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China's Singles' Day shopping frenzy is adding confusion to the country's growth debate. E-commerce giant Alibaba processed transactions worth a staggering $14.3 billion on November 11. Yet the effect on the group's annual volumes is likely to be muted. Moreover, one day of online discounts offers few clues about Chinese consumption.
Every year, thousands of brands and merchants take part in the event, which has become a nationwide shopping extravaganza. This year, Alibaba kicked off the festival with a live-TV gala featuring appearances by James Bond actor Daniel Craig and South Korean super-idol Rain. The hype seems to have worked: volumes were 60 per cent higher than in 2014.
Yet for all the hoopla, the activity will be little more than a blip in Alibaba's full-year numbers. The 57 billion yuan worth of goods shifted last year accounted for 2.3 per cent of the full-year total. Transactions during this year's festival are equivalent to less than 7 per cent of the goods sold in the six months to September.
The $200 billion web giant's growth has been slowing: the value of goods sold across its platforms increased by 28 per cent to 713 billion yuan in the three months to September, the slowest pace in over three years. Even after factoring in the boost from Singles' Day, analysts at CLSA expect transactions for the quarter ending December to be no more than 29 per cent higher than the previous year.
Some macro perspective is needed too. Retail sales of consumer goods were 2.8 trillion yuan in October. So Alibaba's November 11 sales are equivalent to about one normal day of Chinese shopping. Though that's impressive, the online festival is a poor guide to consumption in the People's Republic. Singles' Day promotions may be just displacing traditional brick-and-mortar retail purchases. Shoppers may also have been delaying purchases to wait for better deals. The biggest winners of Singles' Day may not be Alibaba or China's economy, but savvy bargain-hunters.
(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)
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