Spenders or thrifters: As Singles' Day nears, are China's shoppers about to drop?

A man dressed in a kung fu costume displays his martial arts skills as he delivers a parcel for Alibaba's logistics company Cainiao, ahead of the Singles Day shopping festival, in Dengfeng, Henan province, China October 31, 2018. Picture taken October 31, 2018.  REUTERS/Stringer

Man
dressed in a kung fu costume displays his martial art skills as
he delivers a parcel ahead of the Singles Day shopping festival,
in Dengfeng
Thomson
Reuters

By Adam Jourdan

SHANGHAI (Reuters) – China is gearing up for the biggest shopping
event of the year on Sunday, a day dominated by e-commerce giant
Alibaba Group Holding Ltd which saw $25 billion worth of goods
sold on its platforms alone in the 24-hour period last year.

Akin to Black Friday and Cyber Monday in the United States,
“Singles’ Day” has become something of a litmus test for the
strength of Chinese consumption, which is coming under pressure
amid rising trade Sino-U.S. tensions and a wider economic
slowdown.

Companies in China are already seeing the effect of rising
caution among the country’s shoppers. Car sales are down sharply
this year, box office receipts have slowed and brands are facing
pressure to roll out discounts to prop up sales.

Alibaba itself lowered its full-year sales forecast earlier this
month due to concerns about the trade spat, while the firm’s core
commerce business saw its slowest quarterly sales growth since
2016.

As such, China’s leaders in Beijing, global firms targeting the
market and e-commerce giants like Alibaba and major rival JD.com
Inc are all paying close attention to Singles’ Day for wider
signs of consumer strength.

“BAROMETER” FOR CONSUMPTION

The focus on Singles’ Day will be Alibaba’s final transaction
number, which comes out just after midnight following a frenzied
day of deal hunting for shoppers and brands looking to bolster
their sales.

Most analysts said the number will rise, but the speed of growth
will temper. The value of transactions, which includes pre-orders
made weeks ahead of the event, rose 40 percent last year from the
year earlier.

“It’s definitely one of the barometers of consumer confidence,”
said Jason Yu, Shanghai-based General Manager of market
researcher Kantar Worldpanel, adding Beijing policymakers would
be keeping a watchful eye.

For many brands “this is probably the single biggest sales
contributor for the entire year,” he said.

(Alibaba’s $25 billion day: https://tmsnrt.rs/2Pf54D8)

CONSUMER JITTERS

China’s shoppers, on a tear in 2017, have been spooked this year
by falling stock markets, a protracted trade war with the United
States and wider economic malaise.

A range of consumer indexes, including from the Organisation for
Economic Co-operation and Development (OECD) and brokerage
Jefferies, have shown a drop off in confidence this year as
credit conditions and trade tensions have hardened.

(China consumer confidence slips: https://tmsnrt.rs/2QsQu7J)

BOX OFFICE FLOP

China’s box office dropped almost 30 percent in October, its
steepest fall in over two years, according to data from domestic
industry tracker EntGroup. That was also a third straight month
of declining sales versus 2017.

“I haven’t been to the cinema for over a month,” said Ji Chunzi,
26, a Shanghai-based trade publication editor, who said it was
due to a lack of good films and that tickets had become a bit
pricey at 50 yuan to 60 yuan ($7.20 to $8.64) each.

“There also wasn’t really that much worth watching.”

(China box office flop: https://tmsnrt.rs/2PgbQbY)

BRAKE LIGHTS ON

China’s auto market, the world’s largest, posted its steepest
monthly fall in seven years in September and is widely expected
to announce another drop for last month. The market is at risk of
shrinking this year for the first time in decades.

Under pressure, dealers are slashing prices to drum up sales with
increasingly cost-conscious consumers and are pushing the
government to roll out support measures.

(Reverse gear? China’s monthly
autosales:https://tmsnrt.rs/2QniysR )

MOUTAI HANGOVER

Chinese tipplers are slowing purchases of fiery, high-end liquor
baijiu, a potentially worrying sign for global premium brands
targeting the world’s biggest luxury spenders.

Chinese luxury liquor maker Kweichow Moutai Co Ltd , the world’s
biggest alcohol firm by market value and a bellwether for China’s
big spenders, posted its weakest quarterly profit growth since
2015 last month.

(Less heady days for Moutai : https://tmsnrt.rs/2PiDcxW)

SMARTPHONES ON HOLD

iPhone maker Apple Inc and South Korea’s Samsung Electronics Co
Ltd are grappling with a prolonged slump in smartphone shipments
in China, which are down over 10 percent so far this year,
according to research firm IDC.

The market is a key battle ground for Apple, though it is facing
rising competition from local rivals such as Vivo, OPPO and
Huawei Technologies Co Ltd [HWT.UL].

(China smartphone sales on hold: https://tmsnrt.rs/2PdBGNw)

($1 = 6.9466 Chinese yuan renminbi)

(Reporting by Adam Jourdan; Additional reporting by Shanghai
newsroom; Editing by Christopher Cushing)