Alibaba rakes in 'Singles Day' billions as Chinese tech regulation looms
Forget Black Friday and Cyber Monday, the hyped sales festivals that generate the type of crowds in shopping malls sure to trigger super-spreader events in these Covid-inflicted times.
China just held its equivalent, Singles Day, which sees the likes of Alibaba, JD.com, Pinduoduo and other big retailers sharply discount millions of products. Once again the sales fest has outstripped Black Friday and Cyber Monday combined.
Alibaba set a record with US$56 billion in sales in 24 hours - and it is continuing the sale for an additional day, so will add billions more. Hundreds of millions of Chinese, as well as buyers from all over the world shop on the Chinese equivalent of Amazon and eBay and the high sales volume suggest the pandemic hasn't dented consumer appetite.
That trend is reflected in the most recent GST receipts for New Zealand, which showed businesses paid nearly $1.2 billion more to IRD in GST in the first seven months of the year, compared to the same period in 2019.
While China largely has coronavirus under control, a lack of international travel was always anticipated to boost sales through the e-tailing giants, which have been attracting more big-name Western brands to the country via online stores.
Alibaba rival JD.com reported over US$11 billion in sales in the same 24 hour period. The brief sales frenzy is seen as increasingly important in attracting new customers, who are lured in with big discounts and then converted to repeat customers through loyalty schemes, app sign-ups and integration into China's social media networks including WeChat (the Facebook equivalent) and Weibo (Twitter's opposite).
Beijing gets tough
But banking all that cash has failed to disguise the fact that China's internet sector is facing the prospect of anti-trust action similar in nature to what the US Department of Justice launched last month against its own internet giant Google.
In fact, Chinese tech giants have collectively shed US$290 billion in market value over the last 48 hours after the Chinese Government announced regulations designed to curb the monopolistic power of a handful of massive tech companies.
China's antitrust regulator has sought feedback on a plan to build a framework preventing anti-competitive practices such as "colluding on sharing sensitive consumer data, alliances that squeeze out smaller rivals and subsidizing services at below cost to eliminate competitors", Bloomberg reported.
The Government also intends to tighten up on the Variable Interest Entity scheme, which is how Chinese companies attract foreign investment or lists overseas. A rule change would require companies to now apply for specific operating approval.
Meanwhile, New Zealand exporters see the big Chinese e-tailers as an attractive route to market as digital trade becomes increasingly important during the pandemic. But while Kiwis are able to buy products from the likes of Alibaba, Singles Day doesn't register much excitement outside of China.
The IRD said this week that the Government was on track to rake in $100 million in GST through the "Amazon tax". It is applied to goods worth less than $1,000 and sold by foreign retailers turning over sales to New Zealanders of more than $60,000 a year.
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