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A JD.com advertisement for the “618” festival at a shopping district in Beijing. Photo: Reuters

China’s 618 shopping bonanza finds young buyers wary as Covid stings economy

  • June 18, or 618, is among the biggest Chinese shopping extravaganzas of the year
  • With the risk of Covid-19 outbreaks and lockdowns looming, consumers and businesses have both become quite cautious, economist notes
E-commerce
Huge discounts offered under China’s annual “618” online shopping festival struggled to revive the frenzy of previous years, as younger buyers watched their wallets in an economy severely dented by the Covid-19 pandemic.
June 18, or 618, is among the biggest annual Chinese shopping extravaganzas. For the last two years, it was seen to reflect consumer sentiment recovery after prolonged lockdowns and other Covid-related restrictions. But not so much this time around.

“I have started to suppress my desire to spend unless it’s absolutely necessary or there is a not-to-be-missed deal,” said Xi Le, 27, from Jinan, capital of eastern Shandong province.

She had not shopped for new clothes for six months, but still could not be enticed by the 618 deals to buy anything more than necessities such as personal care products.

“I want to start saving money. With the pandemic, it’s not so easy to find a new job,” said Xi, who works at an international trading firm.

“I am making less money at my current job because of the pandemic, [and even that is] full of uncertainties. I would feel safer and more at ease if I had some savings, even if not a lot.”

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Major online shopping platforms and brands all roll out massive discounts for 618 each year, with special sales and promotional campaigns starting weeks earlier. But a slowing economy further crippled by lockdowns in some of China’s biggest cities, including Beijing and Shanghai, appeared to have dampened the desire to spend this time around.

Though online shopping platforms such as JD.com, Pinduoduo and Sunning posted glowing sales increases in some categories of goods, young Chinese consumers showed a more conservative sentiment overall.

E-commerce sites used to be eager to report how they did soon after 618 sales closed. But this year, only JD.com had published platform-wide gross merchandise volume as of Sunday afternoon, prompting questions about whether the festival’s takings were less than stellar.

A worker in a protective suit walks past a shop in Shanghai. Photo: Reuters

As of June 18, JD.com had reported a total transaction volume of 379.3 billion yuan (US$56.43 billion) for this year’s JD618 Grand Promotion, a 10.3 per cent increase over last year’s 343.8 billion yuan.

Rival Pinduoduo, however, only said that sales of home appliances, cosmetics, and personal care and household cleaning items had more than doubled.

“If the data is authentic, [the increase in online 618 sales] could have been transferred from bricks-and-mortar store sales,” said Peng Peng, executive chairman of the Guangdong Society of Reform, a think tank connected to the southern provincial government.

“It could also be a release of suppressed revenge spending, but it’s impossible for that to last.”

Shanghai post-lockdown sees consumers queue up at LV, Prada, other luxury stores

Official data published last week showed China’s retail sales continued to contract by 6.7 per cent in May, despite at a slower pace than the steep fall of 11.1 per cent in April.

This came as income in the catering sector, which is highly sensitive to coronavirus control measures, fell by more than 20 per cent, showing little improvement from April.

Song Chuan, an e-commerce vendor based in Beijing, also cut her 618 spending this year.

“My income is lower because of the pandemic, and this year I only bought necessities,” the 27-year-old said.

“My spending habits have certainly changed. Before the pandemic, I bought what I liked, now I only buy what I need.”

China’s wealthiest city Shanghai, its financial and business hub, has only recently lifted its most stringent Covid-19 lockdown ever, with people allowed to leave their homes for the first time in almost two months.

Meanwhile in the capital Beijing, partial lockdowns have been in place since late April as infections continue to be reported, worsening an uncertain outlook with further tightening of Covid-control rules looming large.

A child outside a barricaded green space to prevent people gathering as a Covid-19 precaution, in Beijing. Photo: AP

China’s new “dynamic zero” coronavirus strategy, which includes regular mass testing and swift lockdown reactions, could have a larger negative impact on consumption than on production and investment, Larry Hu, chief china economist at Macquarie Group, said in a note last week.

“The disruptions from lockdowns have eased but things have not returned to normal,” Hu pointed out.

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Zhang Zhiwei, chief economist with Pinpoint Asset Management, said recovery remains weak and the outlook for businesses and consumers is bleak, due to the ramifications of China’s strict pandemic controls.

“High-frequency indicators show the economy continued to recover slowly. We think China’s economy faces its most severe challenge in the past 30 years. With the risk of outbreaks and lockdowns looming, consumers and entrepreneurs have become quite cautious,” he explained.

“The change in their behaviour dampens economic activities. This means the economy will likely run below its potential unless the government takes decisive actions to boost growth.”

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