Record-Setting Singles Day Sales Are Overshadowed by New Regulations

Alibaba and JD’s Blockbuster Sales

Alibaba (BABA), the Chinese ecommerce giant, set a new record of $75 billion in sales with its annual Singles Day shopping event. Usually the event is one day, on November 11, but this year it started November 1 and is finishing up today. Singles Day is a huge event for ecommerce companies in China like Alibaba, JD.com (JD), and others. It typically generates more sales than Black Friday and Cyper Monday in the US combined. This year it has been bigger than ever for several reasons.

The COVID-19 pandemic has spurred more Chinese consumers to shop online—not just in cities but also in less populated areas. Now, as the country’s economy recovers, people are sticking to ecommerce habits formed during lockdowns and they have more disposable income. Chinese ecommerce platforms are also incorporating more foreign brands into their offerings, as consumers in the country are unable to travel abroad to shop. The combination of these factors has led to a record-setting Singles Day.

New Antitrust Regulations

The blockbuster sales day has been overshadowed by proposed antitrust regulations from Beijing. For some time, certain antitrust laws in China have only applied to the country’s physical economy, not online businesses.

The new regulations would update current laws to reflect the country’s changing economy and the shift to more ecommerce. For example, the new laws would alter how courts determine market share, taking data like user base and page views into account. Alibaba and JD.com could face much stricter regulations. The laws could also impact Chinese social media company Tencent (TCEHY), the food delivery platform Meituan (3690:HK), and rideshare company Didi Chuxing.

A little over a week ago, antitrust regulators in China caused Ant Group, an online payment company and a spinoff of Alibaba, to suspend its IPO. Companies and investors see this as another sign that Beijing may be shifting its outlook on how the Chinese tech industry should be regulated.

Investors Respond

The new laws are under public review until the end of November. Despite the good news about Singles Day, investors in the Chinese tech industry seem concerned.

The announcement about the new laws caused shares of Alibaba and JD.com to tumble. Alibaba’s US shares fell 8% on the news, which is equivalent to $60 billion. The company’s Hong Kong-listed shares were down 9.8%. JD’s US and Hong Kong shares fell 5% and 9.2%. The Hang Seng Tech Index in Hong Kong, home to a number of Chinese tech stocks, tumbled 5% on Tuesday.

Tech companies around the world are facing antitrust battles. Though investors have been carefully monitoring talks between US tech titans and lawmakers, they will now also be watching to see how decisions in Beijing impact Chinese tech.

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