China’s zero Covid policies is equal to bad sales on Chinese e-Commerce platforms.
Many brands in China have seen revenues decrease in China, du to lockdown, and logistics problems.
How tough is the situation for top Brands on Tmall .
While it is a temporary situation, after that, Chinese will spend more
Source Kunfu data
JD suffers from the terrible Impact
The CEO of China’s top e-commerce company, JD, has pointed out the economic impact of China’s current COVID-19 lockdowns – and the news is not good.
Speaking on the company’s Q1 2022 earnings call, JD Retail CEO Lei Xu said that the first two years of the COVID-19 pandemic had brought positive effects for many Chinese e-tailers as buyer behaviour shifted to online purchases.
But Lei said the current lengthy and strict lockdowns in Shanghai and Beijing, plus shorter restrictions in other large cities, have started to bite all online businesses as well as their real-world counterparts.
JD’s own performance supported his assertion: across its retail, logistics, and e-tail for brands platform Dada, revenue grew 18 per cent year on year to $37.8 billion, but that was the company’s slowest-ever growth for the quarter ending March 31st.
China’s lockdowns have tightened since, meaning Q2 impact could be more substantial. On the company’s earnings call, Lei said April saw JD struggle to arrange deliveries, leading to increased cancellation rates as customers bailed from purchases.
Merchants and brands have lowered budgets and focussed on remaining profitable, the CEO added. Securing stock has also become problematic for some.
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Zero Covid Policy
Pointing out that Beijing’s zero-COVID policy is bad for business is perhaps a bold choice for the CEO, as when Alibaba boss Jack Ma protested the cancellation of a share market listing he dropped out of public view for months. While he has re-emerged, his commentary has been less edgy, and less voluminous, ever since.
The CEO may avoid that kind of censure because lockdowns seem set to see China miss its 5.5 percent GDP growth target, and he has not complained about a regulatory decision like Alibaba’s Ma. source
But combined with observations like Chinese chipmaker SMIC’s view that semiconductor demand hasdropped like a rock, China’s tech ecosystem clearly faces significant challenges at this time. Yet Beijing remains has shown no sign of departing from its zero-COVID stance, and continues to crack down on complaints about enforcement tactics used to implement the policy.
Cross border initiatives
A vice commerce minister of China has applauded cross-border e-commerce companies for lowering international trade thresholds.
A host of Chinese micro and small enterprises have become pioneers in cross-border e-commerce by making use of online technologies and finding opportunities in the advancing digital economy in recent years, Sheng Qiuping said at a press conference today.
Import Top e-Commerce Initiaitves
The Covid-19 pandemic has prompted more shoppers around the world to go online. And Chinese sellers are ready to serve. More than 30,000 firms have registered on China’s pilot service platform for cross-border e-commerce. Still, the trend has been upward for a while. Over the past five years, China’s related imports and exports increased by nearly 11 times to reach CNY1.92 trillion (USD287.4 billion) last year.
Cross-border e-commerce is breaking free from time and space constraints, said Sheng. It reduces intermediate trade links and solves the problem of information mismatch between supply and demand, he added. China has signed a memorandum of understanding with 23 countries to cooperate on online shopping regulations.
In turn, digital marketplaces have been enriching domestic buyers’ shopping options. In recent years, various countries’ ambassadors to China have actively promoted local products via live-streaming shows, including some popular products such as Himalayan salt from Pakistan and Bulgarian rose water for skincare.
Logistic’s Problems are impacting e-Commerce
A mixed bag of circumstances and time horizons are creating diverging narratives about whether shipping delays stemming from the shutdown of Shanghai and other Chinese cities are getting better or presage massive supply chain gridlock.
There is no sign that Shanghai’s lockdown is easing anytime soon. Footage on social media shows steel fences being installed on public roads and inside residential compounds to keep people from traveling to other districts and moving in neighborhoods. On Monday, the Shanghai Health Commission reported 2,472 new positive cases of COVID-19, up from 1,401 the previous day. Total daily case levels exceed 30,000. Fifty-two people died Monday of COVID, according to the China Daily.
While some cities in China, including Guangzhou are loosening COVID restrictions, rising COVID cases in Beijing are sparking fears the Chinese capital and other cities could join Shanghai, Suzhou and other major cities in lockdowns. Kunshan, a technology manufacturing hub west of Shanghai, has extended a lockdown, which began on April 2, to April 28. Several districts in Hangzhou, home to e-commerce giant Alibaba, began a lockdown on April 23, with mass testing being carried out for three days. source
Based on current trends, China watchers say lockdowns won’t begin to ease until mid-May or possibly June as the government maintains its zero-COVID policy.
In some ways the logistics situation sounds manageable. The Port of Shanghai, the largest container shipping gateway in the world, has remained in operation. Wait times for export loadings are only about two days and the 12 days it takes to pick up an import box is below wait times for other COVID-related disruptions in China since 2020, as American Shipper reported Thursday. The daily number of vessels waiting for a berth has actually fallen since the lockdown began nearly four weeks ago and there is limited congestion from redirected cargo at other ports.