Conversation with Alibaba CEO ZHANG Yong
(November 14, 2017) Beijing – Peking University, Guanghua School of Management and Chinese e-commerce giant Alibaba jointly held the “China’s Singles’ Day Shopping Holiday: New Economy & the Future of Chinese Consumerism” event on November 14, 2017 on the Peking University campus in Beijing. As part of this anticipated event, Guanghua Dean and financial expert, Dr. LIU Qiao, and Alibaba CEO, ZHANG Yong, sat down for a dialogue on China’s Singles’ Day, consumerism and the digital economy.
Here is a wrap-up of the most interesting points of discussion:
What are the economic implications behind China’s Singles’ Day Shopping Holiday phenomenon?
Prof. LIU Qiao: First, the sheer sales volume of 168 billion USD and 200 million transactions within 24 hours reflects China’s rapid economic development over the last forty years. It is also a testament to two significant developments since China’s Reform and Opening Up policy: increase in wealth among the Chinese population and strong infrastructure development. Over the past forty years, China’s per capita GDP increased from 200 US to more than 8,000 USD. Thus, leading to strong consumer demand. Further, China has made great achievements in infrastructure development, including 130,000 km of railway construction, 22,000 km of high-speed railways and 124,000 km of highway. These infrastructures lay the foundation that supports 812 million orders on Singles’ Shopping Day Holiday.
Second, the shopping holiday reflects the rise of consumers’ right and their participation in reshaping their desire for a better life. Selective consumption, as the starting point, provides consumer demand data to the supplier. New retail itself does not simply link together supply and demand, but rather starts from consumer demand and the use of big data, artificial intelligence, and other technical means, to reshape the industrial chain. How do we address the contradiction between the people’s need for a good life and unbalanced, inadequate development? Single’s Shopping Day Holiday is a starting point for consumers to express personalized needs at the retail end.
Third, the consumption power embodied in China’s Singles’ Shopping Day Holiday is of great significance to the future of China's economy. Over the past 40 years since Reform and Opening Up, China's economic growth has been mainly driven by investment. In recent years, the pulling effect of consumption on China's economy has gone beyond the two driving forces of traditional investment and export. The shopping holiday unleashed China’s huge consumer power, testing the limitations of Alibaba and the retail system’s operating capacity.
Changes in the retail side will force the integration of the supply chain, as well as the efficiency of the upgrade. The transformation from traditional investment-led growth to efficiency-driven growth is important for the future of China's economy. At present, China's total factor productivity is only 20% of the United States, there is still huge room for growth. Consumer power at the retail end will force the supply side to substantially improve efficiency and, thus, aid in that transition.
As the creator of China’s Singles’ Day Shopping Holiday, what is the original intention behind establishing the holiday nine years ago? What is the essence of the holiday?
ZHANG Yong: The holiday consumers together through a festive holiday. Now, the holiday has transformed into a global phenomenon and product. The holiday uses the Internet to meet the needs of the consumers; the holiday is the product of a social collaboration. In order to give consumers the best products and services on this day, each company must invariably input the best resources into the industry chain with each link actively participating.
Because of this day, consumer demand is heightened and businesses must ask themselves to operate at a higher level. You can compare the holiday to an Olympic game. For businesses, they need to employ technical and commercial training and cooperation in order to meet consumer demand. Businesses also must embrace the digital economy, which helps promote the economy as a whole and illustrates China as a role as an emerging, international power.
Third, consumers are able to express their will and preferences through their own actions and ultimately these preferences increase the efficiency of the entire industrial chain. Further, the holiday tracks changes in consumer trends that will bring more possibilities for businesses and the society.
The holiday has transformed from being purely Chinese to a global phenomenon. The holiday has no culture, background, or national boundaries; in the holiday, "everyone is a consumer."
Alibaba will continue to explore the path to being a value creation company. The company was born on the Internet and, in this digital economy era, the Internet has become a kind of infrastructure.
Prof. LIU Qiao: The shopping holiday is a new economic phenomenon that attracts worldwide attention. If Alibaba can realize the transformation from “big” to “brilliant,” it will release more potential. China has massive purchasing power and, thus, its strong consumer demand will reshape its business landscape from “Made in China” to “Made for China.”
How can we achieve a better life?
Dean LIU Qiao: Don’t waste time doing things you don’t really care about. The other is the pursuit of a higher level, the pursuit of happiness.
ZHANG Yong: Over these past several years, China’s shopping holiday has become a new phenomenon and a new engine to promote business. The most important thing is how to utilize the results of this day into sustainable, future development.