#Explainit: How China’s eCommerce players can navigate trade war volatility

The US-China trade war has ushered in a period of volatility for China’s eCommerce sector, prompting industry giants such as Alibaba to adopt new strategies and sustain consumer spending amid economic uncertainty fueled by tariffs.

This shift follows Alibaba’s announcement in March that its quarterly revenue had missed analysts' estimates. Meanwhile, PDD Holdings - owner of Temu - reported a 47% YoY profit decline in the first quarter, as the expiry of a US duty-free exemption for low-value imports squeezed margins, according to BBC.

The policy change, effective May, imposed 120% tariffs on such shipments, forcing Temu to halt direct-to-consumer sales from China to the US. Though tariffs were later adjusted downward, the lingering impact has compelled eCommerce leaders to rethink their strategies to safeguard growth.

For instance, Alibaba introduced initiatives such as its "Buy now, plan later" feature, allowing consumers to defer payments via instalments - a move aimed at retaining shoppers despite tightened budgets. The strategy appears to be paying off: During its 618 summer promotion, Alibaba’s online travel platform, Fliggy, saw a 25% YoY surge in GMV for promotional items.

A record six million travel products were sold, with merchants capitalising on flash sales and livestreaming to capture early summer demand. Over 30% of participating merchants doubled their GMV YoY, while brands hitting RMB10 million and RMB1 million sales milestones saw notable gains.

Yet the broader question remains: How is the trade war reshaping China’s digital marketplace, and what innovations are eCommerce giants deploying to keep consumers spending? MARKETING-INTERACTIVE turned to industry experts to explore. 

Check out what they had to say.

Click on each picture to watch a video!

1. Karen Ho, managing director, Assembly Greater China 

2. Jason Wong, general manager, investment products, Omnicom Media Group Hong Kong

3. Xen Chia, strategic marketing director, XGATE

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