Finance
China’s biggest shopping event of the year exceeds low expectations
Staff sort express deliveries at China Post’s Zaozhuang branch in east China’s Shandong province on November 10, 2024
Nurphoto | Nurphoto | Getty Images
BEIJING — China’s Singles’ Day shopping festival saw consumers spend more than expected in what has otherwise been a tepid retail environment, consulting executives told CNBC.
The country’s version of Black Friday kicked off this year on Oct. 14, more than a week earlier than in 2023, and wrapped up Monday. Major e-commerce companies used to report gross merchandise value, an industry measure of sales over time, but did not for a third consecutive year amid weak consumer sentiment.
“I do think for many brands it probably will have turned out a bit better than they thought, but on a low level. Probably nobody would say we hit it out of the ballpark,” said Chris Reitermann, CEO of Ogilvy APAC and Greater China. He is also president of WPP China.
Many multinational corporations that sell consumer products in China are more cautious on the market, if not struggling, Reitermann said. But he pointed out many of the companies are still “very profitable” in the country, even if their growth has slowed to the low single digits, instead of high double digits.
For this year’s Singles Day, Alibaba claimed “robust growth” in GMV and a “record number of active buyers,” while JD.com said the number of shoppers on its platform rose by more than 20% year-over-year.
The shopping season that celebrates single people, also known as Double 11, came as the Chinese government has announced a series of stimulus measures since late September, fueling a stock market rally.
“There seems to be an uptick” in consumer sentiment over the last six weeks, said Daniel Zipser, senior partner at McKinsey and leader of its Asia Pacific consumer and retail division. It’s “hard to predict what that means going forward.”
Singles Day exceeded expectations for most brands, Zipser said. But rather than sales rising across the board, he pointed out pockets of growth in categories such as outdoors, pet care and “blind box” toys — in which consumers buy uniformly marked boxes for a chance at winning a new collectible.
He noted that the blind box category is one that went from $0 before Covid-19 to an industry more than $2 billion in size, reflecting the potential speed of consumer adoption in China.
China’s retail sales for October are expected to have risen by 3.8% from a year ago, according to a Reuters poll. That would be an improvement from 3.2% growth in September.
“We saw people spending more this year,” Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, told CNBC on Tuesday. The company helps foreign brands — such as Vitamix and IS Clinical — sell online in China and other parts of Asia.
He estimated 16% growth in GMV for the shopping festival from last year, in likely the strongest performance in years. Cooke added that brands didn’t have to cut prices as much.
Research firm Syntun said Tuesday it estimated 20.1% year-on-year growth in sales over the Singles Day period to 1.11 trillion ($150 billion) for Alibaba’s Tmall, JD.com and PDD.
Investors could get more details on China consumption later this week. JD.com is scheduled to release quarterly results Thursday, followed by Alibaba on Friday.
“We’ve seen consumers who have, if you will, save for a rainy day, and they’ve purchased on this Double 11 shopping festival,” Deborah Weinswig, founder and CEO of Coresight Research, said Tuesday on CNBC’s “Squawk Box Asia.”
She said the company’s weekly survey has indicated some “differences” in consumer sentiment over the last month.
Hopes for a recovery in 2025
China’s consumer spending has come under pressure since the Covid-19 pandemic as households grapple with economic uncertainty. A real estate slump has cut into household wealth, while economic growth has slowed.
While premium or mid-tier brands are “disappearing very fast,” higher-end brands such as Lululemon can do well, Reitermann said. He noted generally that local brands are often lower-priced and able to go to market faster.
He expects some rebound in consumer confidence in the second half of next year, after additional stimulus is likely announced in the first half.
China’s Ministry of Finance last week indicated more fiscal support could come in 2025. While China did not hand out cash to consumers during the pandemic, this year, the country did roll out a trade-in program to subsidize a portion of car and home appliance purchases.
— CNBC’s Sonia Heng contributed to this report.
Pictured here is an AI-generated clip from Vidu’s website. The tool can create videos from text or image prompts.
Evelyn Cheng | CNBC
BEIJING — Beijing-based Shengshu Technology on Wednesday said that its artificial intelligence-powered text-to-video tool Vidu will now be able to generate videos by combining images.
Vidu already allows users worldwide to create 8-second clips based on written prompts. While OpenAI — the maker of ChatGPT — in February revealed that its AI model Sora could generate one-minute videos from text, it has yet to release that publicly.
Vidu’s new AI feature can combine three pictures — such as a shirt, person and moped — into a video of the person wearing the shirt and driving the moped through a scene, Shengshu said.
Other platforms claim they can turn text or images into videos using AI, but the quality of output varies. The breakthrough that Shengshu claims is the ability to take three unique images and integrate them with visual consistency into an AI-generated video.
“Very early on we pinpointed [visual consistency] as the problem, and wanted to solve it well,” Fan Bao, chief technology officer at Shengshu, said in Mandarin, translated by CNBC.
Vidu launched in April and its ability to turn two profile photos into lifelike videos of people hugging went viral on TikTok.
The AI video generator is already making money from advertisers, animators and other businesses, Shengshu co-founder and CEO Jiayu Tang said in Mandarin, according to a CNBC translation. He said monthly usage rates per customer can range from 100,000 yuan to 1 million yuan ($13,871 to $138,711).
To address copyright issues, Tang said a company might sign a deal with an artist that allows the AI to mimic the artist’s style of painting for an advertisement. He said he hadn’t seen significant legal cases around consumers’ use of images.
Tang added that Vidu doesn’t allow the public to generate content using images of celebrities or “sensitive” individuals. He said the AI tool also bans nudes and violent images. As for personal photos, Tang said Vidu destroys the data in accordance with general data protection regulation — a global benchmark.
Shengshu was founded last year with backers including Baidu Ventures, Alibaba-affiliate Ant Group, Chinese startup Zhipu AI, Qiming Venture Partners and Beijing city, according to PitchBook.
Tang said Vidu’s AI runs off rented cloud servers in China and abroad.
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