China’s yearlong crackdown on the tech industry has turned Alibaba Group Holding Ltd.’s (NYSE: BABA) global shopping extravaganza Singles’ Day into a more low-key affair, Bloomberg reports. Alibaba now seeks to shift focus from increasing sales towards sustainability and philanthropy, the key pillars of Chinese leader Xi Jinping’s drive to reshape China’s economy.
Alibaba co-founder Jack Ma latched on to the idea of centering a shopping promotion around a holiday, drawing inspiration from the tradition of U.S. retailers like Walmart Inc. (WMT) offering mega-discounts on the day after Thanksgiving (which became Black Friday).
Ma’s Singles’ Day initially targeted consumers to celebrate singlehood and gradually extended to every demographic. China kicked off a campaign to rein in its tech giants in 2020 with curbs on fintech and an antitrust probe into Alibaba that ended in a $2.8 billion fine.
Alibaba’s June-quarter revenue missed estimates for the first time in more than two years, reflecting the crackdown toll. Alibaba has pledged $15.5 billion over five years to foster social equality. It also promised to donate 1 yuan ($0.16) when Singles’ Day shoppers buy certain items and post their purchases on social media.
Alibaba’s platforms also showcase energy-efficient products during the shopping festival, and its logistics network will help recycle packaging.
Chinese regulators shelved Alibaba’s fintech affiliate Ant Group Co.’s initial public offering just before 2020’s Singles’ Day. Alibaba had to overhaul its business, and its super-app, Alipay, is on the brink of being sliced up.
Why It Matters
China may soon compel Alipay to open up walled-off ecosystems. Already Alibaba has started allowing users to use rival Tencent Holdings Ltd.’s (OTC: TCEHY) WeChat Pay on some apps. However, it is still unavailable on Taobao and Tmall, which accounts for most spending during Singles’ Day.
The 2020 sales reached 498 billion yuan ($78 billion), surpassing 2019’s $38 billion sales after Alibaba added several days and additional services to the count.
For several years now, Singles’ Day’s tally has exceeded the five-day U.S. buying spree that begins on Thanksgiving and ends on Cyber Monday, making the Chinese event the most significant global shopping spree.
However, in 2021 Alibaba stressed a pivot toward “sustainable growth” from “pure gross merchandise value (GMV) growth.” JD.com Inc (NASDAQ: J.D.) began pre-sales on October 31 and sold 190 million products within the first four hours. ByteDance Ltd’s Douyin and Kuaishou hired influencers to hawk products through live-streamed shopping events. Li Jiaqi, known as “lipstick brother,” pre-sold a record $1.9 billion in goods on the first day of this year’s festivities.
BABA shares traded lower by 1.23 percent at $160.17 on the last check Tuesday.
By Anusuya Lahiri
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