JD.com touts Singles’ Day sales despite China deflation concerns

ONE of China’s biggest e-commerce platforms said it generated record sales during the country’s massive annual online shopping gala, belying concerns that persistent deflation is discouraging consumers from spending in the world’s No. 2 economy.

JD.com said orders surged nearly 60 per cent during this year’s Singles’ Day event, though it didn’t disclose the transaction values in a statement posted on its WeChat social media account. The company also reported a 40 per cent increase in shoppers, compared with a more than 20 per cent rise last year.

Investors for years have scrutinised business during Singles’ Day - a festival of online bargains that dwarfs Cyber Monday and Black Friday in scale - for clues about China’s economy and domestic consumption rates.

Larger rival Alibaba Group hasn’t released any data on how it fared. Last year, neither of China’s two biggest e-commerce players disclosed gross merchandise value, or the sum total of transactions. 

“JD.com is China’s indisputable leader online in selling ‘3C products’ – computer, communication, and consumer electronics — the main categories enjoying consumption subsidies from the government,” said Neo Wang, lead China macro analyst at Evercore ISI in New York. “Consumers may have been rushing to take advantage before the money runs out, with the subsidies set to expire on Dec 31.”

JD.com’s American depositary receipts rose 0.6 per cent on Tuesday, snapping a three-day decline. Alibaba shares dropped 3.1 per cent in US trading to the lowest level in more than a month.

Separately, Xiaomi Corp. said total payments for its products topped 29 billion yuan (S$5.3 billion).

The jump in sales came after China’s consumer prices unexpectedly increased during the October holidays when travel, food and transportation boosted demand. But last month’s pick-up in prices is seen by many economists as likely fleeting.

Persistent deflation encourages consumers to delay purchases, increases the debt burden and reduces profit margins, raising the risk of a downward spiral of weaker spending and lower investment. 

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The country has faced deflationary pressures in recent months, recording declines in prices for August and September. Its GDP deflator - the broadest measure of prices - has been in decline for over two years, the longest streak since the quarterly data began in 1993. 

In JD’s case, its sales may have been supported by the company’s overseas push.

Both transactions and orders gained more than 100 per cent from last year in countries including Japan, South Korea, Singapore, Malaysia, Thailand and Australia, according to the company. Sales tripled in the 13 foreign markets where it provides free delivery. BLOOMBERG