Singles Day Sales Reaffirm China’s Consumer Power

‘Singles Day’ is likely the most important day for online shopping. It’s a day for young Chinese to be proud of their single status. And what better way to celebrate than to buy something extra special.

During the festival, Alibaba Group Holding [NYSE:BABA] continues to set records for payment transactions. In 2017 the online giant broke records yet again. During Singles Day this year, up to 325,000 orders were processed in the first hour of trade, 90% of which was through BABA’s portal, Alipay.

In the first hour, some 60 brands generated more than US$15 million in sales. Many of the most desirable products were sourced from Australia. We ranked as the third largest selling country this year.

Australian companies help break records in China

As reported by The Australian Financial Review:

Australian pharmacy Chemist Warehouse was once again one of the most-loved Australian retailers, breaking its own record last year of $17 million seven hours after trading started, chief executive Damien Gance said. Final numbers have not been released.

“We are happy with our Singles Day results. We exceeded last year, and enjoyed solid growth. Singles Day and China online retail remains a logistical challenge but one we are learning to manage,” he said.

Popular brands that sold on Chemist Warehouse’s Tmall platform on Alibaba include Swisse, Bio Island, Cenovis, Ostelin, Goat and Lifespace, Mr Gance said.

Piggybacking on Singles Day, Chemist Warehouse also rolled out 11 per cent website discounts locally in Australia.

Interestingly, local Chinese-backed businesses, particularly residential developers, have also jumped on the bandwagon to flog off new off-the-plan apartments. New apartment sales have slowed locally on the back of slowing investor buying, forcing developers to apply occasional discounts.

Opportunity in China for Aussie Businesses

If this isn’t another sign of the opportunity China’s middle income class provides Australian businesses, I don’t know what is. China is rapidly growing their urban population. They’re pulling millions of people out of poverty.

By 2022, McKinsey & Company believes 76% of China’s urban population could move into this middle-income bracket. They’ll have higher disposable incomes to spend on brands, international products and lifestyle goods.

Investing in businesses profiting from China’s massive consumer base could put a rocket under your returns. We’ve already seen companies like a2 Milk Co Ltd [ASX:A2M] and Blackmores Ltd [ASX:BKL] rise more than 245% and 60% respectively this year thanks to their ties to China.

Of course, not every business selling to China will be successful. But it’s an opportunity that you should monitor over the coming years.

Cheers,

Härje Ronngard,

Junior Analyst, Markets & Money

PS: There are opportunities in the market if you know where to look. But there are also a lot of overvalued stocks as well. Award-winning financial adviser Vern Gowdie has written a report detailing the five stocks you may not want to own right now.

To find out if you hold these stocks in your portfolio, click here.


Harje Ronngard is a Junior Analyst at Markets and Money. With an academic background in finance and investments, Harje knows how simple, yet difficult investing can be. He has worked with a range of assets classes, from futures to equities. But he’s found his niche in equity valuation. It’s not good enough to be right on average when it comes to investing. The market is volatile and it only takes one bad day to ruin your portfolio. You don’t want to end up like the six foot man that drowned in the river that was five foot deep on average. It’s why Harje is constantly reminding investors of their downside risk here at Markets and Money. He does so by simply asking just two questions.  What is it worth? And how much does it cost? These two questions alone open up a world of investment opportunities which Harje shares with Markets and Money readers. Right now Harje is focused on managing research and investments over at the Legacy Portfolio. An investment publication designed to significantly grow investor’s wealth over time with deeply undervalued businesses. Harje also contributes his insights in Total Income, headed by income specialist Matt Hibbard. Harje loves cash-rich businesses, so he feels right at home amongst Matt’s high yielding income plays.


Leave a Reply

Your email address will not be published. Required fields are marked *

Markets & Money