The CEO of China’s top e-commerce company, JD, has pointed out the economic impact of China’s current COVID-19 lockdowns – and the news is not good.
Speaking on the company’s Q1 2022 earnings call, JD Retail CEO Lei Xu said that the first two years of the COVID-19 pandemic had brought positive effects for many Chinese e-tailers as buyer behaviour shifted to online purchases.
But Lei said the current lengthy and strict lockdowns in Shanghai and Beijing, plus shorter restrictions in other large cities, have started to bite all online businesses as well as their real-world counterparts.
JD’s own performance supported his assertion: across its retail, logistics, and e-tail for brands platform Dada, revenue grew 18 per cent year on year to $37.8 billion, but that was the company’s slowest-ever growth for the quarter ending March 31st.
China’s lockdowns have tightened since, meaning Q2 impact could be more substantial. On the company’s earnings call, Lei said April saw JD struggle to arrange deliveries, leading to increased cancellation rates as customers bailed from purchases.
Merchants and brands have lowered budgets and focussed on remaining profitable, the CEO added. Securing stock has also become problematic for some.
Electronics sales rated a mention – for going south. Consumers are instead spending on food and healthcare, and deferring purchases of new mobile phones. JD’s sales across electronics and appliances fell 12 percent year over year.
Pointing out that Beijing’s zero-COVID policy is bad for business is perhaps a bold choice for the CEO, as when Alibaba boss Jack Ma protested the cancellation of a share market listing he dropped out of public view for months. While he has re-emerged, his commentary has been less edgy, and less voluminous, ever since.
Lei may avoid that kind of censure because lockdowns seem set to see China miss its 5.5 percent GDP growth target, and he has not complained about a regulatory decision like Alibaba’s Ma.
But combined with observations like Chinese chipmaker SMIC’s view that semiconductor demand hasdropped like a rock, China’s tech ecosystem clearly faces significant challenges at this time. Yet Beijing remains has shown no sign of departing from its zero-COVID stance, and continues to crack down on complaints about enforcement tactics used to implement the policy. ®
source: The Register