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China’s e-commerce platforms have tried hard to lure shoppers during the country’s annual 618 shopping festival, but economic problems have hindered big sales.
The 618 promotion is a multi-week event that runs from late May to June 18 during which online platforms hold flash sales. This year, internet companies including Alibaba, ByteDance and JD.com offered deep discounts to lure Chinese consumers hit by prolonged deflation, youth unemployment and a real estate crisis.
It’s the second-biggest sale in China after Singles’ Day, which takes place in November and is likened to Black Friday in the U.S. The summer shopping festival is seen as a key indicator of the overall mood of China’s retail industry and so far, It shows that consumer spending remains weak this year.
In recent weeks, Alibaba has offered Lululemon clothing at 50% off, JD.com has sold select Apple iPhones at up to 20% off, and TikTok’s sister company Douyin has made deep price cuts.
Luxury brands, which have seen purchasing slow in China, also joined the festival: Burberry livestreamed 618 discounts, and Louis Vuitton offered shoppers a 30-minute virtual personalized shopping experience on WeChat.
After 618 ended, Alibaba and JD.com announced that their sales had increased, but did not disclose specific figures.
According to figures from Xintun, a third-party Chinese data agency, the combined sales of Alibaba’s Tmall, JD.com and Pinduoduo fell 6.9% year-on-year, with total sales during the festival amounting to 742.8 billion yuan., Or $102.3 billion, the first decline in sales in the eight years since Syntun began collecting data.
According to the data firm, home appliances, skin care, cosmetics and fragrances, and personal care products were the top three categories in terms of sales.
The decline comes amid China’s slow post-pandemic recovery as people become more cautious about discretionary spending. Dutch bank ING A survey released in May found that Chinese consumers are spending less on clothing, cosmetics and jewelry, opting instead to spend money on experiences like dining out and sports. They are also flocking to safe-haven assets like gold and supporting local manufacturers, rather than spending on foreign luxury brands like Gucci, Apple and Starbucks.
The economic slowdown may also be due to the large number of sales and discounts taking place throughout the year.
“The promotion period is too long and the marketing is confusing,” said Constance Chou, 31. Said She said she hadn’t bought anything this year, citing the Financial Times: “The platform is constantly running promotions. Regular customers have no incentive to participate.”