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Prof. Balding : Not Read too Much into Single' Day Results

At dawn on Wednesday an army of 1.7 million foot soldiers and 400,000 vehicles will fan out across towns and cities in China. Its mission? To begin delivering 760m parcels expected to be ordered during a 24-hour orgy of spending that is described as the world’s greatest online shopping fiesta.

Singles’ Day – or Double Eleven, as most Chinese call it in reference to the day on which it falls – was reputedly started on 11 November 1993 by singleton students who were seeking an excuse to buy themselves presents.

Today it is a Chinese institution, creating work for hundreds of thousands of green-uniformed postal workers and vast sums of money for Alibaba, the retail giant credited with turning the day into a commercial phenomenon.

Parcels at a sorting centre in Beijing ahead of Singles’ Day. Last year 27,000 merchants took part, with Alibaba’s e-commerce sites generating $9.3bn (£6.1bn) in sales. Photograph: ChinaFotoPress/Getty Images

When Alibaba decided to launch an annual online sale on Singles’ Day 2009, just 27 merchants took part, slashing their prices for the duration of the 24-hour promotion.

Since then the event’s growth, like much in modern China, has been astounding and it now eclipses both the US’s Black Friday and Cyber Monday. Last year 27,000 merchants took part, with Alibaba’s e-commerce sites generating $9.3bn (£6.1bn) in sales.

This year, despite concerns over the overall health of the Chinese economy, Singles’ Day is again predicted to hit new heights. Ninety per cent of respondents in a poll carried out by China’s Jinan University and the Information Times newspaper said they would take part by snapping up bargains.

Lu Zhenwang, an e-commerce analyst from Shanghai, said he expected a record 100 million people to take part in this year’s online shopping binge, the majority aged between 20 and 40. “[Shoppers come] from all parts of China: every province, every city and even every county town,” he said.

Oceanne Zhang, a Shanghai-based e-commerce expert from Kantar Retail, said she expected sales to surge 15% on last year. Part of the reason is that Singles’ Day is now, in fact, no longer held on a single day. Some Chinese e-commerce sites have been offering heavily discounted items for a week now, on the condition that they are paid for on 11 November.

Zhang said one day was insufficient time for most people to fulfil their bargain-hunting needs. “It’s [only] 24 hours. You have to work for eight hours and you have to sleep for six hours. They wanted better [results] this year so they started earlier, will last longer, will have a bigger impact and, of course, will make more transactions happen,” she said.

Another factor driving booming sales is the rapid spread of smartphones, of which there are now more than 910m in China. That has allowed the Double Eleven buying phenomenon to spread right across the country, Zhang said.

China’s wealthy eastern coast and south have traditionally been the source of most online orders. “But the key change we have seen this year is that some rural areas are increasing their number of transactions very, very rapidly. Everybody is talking about rural e-commerce.”

Alibaba says this year’s Double Eleven shopping spree is also going to be the most international yet. A record number of foreign brands – including Burberry, Estee Lauder, Nike, Topshop and Uniqlo – will take part by hawking their wares on Alibaba sites such as Tmall.

“Eleven/Eleven is going global,” Daniel Zhang, the company’s chief executive, boasted in an interview with Fortune magazine. “Chinese consumers will be buying an unprecedented assortment of international brands and products from around the world. Chinese consumers associate quality and prestige with American and European brands, and both have very solid presence on 11/11 in response to strong consumer demand.”

Jack Ma, Alibaba’s chairman and founder, said the event was more than “just the largest shopping day in the world”. He said: “This festival is a thermometer for the Chinese economy.”

Christopher Balding, a professor of finance and economics at Peking University’s HSBC Business School, said observers would look to Singles’ Day results for clues about the state of China’s overall economy. But he cautioned against reading too much into the outcome, particularly since those splashing their cash were likely to represent a younger, single, internet-savvy cross-section of Chinese society.

“Everybody is looking for something they can hang their hat on that this is what is going on with the Chinese economy. Whether it is awful or whether it is wonderful, I’m personally a little sceptical that this would be a good benchmark for what is going on in the Chinese economy,” he said. “If there is negative growth I think that would be a very concerning thing, but even then I wouldn’t read too much into it.”

Alibaba appears to be gearing up for a bumper year. The Hangzhou-based company has built an “11/11 command centre” in Beijing and will throw a glitzy gala at the city’s Olympic Water Cube stadium on Tuesday night to kick off proceedings. The US singer Adam Lambert and the Chinese actress Zhao Wei are among those expected to attend the festivities, which will be televised and streamed online.

China’s latest five-year economic plan, details of which emerged this week, outlines a goal of “a more sustainable and balanced way of development”, with annual growth targets of at least 6.5%.

Not everyone is impressed with the furore around Singles’ Day. In an interview with the Qingdao Morning Post, one man lamented how in recent years his wife had frittered away 130,000 yuan (£13,500) of their hard-earned savings on Double Eleven purchases – thus dashing their dreams of buying a new home.

As millions of shoppers prepared to click their way to consumer happiness, the man, named only as Mr Cao, was left with nothing but bitterness and regret. “Our plan didn’t work out because my wife overspent online,” he complained.

The original tile:Forget Black Friday and Cyber Monday: 100m shoppers splash out on China's Singles' Day, reported by Tom Phillips in Beijing, From Guardian

Additional reporting by Luna Lin
From Guardian