Author: Gao Fu Mao
This week, quarantine authorities in Arctic-cold Harbin city detained packages in luggage at the local airport containing swiftlets’s nest (made from the bird’s saliva, these nests are a delicacy in China), flown all the way from tropical Indonesia for a trader who will sell them at exorbitant prices on 11 November.
That’s all part of the frenzy that is 11-11, China’s Singles Day on 11 November, a day created by e-commerce company Alibaba to get Chinese singles to buy stuff online to curb their loneliness or gift a prospective mate. China’s postal bureau, which also operates a dispatch company, is predicting a 35 percent year-on-year rise in overall 11-11 deliveries this year.
Seafood companies are getting in on the act. Filets of Chilean salmon, shrimp, and scallops are among the offers on Alibaba’s Tmall platform “Tian Mao Chaoshi” (Tmall supermarket), a unit specializing in local and imported fresh foods. It’s selling 490-gram salmon steaks at a 11-11 special price of CNY 69.90 (USD 10.53, EUR 9.04). Likewise, 400- to 500-gram yellow croaker fish from the Xiangshan region of Zhejiang Province are being reduced from CNY 39.90 (USD 6.01, EUR 5.16) to CNY 29.90 (USD 4.50, EUR 3.87) for Singles Day.
And Japanese-breed scallops (the Japanese element is stressed) from Hebei Province are selling at CNY 23.90 (USD 3.60, EUR 3.09) for six pieces through Yiguo.com, a fresh-food online operation with Alibaba backing. Over on JD.com, one of the most elaborate offerings for China’s lonely singles is being laid on by Xing Nong United Yangcheng Lake Crab Producers, a cooperative selling China’s premium hairy crab, at CNY 339.00 (USD 51.06, EUR 43.84) per mature crab – packaged in an elaborate gift box styled in the blue-white motifs of Chinese porcelain.
Amid the frenzy of dispatch riders and salmon steaks this week for 11-11, it’s worth remembering that if the predictions of 30 to 40 percent growth year-on-year come true on this year’s Single’s Day, then China’s online retailers will probably catch up on Amazon in revenue terms within a decade. This creates a whole new range of channels for seafood sales to the country’s spenders.
With the annual frenzy of Singles Day approaching, it’s worth considering online sales in August rose by 34.3 percent, compared to overall retail sales growth in China of 10.1 percent. China recorded 10.5 percent average growth in retail sales online between 2011 and 2016, according to the Global Retail Growth Index. That compares with global average of 4.3 percent and a U.S. figure of 2.4 percent growth. Alibaba and JD.com saw growth in sales of 37 percent in 2016, compared to 4.3 percent global average.
The Chinese online giants are not the behemoths they appear – not yet. In absolute terms, JD.com added USD 8 billion (EUR 6.9 billion) in 2016 but Amazon added USD 23.5 billion (EUR 20.2 billion) in sales. Likewise, whereas Alibaba added USD 2.9 billion (EUR 2.5 billion) – or 33 percent growth – big European retailer Aldi added USD 3.8 billion (EUR 3.3 billion) in absolute terms – growth of six percent year-on-year, according to data was distributed by retail-focused OC&C Strategy Consultants in Shanghai.
Right now Amazon, which has a Chinese unit, dwarfs Chinese peers; it posted revenues of USD 135.9 billion (EUR 116.7 billion) for 2016, while JD.com posted sales of USD 37.5 billion (EUR 32.2 billion) and Alibaba revenues totaled USD 15.6 billion (EUR 13.4 billion). Another Chinese internet firm, Tencent, had revenues of USD 21.9 billion (EUR 19.8 billion): it operates Weixin/Wechat a micro-messaging platform (and payment system), which has spawned a wave of vendors working from home.
However, this is very much a story for the future, driving by continued –though slower – growth in Chinese incomes. The future of e-commerce depends on the relentless growth of China’s middle class, helped along by government-driven urbanization and fostering of a consumption-driven economy. While there are various definitions of middle class in China, a study by management consultancy McKinsey predicts by 2022 over 75 percent of urban consumers (urbanites make up 60 percent of the population currently) will be considered middle class or upper-middle class, earning between USD 9,000 (EUR 7,730) and USD 34,000 (EUR 29,187) per year.
While the competition for jobs in China continued to ease in the third quarter, the average monthly salary for white-collar workers went up to reach CNY 7,599 (USD 1,144, EUR 981), representing a three percent increase over the previous quarter, according to a third-quarter 2017 report on China labor market supply and demand for white-collar workers, compiled by leading Chinese recruitment firm Zhaopin. Growth in salaries has slowed from the double-digit trends of a decade ago, but a three percent increase is more than U.S. workers have seen. As China becomes a more services-driven economy, Chinese cities are offering higher salaries and subsidies to attract more talent, pushing up average monthly salary for white-collar workers in China. It’s this group which are spending most online.
And then there’s the broader ambitions of China to integrate neighboring states into its economy: the One Belt, One Road strategy, though railway and highway links, is starting to open up a whole new world of possibilities in Southeast Asia for the likes of Tmall and JD.com.