Zhongguancun Square, a landmark opened to the public in 2009.

 

Many Zhongguancun vendors say the government's move to push out peddlers will only increase their online sales. Zhang Yue, Wang Kaihao, Xu Lin and Erik Nilsson report.

Zhang Xuefei isn't worried the government of Beijing's Haidian district will purge the stall he has run for eight years in Zhongguancun's electronics market. His business doesn't rely on it. The 24-year-old, like many of the hawkers, has been making more money from online sales. So the government policy - intended to replace the unregulated market with big brand sellers and expand the 90-hectare area's high-grade technology park - means the physical stores will likely virtually disappear, only to reappear virtually. The government plan to clear the vendors was approved in 2009 and amended this May to remove at least 50 percent of the wild gray market's peddlers by yearend. Zhang is already swapping counter space for cyberspace.

His real business, he says, isn't his second-floor stall but rather the 16th-floor office of his online store. Dozens of other cubicles surround his.

"The stalls are just showrooms for buyers who want mobile phones from Zhongguancun," Zhang says.

"More than 90 percent of our customers buy from us online."

In turn, more than 90 percent of Zhang's income comes from online sales on Taobao.com, China's version of eBay, and Zol.com, a website offering Zhongguancun products.

Zhang spends more than 200,000 yuan ($31,279) a month to market his online stores - more than 20 times his office's rent.

"Advertising is expensive but effective," Zhang says.

E-stores enable flashy product displays, descriptions and price comparisons.

Shoppers can also leave comments for future buyers' reference.

"That's how we build reputation," Zhang says.

While e-business might be the solution to the government's clearing of Zhongguancun's stallholders, it has been subtracting from their business for years.