble emerging in the real estate market and a soon-to-expire tax break playing an outsize role in boosting auto sales. Personal spending, which continues to log double-digit growth, is one of the few unambiguous high points in the economy.

Online shopping leads this rise. China's e-commerce market will grow 32% to 5 trillion yuan ($740 billion) in 2016, iResearch Consulting predicts. It is forecast to hit 7.5 trillion yuan by 2018.

Alibaba's sales on Singles' Day 2015 came to 91.2 billion yuan -- 60% more than a year earlier. How far sales rise this year will be a strong indicator of overall e-commerce growth going forward.

Left behind

Yet online shopping alone does not give a full and accurate picture of consumer spending. Sluggish sales at department stores and supermarkets, for example, indicate that consumption needs have largely been met, particularly in urban areas.

Department store operator Parkson Retail Group, part of Malaysia's Lion group, has sold off an underperforming store in Beijing. Japan's Ito-Yokado is reducing its own footprint in the city. U.S. restaurant chain operator Yum Brands recently spun off Chinese operations into a separate entity. Such moves indicate that holding on to traditional business models in this country is increasingly a losing proposition.

Electronics centers, or large-scale facilities hosting multiple smartphone and computer dealers, were among the first casualties of this shift away from bricks and mortar. A wave of closings hit in early 2015, taking down a popular center in Xujiahui, one of Shanghai's leading shopping districts. A new commercial facility is already going up on the site of the former mall. Technology sellers have also largely vanished from the neighboring Metro City mall, which is retooling to focus on eateries and clothing stores.

When e-commerce first took off in China, it was thought that price-sensitive young consumers had simply taken their real-world spending habits online. But sales of smartphones and computers have since slowed, putting pressure on such tech giants as Lenovo Group and Huawei Technologies. Whether online shopping will be able to keep overall spending on the rise as Chinese population growth tapers off is unclear. However big this year's Singles' Day blowout may be, predicting the economic future could take a good deal more information.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media