The headlines are here again. The 11.11 shopping festival is over and some results look very impressive—beauty sales up 24.8% year over year, Tmall reported 79 beauty brands exceeded 100 million RMB ($14 million) in sales. Some outlets were even suggesting China’s economy is back on track.This is not the case, and you have to be operating brands in China to really understand what is going on behind these huge numbers.The economy is tough, you can feel that on the streets, talking to beauty retailers, suppliers, factories, and consumers at all levels, people are feeling the pinch.So why do the numbers for 11.11 look so good?Distorted MetricsOne of the primary drivers of inflated gross merchandise value (GMV) is the aggressive use of promotional coupons on Tmall, which encourages consumers to purchase more than they intend to keep. For example, many shoppers add items to their carts to meet minimum spend thresholds for coupons, only to cancel unwanted items immediately after placing their orders. These cancellations occur before products are shipped, leaving refund rates high with many brands at 30-50% of GMV; some more. While this strategy boosts GMV, it distorts the reality of consumer intent and true sales revenue.Subsidies and Membership Discounts Fuel the IllusionPlatforms like Tmall heavily subsidize promotions, pouring billions into traffic acquisition and programs such as 88VIP, which offers members exclusive discounts and premium bundles. Tmall reportedly invested ¥100 billion ($14 billion) in subsidies this year alone, trying to compete with sites like Pinduoduo.