China’s struggling e-commerce sector

While the “zero covid” policy is still in effect in Chinathe economy of Chinese e-commerce companies bat wing. China is largest e-commerce market in the world with estimated sales of $6.1 trillion in 2021. However, analysts are wondering this year about the ability of Chinese companies to recover.

Sharp slowdown for Chinese e-commerce

According to research firm Insider Intelligence, e-commerce sales in China is expected to increase by only 9.1% in 2022. If these predictions are confirmed, it would be smallest increase since 2008. To understand what is happening, it is important to look about the company’s latest results of this environment.

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During the month of August, Alibaba and JD.com, two e-commerce giants published the thin swing of the second quarter of 2022. JD.com indicates (PDF) to have registered your weakest growth between April and June 2022, with an increase of 5.4% of its turnover compared to the same period in 2021. As for Alibaba, it displays (PDF) a small but significant decrease of your recipes by 0.1%. Pinduoduo (PDF) is The only exception among companies in this sector. Thanks to your low-cost product offeringyour billing increased 36%.

During a call with its investors, Daniel Zhang, Alibaba’s general manager, specifies that the Chinese giant suffered the full force of restrictions imposed by the Chinese government. ” Although we are seeing signs of a return to normal consumption levels on our websites [Taobao et Tmall]I think that will still take for this to fully materialize and for consumer confidence to recover » reports the street newspaper.

Companies in this sector suffer from the comparison with previous years, punctuated by confinements and restrictions linked to Covid-19. E-commerce companies have seen your activity increases significantly during this period before slowing down when the pandemic ended.

Changing consumer habits in China

By sticking to its “zero covid” policy, Beijing is forcing Chinese businesses and consumers review your consumption habits. A necessary change when inflation and unemployment rate are rising. These last Food store for possible containment. The growth of JD.com’s supermarket category has already increased by 25% in the second quarter compared to the previous year. To help its people, the Chinese government distributed, at the end of August, 200 million yuan, equivalent to 29 million dollars in digital coupons that can be exchanged for basic needs.

In addition to food, the inhabitants of the Middle Kingdom invested in for your well-being, animal welfare, outdoor activities and your home improvement. Alibaba noted that these items were bought more at the expense of fashion clothing and accessories.

Ready-to-wear isn’t the only sector neglected by Chinese consumers. The demand for electronic objects like smartphones, smart TVs, refrigerators and air conditioners dropped 11% since the beginning of the year based on data from Beijing.

WPIC, a consulting firm that offers its services to Chinese e-commerce companies, also highlights a significant increase in camping equipment in the last six months. On Tmall, Alibaba’s direct shopping site, this increase is 70% compared to the same period in 2021. This type of articles also experienced Significant popularity in Douyinthe Chinese version of TikTok, which saw its benefits for the sale of these products Double.

For Fitch Ratings, a financial rating agency, online sales in China will represent 29% of total retail sales in 2022. This remains significantly above the expected sales forecast in the US, about 15%This is it despite the difficulties encountered by the Chinese industry of e-commerce. If for Karl Shen, head of Chinese business research at Fitch Ratings, this pace is set to slow down following the easing of anti-covid restrictions, JD.com General Manager Xu Lei is not of the same opinion. he waits for a strong momentum of economic recovery once out of the “zero covid” policy.

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