Have you heard of Yiwu? Most people don’t have a clue.
It is a 4th Tier city in China.
It is located 100 km (62 mi) south of the city of Hangzhou, Zhejiang Province, where Alibaba’s headquarter is.
Zhejiang Province is a province south-west of Shanghai.
What is so special about Yiwu? And how does this small faraway place predict the outcome of the US Presidential Election?
You might not know Yiwu, but you must have seen gifts and trinkets sold at most tourist souvenir stores. A lot of them are from Yiwu. It is a Chinese city that has the world’s largest wholesale market for small goods. The city of Yiwu has around 400,000 types of those goods, and exports to over 210 countries.
Yiwu Index, short for Yiwu China Commodity Index, reflects market conditions including price trends and order quantities. Here is how the Index predicted the 2016 US presidential election.
In 2016, polls had shown that Hillary Clinton’s approval rating was at 72%, and the American public thought Hillary would win. However, Yiwu’s manufacturers successfully predicted the election of Trump based on the overwhelmingly large number of flags, caps, and other merchandise of the Trump campaign.
Yao Dan Dan, a Yiwu manufacturer, recalls that many manufacturers predicted Trump’s win because the demand for Trump flags was 10 times more than that for Hillary's in 2016.
2020 has been an unsettling year, to say the least. Despite the declining sales in Yiwu this year and the Biden team has spent almost 75 million dollars on broadcast ads from late July to the end of August, nearly 5 times the Trump team’s spending*, merchandises of Trump’s campaign still outnumber Biden’s to a great extent. US Polls have shown that Biden has a 10-point lead so far, contradicting the Yiwu Index so far.
Photo source: BBC News
The Yiwu Index has indeed provided a unique perspective to the US presidential election result and was proven accurate in the last election. On the website of Chinese e-commerce giant Alibaba.com, the word “Trump” has about 35,000 search results compared to only 5,000 for the word “Biden”. It may seem like Trump has a better chance of winning, but Yiwu’s Trump merchandise exports only accounted for one-fourth of the number of orders in 2016. Yiwu is currently facing 2 external challenges that are likely to affect the accuracy of its Yiwu Index prediction.
Challenge #1: The COVID-19 Pandemic
COVID-19 has changed people’s lives and significantly damaged the global economy. Since the pandemic started, cities have entered the lockdown, and logistics were disrupted in the US. The rising COVID-19 cases in the US directly impacted the Yiwu exports; a manufacturer in Yiwu mentioned that orders and shipments were delayed when China was pummeled by COVID-19, and new orders from the US have dropped to zero.
Challenge #2: China-US Tension
The recent China-US trade war intensified the tension between the two countries – the increase in tariffs stagnated trade. Considering the difficult times the US is going through due to the pandemic and the trade war, the Yiwu Index might be losing its credibility because the declining sales might mean something, and it could only reflect a small factor of the US presidential election.
Will Yiwu Index be correct again this time to predict the 2020 US election result? Let’s wait and see.
** Source of data and images: various online news outlets
About VOYO Brand Management & Consulting
VOYO began life in Toronto, Canada in 2016, we are design and innovation driven marketers and business strategists helping organizations grow into more sophisticated brands both in Canada and China, whether you are a small business who cannot afford a full-blown marketing department or a big organization who needs extra help.
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