For the first time in eight years, Chinese merchants reported a drop in 618-day sales. On June 18, 2024, mid-year sales fell by 7%. In response to the weak data, Alibaba (BABA), JD.com (JD), and PDD (PDD) fell. PDD is an outlier to the bad news. Not only does PDD not reveal its 618 sales, but it pivoted its business away from China.
PDD’s Temu is growing in Europe and the U.S. More recently, the U.S. tightened its enforcement on low-value e-commerce trade. The U.S. Customs and Border Protection will crack down on Temu sales. PDD changed its packaging (removing the bright color) to help get its products across the border.
JD Founded 618
JD needed a strong 618 sales event to compete more effectively against Alibaba and PDD. The heavy discounting from JD and Alibaba’s Tmall, however, is a race to the bottom. U.S. firms like Apple (AAPL) might benefit. Apple cut iPhone sales by as much as 20% on the JD.com and Tmall e-commerce sites this year.
China’s economy is too weak. Manufacturing activity is slumping after Western firms de-risked their operations. They moved some of the production to neighboring East Asian countries. As a result, weak Chinese consumer confidence hurt sales on 618 day.
Last week, JD lost 4.4%, PDD dropped by 4.77% and Alibaba fell by 2.66%.
