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This article originally ran on CNBC on Nov. 11, 2020.

GUANGZHOU, China — Alibaba set a new sales record for the annual Singles Day shopping event, a feat that was overshadowed by a near 10% stock plunge caused by proposed new Chinese antitrust regulation.

Singles Day is typically a 24-hour shopping event in China that sees huge discounts across millions of products on e-commerce platforms run by Alibaba, JD.com and other players. It generates more sales than Black Friday and Cyber Monday in the U.S. combined.

But this year, retailers JD.com and Alibaba have extended the shopping event. It has run from Nov. 1 and will end at midnight on Nov. 12.

Alibaba said gross merchandise value (GMV), a figure that shows the total value of orders across Alibaba’s shopping platforms, surpassed 372.3 billion yuan ($56.42 billion) as of 12:30 a.m. Beijing time on Wednesday. That is the total since the shopping event kicked off on Nov. 1. That is more than the 268.4 billion yuan of GMV Alibaba recorded last year in a 24-hour period on Singles Day.

JD.com, Alibaba’s biggest rival, said transaction volume on its platform was 200 billion yuan as of 12:09 a.m. Beijing time on Wednesday. Again, that is a total from Nov. 1.

“We are probably going to be doubling last year’s 11.11 or maybe even more than that and this really shows that consumption habits have really moved online, not just in first tier (cities) but across the entire country,” Jacob Cooke, CEO of WPIC, an e-commerce tech and marketing firm that helps foreign brands sell in China, told CNBC.

Alibaba, JD stocks plunge

Despite the massive figures recorded by Alibaba and JD.com, both their share prices have taken a hammering.

That’s because the Chinese government has proposed new antitrust regulations.

On Tuesday, Alibaba’s U.S.-listed shares closed down over 8% at $266.54, wiping off over $60 billion of value in a day. The Chinese technology giant’s Hong Kong-listed stock shed 9.8% to close at 248.40 Hong Kong dollars on Wednesday.

JD.com’s U.S. shares closed over 5% lower on Tuesday, while its Hong Kong stock fell 9.2% to close at 300 Hong Kong dollars on Wednesday.

The State Administration for Market Regulation released draft rules on Tuesday that, for the first time, defines what constitutes anti-competitive behavior. It covers areas including pricing, payment methods, use of data to target shoppers.

China’s tech stocks tumble over regulatory risks despite Singles Day sales

“Potential implementation of new antitrust regulations is negative for most major Internet companies, particularly in e- commerce and food delivery – although competition has already intensified with reduced market dominance across segments in recent years, which could be a mitigant,” Morgan Stanley analysts said in an note published on Wednesday.

Imported brands and lower tier cities

This year’s Singles Day is set against the global coronavirus pandemic which has ravaged the world economy. But in China, where the virus broadly appears to be under control, the economy has begun to recover.

Singles Day could also give some indication about the strength of the Chinese consumer.

Alibaba is expecting imported goods to be a big hit with Chinese shopping because fewer are travelling abroad to buy foreign products. Tmall, a shopping platform run by Alibaba, has brought more than 2,600 new overseas brands to China for the first time.

But both JD and Alibaba use Singles Day to attract new customers. The two companies have been making a push into so-called lower tier Chinese cities where e-commerce penetration is lower and spending power is weaker. The technology giants feel this is key to strong growth going forward.

“In general, it has been a strategy for Alibaba to drive growth for a few years and especially when there is a strong competitor like Pinduoduo that attracts consumers in lower tier cities who are more price-sensitive,” Xiaofeng Wang, senior analyst at Forrester, told CNBC by phone.

Pinduoduo has become a competitor to Alibaba and JD.com by offering attractive prices.

To counter the rise of Pinduoduo, Alibaba and JD have launched rival apps. For example, last year, JD rolled out a group buying app called Jingxi. Alibaba has an app called Taobao Tejia, which has massive discounts on products all year around.

Wang noted that Alibaba was redirecting people from its main Taobao app to this discount app as well, a move that could be aimed at consumers in lower tier cities.

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