Billion signals

JD’s $34 Billion Gala Haul Signals Chinese Consumer Rebound – Yahoo Finance

JD’s $34 Billion Gala Haul Signals Chinese Consumer Rebound

(Bloomberg) — Inc. has bagged a record $34 billion of sales during the country’s biggest online shopping gala of the post-pandemic era, suggesting China’s nascent consumer spending recovery has legs.

JD and larger rival Alibaba Group Holding Ltd. this month put Chinese consumption to its first major test since Beijing locked down the country in February. China’s largest retailers are hoping the “6.18” summer extravaganza that wraps up Thursday has unleashed pent-up demand, making up for lost sales during a coronavirus-stricken March quarter. JD said it had racked up 239.2 billion yuan ($34 billion) of transactions as of mid-afternoon, up 33% from the same time a year earlier and already surpassing 2019’s total. The retailer’s shares rose 3.5% on their Hong Kong debut, after raising $3.9 billion in a stock sale designed to appeal to Asian investors.

Global brands and smaller merchants alike had stocked up on goods for months in anticipation of the annual summer event, a bargain buffet surpassed only by the Nov. 11 Singles’ Day in scale. It comes down to how willing hundreds of millions of shoppers are to spend after the world’s No. 2 economy contracted for the first time in decades. The stakes couldn’t be higher at the conclusion of an 18-day shopping marathon conceived by JD to commemorate its June 18 anniversary.

This year’s deals-fest culminates with the biggest bargains Thursday and has so far featured more generous subsidies than ever before, as well as an unprecedented cohort of live-streaming personalities. Competition also intensified with the likes of ByteDance Ltd. and Kuaishou — whose video app now sells JD goods — vying for buyers.

“Chinese and foreign brands had sluggish sales due to the pandemic, and 6.18 has become their most important opportunity in the first half,” JD Retail Chief Executive Officer Xu Lei said in an interview with Bloomberg Television. For discretionary items like home appliances, “we’ve seen a recovery in consumption.”

Read more: Chinese Shoppers Can Go Out Again. Online Buys Show They Won’t

Chinese retail suffered a record collapse in the first three months of 2020. While it’s on the mend, latest data shows private consumption still sluggish, dashing hopes of a V-shaped recovery as people head back to work. The picture is further complicated by the fact that Covid-19 has kept people away from stores and shifted an unknown proportion of retail activity online, propping up online purchases.

JD has projected revenue growth of 20% to 30% this quarter. Xu — widely viewed as the front-runner to succeed billionaire founder Richard Liu — says JD is on track to meet that goal and isn’t threatened by competitors encroaching upon its turf, like in consumer gadgets.

“I don’t dance with them, I dance with users,” he said.

What Bloomberg Intelligence Says

A strong 2Q sales and profit recovery is likely for Alibaba, and Pinduoduo, as merchant operations and logistics return to normal. User reliance on these platforms may also have increased during the coronavirus pandemic.

– Vey-Sern Ling and Tiffany Tam, analysts

Click here for the research.

Based on the first 17 days of June, China’s e-commerce giants are on track for record sums as measured by gross merchandise value, or total value of goods sold. During the first ten hours of its 6.18 campaign, Alibaba’s Tmall business-to-consumer marketplace logged sales 50% higher than during the same period last year, after participating brands doubled. JD has said sales of imports like HP laptops and Dyson hairdryers soared, while it’s selling more fresh produce in smaller cities.

Read more: JD’s Outlook Beats After E-Commerce Surges in China Lockdown

Initiated in 2014 as a riposte to Alibaba’s Singles’ Day, 6.18 has become yet another annual ritual for e-commerce companies and their offline partners from Walmart Inc. to Co. Beyond headline figures, it’s less clear how much it contributes to the bottom line given the enormous discounting involved.

“My lens for this year is competition, not consumer confidence,” said Michael Norris, researcher with Shanghai-based marketing firm AgencyChina. “After the pandemic, the frequency of flash sales and e-commerce shopping events has increased. This boosts GMV but does little for margin expansion. Each platform’s monetization rate — how much revenue it generates per unit of GMV — is the best indication of relative strength and staying power.”

Alibaba, along with brands on its platforms, committed cash and other coupons worth a total of 14 billion yuan ($2 billion), according to the company. JD said it offered 10 billion yuan in subsidies.

“User growth and retention, and the digitization of brands and merchants are key considerations” when Alibaba pushes subsidies during promotions like 6.18, said Alibaba Vice President Mike Gu, who heads Tmall’s fashion and consumer goods businesses.

Read more: Alibaba Drops After Projecting Slowing Growth in Uncertain Times

Sales of fast-moving consumer goods on the Tmall and Taobao marketplaces in the June quarter has so far exceeded the pace of 2019’s final quarter, Gu said in an interview. Thanks to 6.18, apparel growth this month has also climbed back to pre-Covid-19 levels, he added.

Live-streaming is also playing a bigger role during this year’s 6.18, at a time Covid-19 is fueling an unprecedented boom in online media. Alibaba’s Taobao Live championed the use of influencers to sell everything from lipstick to rockets, prompting rivals like JD and Pinduoduo Inc. to follow suit.

Social media companies like TikTok-owner ByteDance and Tencent Holdings Ltd.-backed Kuaishou are jumping on the bandwagon. Their mini-video platforms in China have lured a long list of tech chieftains hawking products of their own to live-streaming fans: The latest was NetEase Inc.’s usually reclusive founder, William Ding. Last week, his debut on Kuaishou amassed 72 million yuan of sales in just four hours.

“I’ve never eaten beef jerky as tasty as this in the last twenty years,” the billionaire said during the livestream.

(Updates with latest haul and share action from first paragraph)” data-reactid=”53″ type=”text”>For more articles like this, please visit us at

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China signals

China signals plan to take full control of Hong Kong, realigning city’s status – The Washington Post

China’s ruling Communist Party signaled that it is moving swiftly to bring Hong Kong under its full control, with a top official saying Thursday that Beijing plans to alter the system that has allowed the territory to enjoy a level of autonomy for the past 23 years.

After steadily eroding Hong Kong’s political freedoms and independent legal system, the party appears to be preparing to change the Basic Law, Hong Kong’s mini-constitution, which sets out rights unavailable in mainland China such as freedom of assembly and the press.

The new approach marks a dramatic escalation in Beijing’s crackdown in the former British colony, and the clearest indication that it now views Hong Kong as a restive region to be brought to heel after widespread anti-government protests last year.

“We will ensure the long-term stability of ‘one country, two systems,’” Wang Yang, head of the Chinese People’s Political Consultative Conference, said at the opening of the annual meeting of the country’s top political advisory body. The meeting is the first part of the “Two Sessions,” which will continue Friday with the National People’s Congress, the rubber-stamp parliament.

“We will continue to support the improvement of the implementation of the systems and mechanisms of the constitution and Basic Law,” Wang said in a report to the meeting.

Local media in Hong Kong, including the South China Morning Post, reported Thursday that Beijing will pass a comprehensive national security law in Hong Kong by fiat, bypassing the city’s legislature and chief executive. The Hong Kong dollar weakened sharply against the U.S. dollar as the reports emerged.

The law, which will target subversive activity, appears to be a tailored response to last year’s pro-democracy uprising — which Beijing blamed on secessionist forces and foreign influence. A government proposal to allow extraditions to mainland China touched off the unrest, but the movement grew into a broader and sometimes violent rebellion calling for full democracy and opposing China’s efforts to chip away at Hong Kong’s firewall with the mainland.

Wang did not elaborate on what “improvement” meant. But he also referred to the Chinese territory of Macao, a gambling hub where open displays of political dissent are rare and where most leaders toe Beijing’s line.

The shift will have far-reaching effects. Under the agreement Britain signed with China before it handed back Hong Kong in 1997, the territory is supposed to enjoy its relative freedoms until at least 2047 under the “one country, two systems” framework.

This arrangement helped Hong Kong to flourish as a global financial center even after returning to Beijing’s overall control, and has allowed the United States and other nations to treat the city differently to China. It also allowed Hong Kong to run its own affairs, except foreign affairs and defense.

But under Xi Jinping’s leadership, the Communist Party has encroached on Hong Kong’s autonomy with stunning speed.

“I’m speechless,” said Dennis Kwok, a pro-democracy lawmaker, of the proposed national security legislation. Kwok was singled out for criticism by Beijing and was recently removed from his chairmanship of a key legislative council committee. “This is a complete and total surprise and I think it means the end of one country, two systems.”

Kwok said that the Hong Kong government and Beijing had used the coronavirus pandemic as cover to clamp down on the city.

“When the world is not watching they are killing Hong Kong, killing one country, two systems, and using social distancing rules to keep people from coming out to protest,” he said. “This is the most devastating thing to happen to Hong Kong since the handover.”

On Wednesday, Secretary of State Mike Pompeo said that the United States was “closely watching what’s going on” in Hong Kong, adding that pro-democracy lawmakers had been “manhandled” this week “while trying to stop a procedural irregularity by pro-Beijing legislators.”

“Leading Hong Kong activists like Martin Lee and Jimmy Lai were hauled into court,” Pompeo told a news conference in Washington. “Actions like these make it more difficult to assess that Hong Kong remains highly autonomous from mainland China,” he said.

For the United States to treat Hong Kong as a separate entity, mostly for commercial purposes, the State Department must certify that the city retains “a high degree of autonomy” from China. Pompeo said its latest decision on this was still pending.

The Chinese Foreign Ministry, through its office of the commissioner to Hong Kong, said Thursday that Pompeo was “blackmailing” the Hong Kong government and accused him of “blatant interference” in China’s internal affairs. It also took aim at Sen. Marco Rubio (R.-Fl.) for placing “unjustifiable pressure on China’s central government.”

“Certain U.S. politicians are repeatedly carping on about [Hong Kong’s] legislative and judiciary branches in a vain attempt to glorify and exculpate the rioters who oppose China and seek to stir up trouble in Hong Kong,” it said. “They just don’t want to see Hong Kong heal its divides and get back on track: their sinister motives are thoroughly exposed, and their ‘black hands’ are bared for all to see.”

In recent months, Beijing has installed a tough new representative in Hong Kong, called for patriotic education to instill more allegiance to China, and promoted a bill that would make it a criminal offense to disrespect China’s national anthem.

Delegates from Hong Kong, including Carrie Lam, the city’s chief executive, have arrived in Beijing for the Two Sessions.

Wang said that Beijing supported the Hong Kong deputies’ efforts to “avoid violence in Hong Kong and to restore order.”

Citing coronavirus control efforts, Hong Kong authorities have extended prohibitions on public gatherings through June 4, the anniversary of the 1989 Tiananmen Square massacre and a date that is traditionally marked with a large vigil in Hong Kong.

Timothy McLaughlin in Hong Kong contributed to this report.

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