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Despite Deep Discounts during Major China Shopping Festival, Consumption Remains Soft, Say Analysts

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Chinese Consumers Snap Up Goods in Major Online Shopping Festival, But Confidence Remains Weak


Chinese consumers purchased goods worth billions of dollars in China's major online shopping festival. The festival, which was held from the end of May until June 18 on major shopping platforms, saw merchants giving steep discounts in hopes of boosting sales and combatting weak consumption rates. Despite these efforts, however, analysts report that consumer confidence still remains weak.

Consumption Rates Stagnate

Although e-commerce platforms, such as JD.com, Tmall, Taobao, and Pinduoduo, offered billions in subsidies and incentives to consumers, consumption rates stagnated. Experts attribute this to a mix of factors such as geopolitical issues, continued weaknesses from Covid-19, and domestic Chinese politics. Shaun Rein, founder and managing director of the China Market Research Group in Shanghai, affirms this, mentioning that consumers were less likely to spend more during the festival as merchants had already been heavily discounting prices for years.

Price-Consciousness and Soft Consumption

Rein also states that Chinese consumers have been price-conscious, looking for deals and trading down across most product categories. Analysts suggest that the main cause of weak consumption was the impending pandemic and the uncertainty that ensued. However, regardless of the reasons for the lack of consumption, it remains a challenge for Chinese retailers to encourage customers to buy more.

Luxury Online Brands Make a Comeback

Despite overall soft consumption, sales in categories, such as cosmetics and luxury goods, saw an increase compared to the previous quarter. More luxury brands participated in this year's festival than ever before, as the sector in 2022 declined for the first time in five years amid China's strict "zero-Covid" policies and lockdowns that hammered retail spending. Brands like Moncler and Lemaire took part in the event for the first time. Many luxury brands also used this opportunity to launch new products and offer discounts. Burberry, Chloe, and Miu Miu had exceeded their total sales during the shopping festival a year ago within the first 30 minutes of the 618 festival at the end of May.


Chinese merchants offered steep discounts during the 618 shopping festival in the hopes of shoring up sales amid a weaker-than-expected recovery in consumption. Despite efforts, such as the "10 billion yuan subsidies" program by JD.com, consumer confidence remains weak due to a mix of factors. However, despite soft overall consumption, the sales in luxury goods saw an increase compared to the previous quarter, with participating brands seeing up to a 10-fold increase in sales over the previous year.
In conclusion, the weak consumption rates seen during China's 618 shopping festival highlight the challenges that businesses face in the current economic climate. While steep discounts were successful in enticing consumers to purchase luxury goods and cosmetics, overall consumer confidence remains low as a result of the pandemic and geopolitical issues. This has resulted in a shift towards price-consciousness, with consumers trading down across most product categories. For a new business looking to enter the Chinese market, it is crucial to understand these trends and adapt accordingly. A focus on offering value and competitive pricing may be necessary to attract customers in this price-conscious environment, especially for non-luxury goods. It is also important to bear in mind that overall consumption rates in China may remain stagnant for some time due to the uncertain economic and political climate. With careful consideration and strategic planning, however, there are still opportunities for new businesses to succeed in this challenging market.

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