“Singles’ Day”: the Great Trade War between the Chinese giants begins
November 11th is getting closer and closer, which is not only important because it is Saint Martin's Day, but because it is “Singles' Day” in China. A purely invented, consumerist party, in which people are invited to make consumerist purchases, somewhat at random. The equivalent, for a theoretically communist country, of American Black Friday.
This artificial party will be the pretext for a major trade war: in fact, Alibaba Group Holding's Taobao & Tmall group is defending its dominant position in the Chinese e-commerce market by offering consumers huge discounts this year, demonstrating an aggressive attitude in price competition against rivals JD.com and Pinduoduo.
Taobao Live will give out cash vouchers worth 1 billion yuan ($137 million) from Oct. 12 to 23, ahead of the start of the selling season later this month, according to a statement from the government-run live streaming platform. Alibaba's e-commerce. business unit, which is battling short-video apps Douyin, the Chinese version of TikTok and Kuaishou. According to multiple Chinese media reports, merchants on Taobao and Tmall will be invited to participate in the platforms' "good deals every day" campaign between October 24 and November 11.
Meanwhile, JD.com will start its Singles' Day promotion at 8pm on October 23. Themed "truly affordable", the event will see more than 800 million products on sale at super discounted prices until November 13, the company said.
The Singles' Day shopping festival, created by Alibaba in 2009, is the world's largest online retail spectacle. The annual bargain-hunting ritual, originally a 24-hour event on November 11, has in recent years expanded to a weeks-long event lasting from late October to mid-November, joined by new players such as Kuaishou Technology and discount retailer PDD, which owns Pinduoduo.
The order for the trade battle comes directly from the company's top brass: Alibaba founder Jack Ma informally met with the company's e-commerce executives in May, advising them to refocus on Taobao and consumers to survive to brutal competition and adapt to the new Chinese economic reality of less wealth and more attention to purchasing prices.
JD.com did not stand by and fought back, doubling down: it launched the "true low price" strategy , throwing 10 billion yuan of price subsidies and free shipping onto the market for a range of products priced at just 9, 9 yuan, the company said.
The Beijing-based operator, founded by Richard Liu Qiangdong, is struggling to fend off growing competition from Alibaba and PDD. JD.com's retail revenue grew the least among its three rivals in the quarter ended June 30, fueling concerns about rising operating expenses and declining profit margins.
It remains to be seen whether Chinese consumers will be attracted by the deep price cuts. Will they increase their consumption, or will they simply buy now the products that they would have bought in a month or two anyway? Or will they buy nothing more than they need at all? We'll know in a month.
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The article “Singles' Day”: the Great Trade War begins between the Chinese giants comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/singles-day-parte-la-grande-guerra-commerciale-fra-i-colossi-cinesi/ on Mon, 16 Oct 2023 16:22:42 +0000.