Singles' Day smashes records yet again despite US trade tensions

12 November 2019 Consultancy.asia

China’s annual shopping frenzy Singles’ Day has continued its staggering sales growth, but uncertainty remained in the lead-up as to how ongoing trade tensions with the US might impact this year’s event.

As analysts pour over yet another year of smashed records during China’s annual shopping frenzy known as Singles’ Day – Alibaba beat its previous sales mark of $31 billion in just over 16 hours, with 100 billion yuan ($14.3 billion) notched in the first 64 minutes – a survey in the lead-up to the event conducted by global consultancy AlixPartners forecast a significant rise in spending this year among consumers. One question however remained: the impact of trade tensions with the US.   

The more than 2,000 consumers from tier 1 and 2 cities surveyed reported pre-sale intentions to increase their spending by an average of 54 percent, with 57 percent of respondents declaring that they would spend in excess of RMB5,000 (~$715) – despite a local economic slowdown and the ongoing trade spat with the US. Yet, on the latter point, nearly 80 percent of respondents stated at the time that they would avoid buying products from the US this year, with half of those citing national loyalty.

The survey, conducted at the end of last month, was followed by another survey from fellow consultancy Oliver Wyman among 1,000 local consumers – which likewise found that more than half of those polled were planning to increase their spending this year, with an expected increment of nearly 10 percent. The second survey however noted that 60 percent intended to purchase imported products; “The demand for imported goods seems not to have been affected by the trade tensions.”

Singles' Day smashes records yet again despite US trade tensions

And the early signs are that the quiet threat of a boycott didn’t bear out in the figures, with a number of American brands doing exceptionally well and the US proving the second biggest source of products behind China. “Ultimately Chinese consumers are practical and look for brands and products that appeal to them,” OC&C Strategy Consultants partner Adam Xu told Quartz. “Both Nike and Apple have been consistently delivering that consumer delight globally and also in China.”

Indeed, this practical approach to purchasing was also noted in the AlixPartners survey report; “Chinese consumers are sensitive to product quality, product safety and, increasingly, sustainable and responsible manufacturing. In general, they also prefer local brands, and the recent rise in pro-China feeling has only pushed this further. But Chinese consumers are pragmatic; they will not sacrifice quality simply to buy Chinese products – they are increasingly sophisticated buyers.”

Described previously by Alibaba’s Taobao and Tmall president Jiang Fan as the “Super Bowl for brands”, it might appear that brands really do trump any personal concern for geopolitics. “Increasingly, it is brands and products that are driving growth in spending,” noted China Retail and Consumer Goods practice lead Jacques Penhirin in the Oliver Wyman report. “Our survey shows ‘more choices of brand’ is now a top three reason for spending more this year, up from number five last year.”

There may however be another, older-fashioned reason for the resilience of US brands in the face of nationalistic pride, also cited by Penhirin as helping to “maintain Chinese consumers’ frenzied involvement” in the festival; attractive discounts, with, as pointed out by OC&C’s Zu, the steep discounts offered by American brands an important driver of growth. Oanda senior market analyst Jeffrey Halley to CNN: “Deeply discounting prices always brings consumers out to play, no matter how bad the economy might be.”