World Shopping Day (Singles Day) is Coming


Alibabas World Shopping Day

November 11th is World Shopping Day, formerly Singles Day, in China.  It’s like Black Friday in the US, but with a twist.  Much of it happens online. Sales through Alibaba’s marketplaces, Tmall and Taobao, were $9.3 billion dollars on that day in 2014, up 63% over 2013.  Those numbers did not include any other sales in the country for the 24-hours of the holiday.

Speculation on this year’s haul would just be a guess.  But here is something to contemplate.  Eighty-nine percent of Chinese people who are accessing the internet are doing so on mobile devices.  And mobile subscriptions are up over 42% from this time last year.  Total subscribers now reach approximately 750 million.

Add to that, last Tuesday’s report in the New York Times about Alibaba’s third quarter, which rose 32% with 62% of the transactions competed on mobile phones.

Another clue: The Golden Week holiday, celebrated from September 24th to October 7th, saw retail sales in Shanghai alone grow 10.3% while in Beijing they grew 6% versus last year.

Time to monetize those impressions.  Source: China Skinny, Shanghai Daily

Replacements Keep On Rollin’

Carrier Data -Septmeber 2015

China’s smartphone market continues to roll on.  The run rate of new subscribers has averaged a little better than 19 million per month over the last four months.  And China Mobile maintains its dominance, now approaching 60% market share.

Something to think about: There are still about 550-million feature phone subscribers. Who are they?  Common understanding is that there are 500 million peasants in China.  They are the non-urbanized, rural farmers.  The two numbers are strikingly similar.  Source: China Mobile, China Unicom, China Telecom

China’s Economy May be Slowing, But its Consumers are Not

Alibaba Quarterly

In spite of China’s economy slowdown Alibaba reported strong third quarter results. Sales rose 32% to $3.5 billion.  More than half of that ($1.7 billion) came from mobile sales, which accounted for 62% of all transactions on the company’s sites.  Source: New York Times

Third Quarter Growth Down 1/10th


Q3 Economy

Initial reporting on third quarter growth indicates a slight downturn to 6.9% from the 7% growth in the first two quarters of the year.  A look under the hood shows one positive; the growth in the service sector is consistent with the goal of planners who are trying to rebalance the economy toward consumption.   And the numbers make it possible for the economy to reach its overall 7% target for the year.

There are skeptics who do not trust the official numbers.  But the general direction of the shift to consumption is not in question.   Huang Yiping, professor at Peking University’s China Center for Economic Research has said, “The consumption share of GDP is bigger and bigger because ordinary people’s share of national income is higher and higher.”   Source: Financial Times

Ups and Downs

Business Sentitment - 0915

Business sentiment finally caught up with the news, which explains the 5.8 point drop in the current mood from August to September – the largest drop all year.  The pattern has been fluctuating up and down for the last four months making it hard to predict its next move, but given the 6.9% growth reported for the third quarter – better than expected – business sentiment could move up.  Though 6.9% is slightly lower than the 7% seen in the past two quarters, it still represents the fastest growing modern economy in the world.  Decline is all relative.  Source: Westpac MNI China Business Sentiment, New York Times

Luxury Purchases Online

Luxury Categories

A KPMG survey reports that 45% of their respondents make luxury purchases via e-commerce sites and that they spend an average of $362 per purchase – up almost one third over last year.

They identify several reasons for the growth.  Among them is the mega growth of smartphone subscriptions combined with secure mobile payment systems and, as always, low prices and big discounts.  But respondents also mentioned uniqueness of the product and where it was made or designed as factors in purchases.

In a statement as twisted as San Francisco’s Lombard Street, CEO, Thibault Villet tried to express it, “Low price is playing an increasingly smaller role in driving online sales. Chinese consumers now can travel around the world or search through websites to know how a product is priced globally.”

KPMG surveyed more than 10,000 consumers of luxury goods for the report.  Source:  China Daily

Hack No More, Maybe


One point of discussion between Chinese President Xi Jinping and President Obama when they met recently was the need to curb hacking.  The Washington Post revealed that as a test of their sincerity prior to the meeting, the US had given the Chinese a list of hackers and asked that they be picked up.  It turns out that several of them were arrested.  The action was done quietly.  Now, the US waits to see if the accused will be tried and whether or not the action has a deterrent effect on other would-be hackers.  Stay tuned. Source: Reuters

Jon Huntsman at Stanford Graduate School of Business


A couple weeks ago Jon Huntsman, former US ambassador to China, spoke at length at the Stanford Graduate School of Business about the US and China and the digital economy.  A key insight was that the Chinese government doesn’t like surprises.  Huntsman says that Google’s problems in China stem from not giving the Chinese a heads up on their plans for the market – rather Google announced its plans on their website.  The talk about China starts at about 10 minutes into the 40-plus minute conversation. Source: Stanford Business School

Chinese Students Score in Math Performance

Math tests

The cornerstone of the STEM curriculum is mathematics.  Without it there is no physics, no engineering, and now that we live in the age of gnomes, there is no biology.  In other words, there is no science or technology.  Given the results of this assessment of 15 year old students worldwide, China is in a position to own it all in the future.  Source: MediaPost

Chinese Consumers Continue to Spend


Rarely does one see a pattern of growth that moves in a straight line.  But retail sales growth in China is one of the few.  Notably this pattern defies the negative trend in the Leading Economic Index we featured last week.  While the overall economic trend has been down, the street economics have remained consistently positive – continuing growth in retail sales is but one of the contra-indicators.  Source: Trading Economics, National Bureau of Statistics China