Asset Classes

Free investment financial education

Language

Multilingual content from IBKR

Close Navigation
Learn more about IBKR accounts
Chinese Retailers Made Expensive Bets On US-Focused Advertising

Chinese Retailers Made Expensive Bets On US-Focused Advertising

Posted March 8, 2024 at 10:15 am
Theodora Lee Joseph, CFA
Finimize

What’s going on here?

Chinese retailers made expensive bets on US-focused advertising, but Google and Meta should be wary about trusting their newfound hands.

What does this mean?

The head honchos in the US and China might be keeping their distance from each other, but Chinese retailers seem as keen as ever on stateside shoppers. Digital marketplace Temu, fast-fashion empire Shein, and video streaming and gaming platforms have been funneling cash into ads on Facebook, Youtube, and X (formerly Twitter). No wonder: China’s economic problems have convinced local shoppers to keep their money firmly in their wallets. So Temu alone spent nearly $2 billion on ads, determined to bring in customers from the land of the Red, White, and Blue – enough to become one of Google and Meta’s biggest advertisers. In fact, Meta said that 10% of its ad revenue comes from Chinese brands now, up from 6% just two years ago.

Meta's China revenue (in billion US dollars)

Why should I care?

Zooming out: It’s tough to run a small business.

Meta and Google have been struggling to bring in their usual buckets of ad money, with Apple’s tightening policies making it harder for them to target folk with MI5-level algorithms. This recent rush of Chinese business is just what they need, then. Plus, now that Meta and Google can afford to up their prices, smaller players like Etsy have to cough up more for the same coverage.

The bigger picture: Temu’s far from reliable.

Big Tech can’t relax yet, mind you, because Temu’s spending habit might not stick. They’ve seen that before: Wish – an American ecommerce company that sells cheap products made in China – used to line social media companies’ pockets, but then it suddenly cut back. Temu could do the same. The platform reportedly loses $7 on each order, compromising profit to make a name for itself, so it could feasibly switch into money-saving mode without a moment’s notice.

Originally Posted March 7, 2024 – Chinese Retailers Made Expensive Bets On US-Focused Advertising

Join The Conversation

If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.

Leave a Reply

Disclosure: Interactive Brokers

Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Finimize and is being posted with its permission. The views expressed in this material are solely those of the author and/or Finimize and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

IBKR Campus Newsletters

This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.