Nov. 11 is Alibaba’s biggest day of the year. Beijing rained on the parade

The Chinese government put a damper on the world’s biggest shopping event.

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Wednesday was supposed to be Alibaba’s best day of the year. Nov. 11 marked the second part of its gargantuan Singles Day shopping festival that is bigger than the U.S.’s Black Friday and Cyber Monday combined. The day started with the usual public relations bonanza, in which news outlets published eye-popping stats from the early hours of the shopping event. (Alibaba said shoppers had purchased $56.3 billion worth of goods as of 30 minutes past midnight.)

But the news soon collided with a continued selloff among Chinese tech stocks that followed Beijing’s unveiling of anti-monopoly regulations that could rein in Alibaba, an e-commerce giant, and its Internet peers.

The regulations, which are currently under review, seek to curb practices such as compelling vendors to sign exclusivity contracts, giving preferred treatment to customers who spend more, and requiring users to permit personal data collection.

In the two days since the antitrust rules were announced, Chinese tech stocks have lost a collective $260 billion in market value. Alibaba was among the worst hit; its Hong Kong–traded shares were down 10% as of the close of trading Wednesday.

Coming a week after Beijing halted the record-setting IPO of Alibaba’s sister company, Ant Group, the edict is another indication that the Chinese government is determined to curtail the enormous influence of digital behemoths like Alibaba and rival Tencent Holdings—after letting them grow at a blinding pace for decades.

The timing of the regulatory changes proposed by Beijing was a statement unto itself, since it encroached on Singles Day, the ultimate showcase of Alibaba’s sway.

Single shoppers

Singles Day—a holiday started by university students to counter Valentine’s Day—was co-opted by Alibaba in 2009 and spun into the world’s largest sales event, far outpacing Black Friday and Cyber Monday in the U.S.

The event has turned into a global spectacle, with Alibaba drafting U.S. celebrities like Pharrell Williams and Taylor Swift to perform at the all-night Singles Day Gala Alibaba hosts on Nov. 10. The tactic ensures that shoppers are engaged, awake, and ready to buy as soon as the clock strikes midnight. This year, Katy Perry performed at the Gala via live stream, owing to the onerous travel restrictions of COVID-19.

The huge shopping festival is normally held on Nov. 11—a date selected because its numeric representation is a group of single ones. But this year, Alibaba introduced a “Double” Singles Day event, providing a secondary sales period at the beginning of the month.

Alibaba CEO Daniel Zhang said the company made the change for a “number of reasons.” Alibaba wanted to give consumers “more time to browse” and give merchants “more exposure and selling opportunities” while “easing pressure” on the logistics infrastructure that supports Singles Day astronomical sales volume, he said.

Left unsaid is that Alibaba has a track record of reporting that every Singles Day has outperformed the last, with sales volumes growing by an average of 35% annually since 2014. The move to expand Singles Day in 2020 seems to be a guarantee that the trend continues, even in the midst of a pandemic.

“Singles Day has been a consistent forward-looking indicator of retail trends, as well as a guide to the health and outlook of the market. The impact of COVID-19 puts greater pressure on the day to make up for retailers’ lost sales in the first half of 2020,” said Jonathan Cheng, a partner at consultancy Bain & Company.

China’s economy has shrugged off the crippling effects of its COVID-19 lockdown early in the year. But retail sales have been slow to recover. According to the National Bureau of Statistics, retail sales returned to growth for the first time in August, at 0.5%, and then rose 3.3% in September over the year before. The economy overall grew 4.9% in the third quarter.

Doubling up

Singles Day 2020 could showcase a continuation of returning consumer confidence. A Bain survey finds that 40% of Chinese consumers intend to spend more during this year’s shopping festival than they did last year. But it’s difficult to parse Alibaba’s metrics, which are selected to highlight growth.

Last year, Alibaba said Singles Day sold $38.4 billion worth of goods, measured as gross merchandise value (GMV), on Nov. 11. The larger $56.3 billion tally for GMV Alibaba cited this year was accumulated over 11 days, reflecting Alibaba’s decision to introduce a new sales window to the festival.

The extended Singles Day will give Alibaba an impressive GMV figure to present investors even as the company’s share price tumbles. The tech giant’s stock has declined 20% from its peak at the end of October after the sudden halt of the mega-IPO of Ant Group, Alibaba’s financial affiliate.

Alibaba holds a 33% stake in Ant. The IPO was supposed to be record-breaking, much as Alibaba had hoped this year’s Singles Day would be the largest yet. But the messaging from Beijing is clear: Bigger is no longer better.

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