Trade war casts shadow on Black Friday business
Shopping spree continues for Chinese
Published: Nov 29, 2019 11:08 PM

Shoppers buy TV sets at a supermarket during a Black Friday sale in Sao Paulo, Brazil, on Thursday. Photo: AFP

Black Friday, which fell on November 29 this year, remains the busiest shopping day for US retailers. But while sales were up, there may be a mixed feeling, as the tariffs the US imposed on China have slashed their profits, and the long-discussed phase one deal poses more uncertainties on future sales.

Expectations for this holiday season are strong, as the US National Retail Federation expects a 4 percent increase in sales over last year. 

Discounts are also huge, and a jump in sales during the holiday season, a period which makes up nearly 40 percent of annual revenue for many retailers, may not lead to huge profits for US retailers, as the tariffs, which are now generally shared by retailers and Chinese exporters, might eat into more of their profits. 

"US retailers may have a 'forced laughter' during the holiday season, to not pass the rising costs to consumers. They have to bite the tariffs, and the more they sell, the more they bite," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Friday.

An analysis by Oxford Economics showed that profits for all retailers excluding Wal-Mart have been declining since October 2018, and at 6.7 percent is the lowest since 2010, Reuters reported.

"Distributors, US importers and we [exporters] are sharing and absorbing the rising costs by reducing some of our profits that are manageable for now," Ji Dongsheng, the manager of Yiwu Gusheng Costum Co, told the Global Times on Friday. "No one wants to pass the costs to consumers to 'cool' their shopping passion in this critical season." 

"However, if the tariffs reach 25 percent or more, we will quit the US market and turn to other countries we've been developing," Ji said.

Ji noted that the US was once his largest export market, accounting for 80 percent of total customers, but now the customers from the EU have been climbing.

Some also warned that the shopping spree might be "superficial" as consumers have a "pre-storage" mindset as they are concerned that a potential tariff hike might raise their living costs next year. 

Increasing Chinese presence

The US shopping season has also drawn greater attention from Chinese consumers whose strong purchasing power was fully demonstrated during China's Double 11 shopping festival, often known as the "Chinese Black Friday," but only much larger.

Black Friday and Cyber Monday are expected to generate $16.9 billion in sales this year, Adobe Analytics said. That compares to Chinese online shoppers spending 264.8 billion yuan ($38.3 billion) in this year's 24-hour shopping festival on November 11, an increase of 27 percent year-on-year. 

Data provided by Alibaba shows that on Monday, the first day of the Black Friday holiday shopping on its Tmall platform, sales was over 66 percent higher than the previous year.

Gift boxes of the Double 11 shopping spree. Photo: IC

The carnival involves more than 2,500 brands from more than 70 countries, including those from Europe, the US, Japan and South Korea, according to a statement Alibaba sent to the Global Times on Friday. 

In contrast, US consumer confidence has fallen for the fourth consecutive month, data released Tuesday by the Conference Board shows.

There might be downward pressure on the Chinese economy, but overall consumption in China continues to grow and is set to become the new driver of the country's economy, especially in lower-tier cities and rural areas, Bai said.

Eyeing China's vast potential, Amazon opened a pop-up store on China's e-commerce platform Pinduoduo. The US-based company closed its own Chinese online marketplace in July.

The store opened on Monday and will run until the end of December. Observers see this as the US giant's move to lure more customers in China's second- and third-tier cities. 

In the first three quarters of the year, China's cross-border e-commerce retail imports increased by more than 30 percent year-on-year, data from the Ministry of Commerce showed.