China’s “618” shopping festival, one of the country’s two major annual sales extravaganzas, ended this past weekend, seeing only a lukewarm response amidst a broader trend of sluggish retail consumption.
Between May 31 and June 18, JD.com, one of China’s biggest e-commerce platforms, reported total sales of 379.3 billion yuan ($56.6 billion). While the figure represents a 10.3% increase over sales during the same period last year, the growth is much lower than the 28% year-on-year increase in 2021 and 33.6% in 2020. Overall, this year’s 618 sales growth is the slowest ever for JD, Reuters reported.
JD’s two major rivals e-commerce platforms, run by Alibaba and Pinduoduo, usually don’t publish sales figures for the festival. Instead, Alibaba only said in a statement that it achieved “positive year-on-year” gross merchandise volume growth in a “challenging environment.”
Shopping festivals in China are usually accompanied by cheerful headlines announcing stunning sales figures from platforms and the media. But this year’s 618 was called “the quietest 618 ever” by The Paper, a Chinese state media outlet. The festival was low-key, The Paper said, because consumers are becoming more rational even as businesses preserve their energies for future promotional events.
This year’s 618 was foreshadowed by the sudden disappearance of Li Jiaqi, once China’s most influential livestreamer in e-commerce. Li has been absent online since June 3, the eve of the 33rd anniversary of the Tiananmen Square protests, when he displayed a tank-shaped ice cream during a livestream. (Tanks are a common symbol for the protests, during which the military deployed several of them to crack down on demonstrators.) Li’s disappearance this year dealt a blow to the many brands that partner with him, as well as to Alibaba’s e-commerce platform Taobao, which hosted Li’s livestreams.
But over and above Li’s disappearance, retailers will worry much more about China’s weak consumption trends. The government’s zero-covid strategy continues to disrupt daily lives for many citizens, who are also grappling with rising unemployment and a cooling property market. In April, China’s consumer sentiment figures, released monthly, hit their lowest level since 1991, when retail sales plunged by 11.1% from the previous year. Last month, China’s retail sales recovered some ground, declining only by 6.7% year on year. Many analysts think that Beijing’s zero-covid strategy might, in fact, be having a larger negative impact on consumption than on activities like production and investment.
Beijing has yet to disburse large-scale cash handouts to revitalize the struggling consumption sector, as Hong Kong has repeatedly done during the pandemic. Instead, several provinces and cities issued consumption vouchers and other stimulus measures. But given their small sizes, experts say they are drops in the country’s vast economic bucket, and will be unlikely to boost spending substantially.