China: shopping and economics

When I’m on the road, one of the things I love the most is getting first-hand exposure to different cultures. I’m in China this week to launch an important new report, China Outlook 2018 – A new era, a new paradigm of globalization, which looks at what China’s ‘new era’ will mean for investment into and out of China in 2018 and beyond. I will also be meeting with our Beijing team and a number of clients while in the country. It has been extraordinarily impressive to watch China as it transitions to an economic model driven more by consumption and innovation, all while continuing to grow at 6.5 to 7 percent each year. It is also one of our most important markets – KPMG China has grown in a few short years to around 12,000 people in 16 cities across China.

Business in China, and consumer trends specifically, is an interesting case study, especially when we compare this to the North American economy.

Let’s look at shopping as one example. During China’s Golden Week from 15-21 February, Chinese consumers this year spent close to US$150 billion. By way of comparison, in North America, the busiest shopping day of the year is “Black Friday,” the day after the US Thanksgiving holiday – and in 2017 total online consumer spending for the day was over US$5 billion. And this doesn’t even include the volume of in-store sales.

The Monday after Black Friday has spawned an online equivalent in North America called ‘Cyber Monday’ – in 2017 it generated an online shopping spree to the tune of about US$6.6 billion. But in China, Cyber Monday is now dwarfed by the relatively new online shopping phenomenon called “Singles’ Day.” It was started by Alibaba in 2009, targeting upwardly mobile young adults in China who wanted to treat themselves in celebration of being single. Every 11 November (chosen for the date, having four “1s” representing being single), retailers across China amp up their discounts and ring through near-unimaginable volume of products over the course of one day. Revenue for all retailers during the 24 hours of Singles Day 2017 was US$38 billion, clocking in more than 250,000 transactions per second.

The celebration of Singles Day has gone mainstream in China, not unlike Black Friday in North America. The massive consumer spending over Golden Week and on Singles Day are prime examples of the progress China has made in transitioning its economy and growing the middle-class. Investment in infrastructure and the ambitious “Belt and Road” Initiative are helping spur greater inbound and outbound investment, which will serve to further strengthen the economy.

I’m excited to see the great progress being made each time I visit China – and proud of the contribution my KPMG China colleagues are making to the next stage of China’s economic development.