By Gidon Gautel
Billions lie within China’s e-commerce market. Online sales in 2016 amounted to RMB 5.16 trillion – approximately US$758 billion. E-commerce giant Alibaba saw US$17.8 billion in sales last November 11 during China’s largest e-shopping festival, Singles’ Day. However, although China has a plethora of other online shopping events, few beyond Single’s Day have gained Western recognition.
Just last month, JD.com, Alibaba’s main competitor in China, celebrated its own shopping festival: “618.” Over the course of 18 days, the website amassed US$17.6 billion in income from sales. Large shopping festivals such as this hold significant potential for foreign businesses looking to sell their products in China.
Chinese shoppers respond strongly to sales and special promotions. Shopping festivals offer enticing opportunities for foreign businesses wanting to achieve higher sales, gain brand recognition, and market themselves towards Chinese consumers. This article provides an overview of China’s biggest e-shopping festivals.
Chinese New Year – January to February
Chinese New Year, also known as the Spring Festival, is China’s most important holiday. Gifts have long been exchanged on this holiday; however, with the dawn of online shopping, gift giving has reached new heights. Food and beverage products are the most common type of gift, along with electronics and clothing. People will often order gifts to the addresses of relatives if they know they will not be able to return home over the holiday.
As Chinese New Year is such a popular festival, promotions extend across various platforms, though market giants such as Alibaba and JD scoop up large swathes of consumers. This year’s celebrations saw US$124 billion in online and offline sales for retail and catering. Meanwhile, US$68 billion in total online payments were recorded by China Union during the holiday.
Valentine’s Day – February 14
Valentine’s Day has become an increasingly popular date for shopping in China, both for couples and optimistic singles. From Tmall to Jumei, most online retailers have continued to provide more and more deals on items likely to be gifted, such as makeup or perfume.
Figures from Kung Fu Data, an independent data firm based in China, show that during this Valentine’s Day, gross sales on Taobao and Tmall for flowers, bags, women’s shoes, and accessories came to RMB 6.2 billion (approximately US$911 million). Additionally, whilst Tmall and Taobao snap up around 60 to 90 percent of online sales depending on category, other smaller retailers add further to gross sales.
Interestingly, February 14 is one of three Valentine’s Days in China, along with the Lantern Festival in March and Double Seventh Festival in August. However, these festivals are more traditional and less popular amongst young people, hence they see fewer online promotions.
Women’s Day – March 8
China announced that it would celebrate International Women’s Day over 60 years ago, in 1949. Recently, online retailers have ramped up promotional events on the day to capture the interests of China’s female shoppers.
In 2017, online retailers opted for alternate names for the holiday to distinguish themselves from the competition. Tmall dubbed its promotions “Queen Festival” while JD.com went for “Butterfly Festival.” In particular, cosmetics and beauty products sell well. Jumei, which specializes in cosmetics, hosted its own “Goddess Festival”, which was well-received. These events have not been without controversy, however, as some argue they enforce stereotypes about women, while others say International Women’s Day should not be commercialized in the first place.
Chinese female shoppers represent a huge market: according to the Chinese Research Centre for E-commerce, 70 percent of Chinese women shop online more than offline. Kung Fu Data’s figures show that Women’s Day 2017 witnessed RMB 30.8 billion (approximately US$4.5 billion) in gross sales on Taobao and Tmall for items such as women’s fashion, accessories, and cosmetics.
Children’s Day – June 1
Recognized in China since 1949, Children’s Day has recently become a popular shopping festival, with promotions beginning at the end of May and lasting through the first week of June. Advertising during Children’s Day is mostly geared towards parents, who are increasingly expected to buy gifts for the event.
Products on sale during Children’s Day include items such as toys, board games, children’s wear, and children’s shoes. According to Kung Fu Data, gross sales on June 1, 2017 for such items across Alibaba’s platforms totaled RMB 7.4 billion (approximately US$1.1 billion).
618 – June 18
China’s second most prominent e-commerce festival after Single’s Day, 618 celebrates the foundation of JD.com. The festival can be viewed as JD’s response to Alibaba’s own shopping extravaganza in November, with considerable deals throughout, and plentiful promotion leading up to the event. As with Singles’ Day, other retailers also host sales, though JD receives the most attention.
Although 618 does not see the same scale as Singles’ day, this year’s figures were very impressive, with US$17.6 billion in sales over 19 days. JD looks set to level the playing field somewhat in upcoming years, as the e-retailer’s market share has slowly climbed from 18 percent in 2014 to 25 percent in 2016, and continues to rise.
9.9 Wine Festival – September 1-9
Announced by Alibaba’s founder Jack Ma in 2016, 9.9 is the e-retailer’s gift to China’s wine enthusiasts. So-called because “nine” and “alcohol” share the same pronunciation in Mandarin, the event sees nine days of deals on not only wine, but also Chinese Baijiu and other alcohol.
Alibaba did not release comprehensive data, but Kung Fu Data’s statistics show the inaugural 9.9 shopping event on the firm’s platforms saw RMB 1.9 billion’s worth of alcohol sold (approximately US$280 million).
Formerly confined to the realm of gifts amongst businesspeople, wine has become increasingly popular in China, particularly among Chinese millennials and the upper middle class. Total wine imports grew 47.3 percent year-on-year in 2016, slowing slightly in 2017 due to increased stockpiling by suppliers.
Singles’ Day/Double Eleven – November 11
Infamous for its dizzying sales figures, Singles’ Day is more commonly known as “Double Eleven” in China. It is the brainchild of Jack Ma, along with 9.9. Originally, November 11 was designated as a day for China’s bachelors, later morphing into an event for all singles to celebrate themselves. The four ones in the date (11.11) symbolize single life.
Alibaba launched sales for the festival in 2009. Since then, sales revenue has seen impressive growth to the aforementioned US$17.8 billion last year, though the climb has slowed somewhat.
Other e-commerce sites also host promotions on Singles’ Day. However, in effect, this is Alibaba’s day. In 2014 the firm went so far as to trademark the name “Double Eleven,” preventing other retailers from advertising under the same guise.
Double Twelve – December 12
Double Twelve appeases those left unsatisfied by Double Eleven. An end of season promotional sale hosted primarily by Alibaba’s Taobao and Tmall, Double Twelve also boasts impressive sales figures, despite not reaching the stellar heights of Singles’ Day. In 2015, Alibaba’s Taobao recorded around US$13.2 billion in transaction volume.
The festival is reasonably new and has not amassed the same clout as its November counterpart. It therefore looks set to grow further. In 2016, total wireless transactions on Taobao on Double Twelve rose 45.8 percent over the previous year.
Christmas – December 14-25
Christmas has become increasingly popular in China, and most large cities are rife with festive decorations in the second half of December.
Interestingly, Christmas in China has developed distinct traditions. Gifting apples to friends and coworkers, for example, is commonly observed, due to the fact that the first character of “apple” and “peaceful” are the same.
Shopping, however, remains the focal point of the holiday, with most online retailers providing promotions and sales during the Christmas period. Whilst many buy gifts online, others simply make use of the opportunity if they feel they could have bought more during Double Eleven and Double Twelve.
Christmas shopping has therefore become increasingly important for online retailers, helping Alibaba beat forecasts with a 32 percent rise in third quarter revenue last year. Moreover, the festival still has strong potential for further growth as it gains popularity in lower tier cities.
China’s e-commerce market provides plentiful opportunities, with major shopping festivals occurring on an almost monthly basis. Events such as Singles’ Day and 618 earn the spotlight, reaching a large demographic across the country. However, businesses hoping to sell to specific consumer subsets also have a variety of more niche events to choose from.
E-commerce in China is highly competitive and can be difficult for new participants to penetrate. Online shopping festivals provide an opportunity for foreign businesses to entice Chinese consumers, market themselves, and boost brand presence.
Beyond the festivals listed above, numerous other shopping festivals occur throughout the year. Events such as 418 and 818 offer similar experiences as Singles’ Day and 618, but on a smaller scale. Additionally, Western shopping festivals like Black Friday and Cyber Monday are establishing a growing presence in China.
Foreign businesses would do well to study China’s e-commerce festivals. Detailed marketing strategies to navigate China’s competitive e-commerce landscape allow them to reach valuable consumers in a country where many are turning to e-commerce for all their shopping needs.
This article was originally published on July 17, 2017 and has been updated to include the latest updates.
China Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Asia, including ASEAN, India, Indonesia, Russia, the Silk Road, and Vietnam. For editorial matters please contact us here, and for a complimentary subscription to our products, please click here.
Dezan Shira & Associates is a full service practice in China, providing business intelligence, due diligence, legal, tax, IT, HR, payroll, and advisory services throughout the China and Asian region. For assistance with China business issues or investments into China, please contact us at firstname.lastname@example.org or visit us at www.dezshira.com
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
This Dezan Shira & Associates 2017 China guide provides a comprehensive background and details of all aspects of setting up and operating an American business in China, including due diligence and compliance issues, IP protection, corporate establishment options, calculating tax liabilities, as well as discussing on-going operational issues such as managing bookkeeping, accounts, banking, HR, Payroll, annual license renewals, audit, FCPA compliance and consolidation with US standards and Head Office reporting.
In this issue of China Briefing magazine, we lay out the challenges presented by China’s payroll landscape, including its peculiar Dang An and Hu Kou systems. We then explore how companies of all sizes are leveraging IT-enabled solutions to meet their HR and payroll needs, and why outsourcing payroll is the answer for certain company structures. Finally, we consider the potential for China to emerge as Asia’s premier payroll processing center.