China’s 618 Festival: A Boost for Consumer Spending
China's mid-year 618 shopping festival showed promising signs of a consumption rebound this year. According to retail data, the festival's gross merchandise value (GMV) climbed by 15.2% year-over-year, reaching an estimated 855.6 billion yuan ($119 billion). This surge points to growing consumer confidence and increased retail activity compared to the previous year’s decline.
Categories Driving the Surge
Shoppers demonstrated strong enthusiasm for consumer electronics, beauty products, and pet care items throughout the festival. Notably, Beijing’s trade-in subsidy program accelerated sales in specific sectors, especially household appliances, which generated 110.1 billion yuan in sales. Beauty and skincare products also performed strongly, posting sales worth 43.2 billion yuan.
Record Participation Amid Extended Promotions
Major platforms like JD.com, Alibaba’s Taobao, and Tmall reported robust participation rates. JD.com revealed that between May 30 and June 18, the number of shoppers more than doubled compared to last year, setting a new record. The platform processed over 2.2 billion orders across its various channels, including online, offline, food delivery, and quick commerce.
Extending the promotional period from May 13 to June 18, a week longer than the previous year, retailers aimed to maximize consumer engagement. However, despite the strong start, sales momentum tapered off toward the end of the festival as some provincial governments exhausted their funds for trade-in subsidies.
Government Incentives and Technology Fuel Spending
The government’s trade-in subsidy scheme played a crucial role in encouraging purchases of consumer electronics and household goods. Online giants Taobao and Tmall saw sales in subsidy-eligible categories more than triple compared to last year’s Singles’ Day festival period.
Additionally, Alibaba leveraged artificial intelligence to enhance shoppers’ experiences. Taobao’s AI-powered image-to-video function and advanced marketing algorithms improved campaign returns by an average of 12%, contributing to stronger sales performance.
Interest in pet care also soared, with the first 100 minutes of sales on pet products surpassing the total sales recorded in the first four hours of last year’s 618 festival.
Encouraging Broader Consumption Trends
Beyond the festival, official data revealed a 6.4% year-on-year increase in national retail sales for May—the fastest growth since December 2023—surprising investors and signaling overall economic resilience.
Industry experts noted a particular uptick in spending on apparel, cosmetics, and beauty products. Companies specializing in helping foreign brands enter China observed a roughly 14% GMV growth during the 618 period, aligning closely with official figures.
Challenges of Extended Festivals
Despite the positive momentum, concerns linger about the potential downsides of stretching promotional events over several weeks. Analysts warn that prolonged discount periods might exhaust consumers’ interest and reduce the urgency that typically fuels bursts of spending during shorter sales windows.
Some regions have already paused their trade-in subsidy programs due to budget limits. According to industry observers, around a third of China’s mainland provinces have suspended these incentives, suggesting that sustaining such stimulus measures long-term poses challenges.
Looking Beyond Subsidies
Unlike handing out direct cash payouts, Chinese authorities are focusing on targeted subsidies for consumer goods and incremental employment support to stimulate domestic demand. Experts suggest that both the government and retailers must explore more inventive methods to keep fueling consumption growth in the future.
What Comes Next?
With the government reportedly gearing up for further consumer incentives as early as July, the retail landscape in China remains dynamic. However, balancing effective stimulus with healthy market dynamics will require careful planning and novel strategies beyond extended shopping carnivals.
China’s 618 festival illustrates an encouraging rebound in consumer activity, driven by subsidies, technology, and a booming appetite for electronics and lifestyle products, though the sustainability of such growth invites caution.
