Wallets ‘bleed out’ as the world’s largest shopping festival kicks off

“A war is afoot”, “hand chopping”, “bleed out” and “killing spree” — these seemingly violent terms are frequently seen on Taiwan’s news pages and social media posts at this time of year, every year.

The “war” is between e-commerce sites.

“Hand chopping” is internet slang for spending money. “Bleed out” is what happens to one’s wallet after too much “hand chopping”.

“Killing spree” is a relatively easy guess. It means shopping spree.

That’s because the November 11 Singles’ Day shopping festival has begun, when brands and e-commerce sites offer generous discounts to lure customers for year-end spending, similar to Black Friday sales in Western countries.

The Singles day — so called as the digits of the date symbolise “bare stick”, or bachelor, in Chinese slang, was originally a humorous, self-deprecating celebration of bachelorhood.

But in 2009, Chinese e-commerce giant Alibaba’s online shopping platform Taobao reinvented it into a lavish shopping festival, which quickly gained cultural and economic significance within China and has since spread to Taiwan.

And this year, facing fierce competition in China amid sluggish economy, Taobao is establishing a new front in the Singles’ Day war in Taiwan.

However, with the threat of real conflict between China and Taiwan looming, some fear Taiwanese consumers’ embrace of the Chinese shopping sites could have security implications.

Millions spent subsidising shipping

In October, Taobao announced a $NT2 billion ($94 million) package to subsidise shipping, handling and tax for customers in Taiwan.

Taobao has also been enhancing the shopping experience for Taiwanese customers.

Previously, shopping on Taobao was a complicated process for buyers in Taiwan, as they often had to rely on third-party shipping services to receive purchases in China and forward them to Taiwan.

However, Taobao has now introduced direct shipping options for a wide range of products on its platform, making the process almost identical to purchasing from local e-commerce sites in Taiwan.

Jolin Shen, a 29-year-old mother of two, told the ABC she had already made several purchases for this year’s Singles’ Day shopping festival, which starts in late October.

She first shopped on Taobao nine years ago with the help of a third-party shipping service.

“At first, I was attracted to Taobao because of the price,” she said.

“Now, Taobao is also very convenient. Sometimes it takes less than a week to receive my item.

“It’s cheaper too.

“The same item from the same brand can cost as little as 50 per cent of what is sold here in Taiwan.”

Alibaba after Jack Ma

The past four years have been turbulent for Alibaba, once a beacon of China’s formidable tech prowess.

In late 2020, Chinese authorities abruptly called off what would have been the world’s largest initial public offering from Ant Group, a fintech affiliate of Alibaba.

The move, just after the resignation of Alibaba’s founder Jack Ma, was the beginning of a broader crackdown on the country’s tech industry.

It saw Alibaba’s share price plummet by 70 per cent from its peak and a forced restructuring of the group into six independent business units.

Now, Taobao, once China’s dominant e-commerce leader, faces new competitors like TikTok and PDD (Temu’s parent company), which have also achieved significant success in the international market.

In May this year, PDD overtook Alibaba in market cap to become the most valuable e-commerce company in the world’s second-largest economy.

China is also experiencing the worst economic crisis since its economic liberalisation, with consumer spending remaining stubbornly conservative.

In a break from tradition, Taobao hasn’t published detailed Singles’ Day sales figures since 2022.

Last year, Taobao only saw a 2 per cent growth year-over-year.

“The Chinese economy is struggling right now,” said Guochen Wang, an assistant research fellow at the Chung-Hua Institute for Economic Research.

“People aren’t spending enough.

Breaking into Taiwan’s market

However, Mr Wang said he had concerns about Taobao’s presence in Taiwan and its implications for Taiwan’s national security.

“Taobao’s strategy is to lure customers over with generous subsidies,” he said.

“It will be able to gather enormous data on Taiwanese customers, from addresses to spending habits.

Neither Alibaba nor the Taiwan government responded to the ABC’s request for comment.

Taobao has previously made attempts to enter Taiwan as Taobao Taiwan, a local branch of the UK-registered Claddagh Venture Investment.

In 2020, Taiwan’s Investment Commission found that the company was “in effect” controlled by Chinese company Alibaba, in violation of the island’s law governing Chinese investments.

In Taiwan, investments from mainland China face far more stringent regulations compared to other nations.

The commission gave the company six months to divest, register as a Chinese company, or leave the island.

It also expressed concerns over how user data is handled, saying the company’s user agreement and privacy policy were linked to that of Taobao’s for its global users, which would grant Alibaba access to Taiwanese users’ data.

In October 2020, Taobao Taiwan announced it would shut down its operation and laid off Taiwanese employees, citing “multiple uncertainties in the market”, without elaboration.

While not having a local entity would bar Taobao from enhancing market penetration through localised services, logistics, and compliance flexibility, it doesn’t deny Taiwanese access to Taobao.

Taiwanese customers now make purchases on Taobao’s main website and mobile app by switching their user location to “Chinese Taiwan”.

“Chinese consumers can’t access Taiwanese websites and make purchases due to the Great Firewall.

“But their websites can freely operate here in Taiwan because we are a free country.”

Shoppers less concerned

When asked if she had concerns about data security, Ms Shen told the ABC said she didn’t think people cared that much.

“Most things you buy on Shopee are actually second-hand imports from Taobao,” she said, referring to the Singaporean e-commerce site that has become the biggest in Taiwan.

“Not to mention there’s so much cross-strait trade going on.

“If they want data, they have many ways to get it.

“If it really is that big of a threat, I’m sure the authorities would have banned Taobao by now.”

Hau Yu Wang owns a business that sells socks, underwear, and other textile products, mostly made in Taiwan.

He said Taobao’s foray into Taiwan would have a profound impact on local businesses.

“Low-to-mid-tier value manufacturers and merchants are bearing the brunt of the impact,” he said.

“You can’t be going to war with China while importing military uniforms from them at the same time.

“The government needs to protect the local industry against China.”