As well as some eye-popping numbers, Single’s Day in China helped bust some pervasive myths around emerging market investment.
- Single’s Day was a great success, breaking sales records
- It shows that emerging markets are developing in their own way rather than following a developed market path
- It also shows that emerging markets are every bit as innovative as developed markets
Single’s Day – the most important shopping day on the Chinese calendar - exceeded all expectations. There was 39% growth on last year in gross merchandise volume for Alibaba. That is equivalent to RMB168bn or US$25bn of goods bought in one day, double the US-wide equivalent (between Thanksgiving and Cyber Monday). Investors should take note – it destroys some persistent myths about emerging markets….
- That they are just like developed markets, but earlier – ‘emerging’ gives the impression that there is a smooth and predictable trajectory to ‘developed’. Suddenly citizens get cars and fridges and microwaves and start to look just like the US. But Single’s Day shows that emerging markets are developing in their own individual way – bypassing the high street, for example, and moving straight to ecommerce.
- Innovation is a US-thing – The US no longer has a monopoly on developing new technology. In fact, four of the world’s top 10 start-ups were founded in China. Patents are being registered at break-neck speed. In certain industries, emerging market companies have stolen a march on their developed counterparts.
- Emerging market companies are badly run – Certainly, there are still some state-owned enterprises that are not necessarily run in the interests of shareholders, but there are plenty of companies with strong business models that are run for long-term growth. Alibaba is a credible rival to Amazon and some even suggest that it has a superior business model.
- They are dependent on global markets – China’s ecommerce market is twice that of the US. Companies don’t need to be in the US to make it big. There is increasing intra-emerging market trade and less reliance on trade from developed markets. This means emerging markets are less vulnerable the ebb and flow of global trade.
