Serve con­sumers well to make them lead growth

China Daily (USA) - - VIEWS - The au­thor is a se­nior writer with China Daily. zhuqi­wen@chi­

Un­like the dra­matic US pres­i­den­tial elec­tion or the sur­pris­ing Brexit vote, one can al­most be sure about an­other mas­sive surge in Sin­gles’ Day sales this year. Since on­line shop­ping has be­come so pop­u­lar in China, more and more in­ter­na­tional brands and re­tail­ers are par­tic­i­pat­ing in the shop­ping fes­ti­val that Nov 11 has be­come to cash in on the craze.

Af­ter a year-on-year increase of 54 per­cent in 2015, Fung Global Re­tail & Tech­nol­ogy forecast that this year’s shop­ping frenzy would see a 40-per­cent increase to hit $20 bil­lion.

That is a bold forecast. Af­ter all, US con­sumers spent only $5.8 bil­lion on­line on Black Fri­day and its web­based Cy­berMon­day last year. It is dif­fi­cult to un­der­stand why Chi­nese con­sumers, with an av­er­age earn­ing a quar­ter of their US coun­ter­parts, spent over two times more at their year-end shop­ping day. With lit­tle change in their in­comes, will Chi­nese con­sumers be able to widen that ex­pen­di­ture gap to three-fold this year? Per­haps yes. Fung Global has based its 2016 forecast on a tail­wind from Chi­nese on­line shop­pers’ surg­ing de­mand for over­seas goods and high ex­pec­ta­tions from the ex­ten­sive mar­ket­ing cam­paign by China’s lead­ing e-busi­ness gi­ants like Alibaba, which would use vir­tual and aug­mented re­al­ity fea­tures this year.

E-busi­ness gi­ants, on­line re­tail­ers and Chi­nese reg­u­la­tors all should do their bit to en­sure con­sumers get the goods and ser­vices they pay for, not only on Sin­gles’ Day but also on other days of the year.

It is re­ported that Alibaba will not only pi­lot Buy+, a VR head­set which will al­low shop­pers to walk around sim­u­lated bricks-and-mor­tar stores around the globe and sim­ply nod to con­firm the pur­chase of items, it has also re­leased a lo­ca­tion-based aug­mented re­al­ity Poke­monGo-style mo­bile app ahead of Sin­gles’ Day to help drive traf­fic from on­line stores to the phys­i­cal stores of re­lated mer­chants.

Deep dis­counts and fancy high-tech user ex­pe­ri­ence will cer­tainly help woo more Chi­nese on­line shop­pers. Nev­er­the­less, it is the un­der­ly­ing re­silience of Chi­nese con­sumers who con­tinue to fuel dou­ble-digit con­sump­tion growth in the world’s sec­ond-largest econ­omy de­spite all the dif­fi­cul­ties and un­cer­tain­ties at home and abroad that best ex­plains the on­line shop­ping frenzy.

Though the eco­nomic slow­down has more or less bit­ten into their pock­ets, the in­come level of Chi­nese con­sumers is still grow­ing, and it will grad­u­ally but steadily lift China from a mid­dlein­come coun­try to­ward a higher-in­come one. As the coun­try’s ex­port- and in­vest­ment-led growth loses steam, it is in­creas­ingly im­por­tant to main­tain the sound mo­men­tum of con­sump­tion growth to sta­bi­lize over­all eco­nomic growth.

Though Sin­gles’ Day sales do not nec­es­sar­ily make a big por­tion of Chi­nese con­sumers’ an­nual ex­pen­di­ture, its increase will tes­tify both their con­fi­dence to spend more and their grow­ing pur­chas­ing power.

It is hoped this year’s Sin­gles Day will cre­ate an­other newsales record. But it should also be re­al­ized that high ex­pec­ta­tions are not enough to make Fung Global’s op­ti­mistic forecast to come true.

China’s box of­fice should be a sign of warn­ing in this re­gard.

Af­ter soar­ing by about 30 per­cent for sev­eral years and rock­et­ing by more than 50 per­cent in the first quar­ter of this year, China’s box of­fice sud­denly fell 7 per­cent in the sec­ond quar­ter and slumped by 14.9 per­cent in the third, shat­ter­ing many peo­ple’s hopes that it would reach 60 bil­lion yuan ($8.86 bil­lion) this year.

Peo­ple blamed the poor qual­ity of movies for the un­ex­pected slow­down of this once-promis­ing mar­ket. The same could hold true for Sin­gles’ Day sales if on­line re­tail­ers and com­pa­nies do not meet Chi­nese con­sumers’ de­mand for qual­ity goods and ser­vices. E-busi­ness gi­ants, on­line re­tail­ers and Chi­nese reg­u­la­tors all should do their bit to en­sure con­sumers get the goods and ser­vices they pay for, not only on Sin­gles’ Day but also on other days of the year.

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