3 Things to Watch This Singles Day
This Saturday, in just 24 hours more than $17 billion will be exchanged between consumers and producers in China’sSingles Day. That’s a bit more than double what will be sold in the U.S. between Black Friday and Cyber Monday. The holiday, created by Amazon rival, Alibaba, originated in 2009. It’s grown so big that this year 140,000 brands will be participating including 60,000 from beyond the Great Wall. There will even be a countdown clock party with superstars like Pharrell Williams; it’s like New Year's Eve, but bigger. The largesse signifies China’s impact on the world stage, will it be for better or for worse? Here’s three things to watch.
1. Novel vs. Copy Cat
A predicted $17 billion in sales is a lot of demand. In any other economy that would be a good thing; demand fuels competition which drives innovation as producers compete for business. That is not always the case in China. The OECD reported that more than 80% of counterfeits in the world originate from China. If new ideas can be ripped off without repercussions businesses lose the incentive to build newer and better things.
Counterfeit products also tend to be unsafe: see explosive chargers, lead-filled makeup, dangerous laundry detergent, and poisonous prescription drugs. Not to mention that revenue often goes to criminal groups, terrorists, or other illicit ventures. The U.S. President, Donald Trump, initiated an investigation into Chinese trade practices earlier this year.
The Alibaba platform has millions of honest vendors who are also victims of these copycat crimes. Earlier this year Alibaba formed an initiative utilizing big data coupled with a brand network and an elite task force of spotters, so far hundreds have been arrested. It remains to be seen if Singles Day will drive the production of novel products, or if counterfeits will prevail jeopardizing the growth of the consumer-driven economy.
2. A New Shopping Experience?
In the U.S., brick and mortar retail stores have been going through an apocalypse due in large part to the rise of e-commerce, last year 40% of Black Friday sales were mobile purchases. One would think Singles Day, where 82% of sales last year were mobile transactions, would definitively destroy the physical market. You would be mistaken, instead, 2017 may see a new trend become a standard retail experience.
Alibaba this year is pioneering “New Retail” by installing thousands of pop-up stores in malls and other public locations. The stores display featured products in concept-style display rooms, each with a QR code which link shoppers to the online store where they can see more variety and place orders. In addition, through “retail integrated” the company has brought more than 600,000 offline stores to the digital space. If it works, customers in other markets can look forward to a new augmented reality shopping experience heavy on display with little pressure to buy in store.
3. Global Trade
This year singles day is not just in China. Korean, American, and European brands have always competed on the celebratory day, but this year the deals will extend to other countries. Through its South-East Asia focused e-retailer, Lazada, consumers in Singapore, Indonesia, Malaysia, Vietnam, the Philippines, and Thailand will also benefit. That’s a huge deal.
It is another sign of how integrated global markets have become in the 21st century, yet global rules have not merged. U.S. trade experts have dubbed this region “Section 301,” referring to the code in the U.S. 1974 Trade Act that authorizes the president to take “all appropriate actions” to defend against unfair trade practices.
The digital age has seen the advent of new crimes like hacking, and new barriers such as data localization rules, forced technology transfer rules, and state-driven industrial policies among others. No international trade agreement has tackled these non-tariff digital barriers, yet. Usually, the United States, which has the largest trading relationship with China, is the loudest reform advocate. If intra-regional trade increases that may change.
Image credit: See-Ming Lee