‘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.
Junior Analyst, Markets & Money
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