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Distribution sector: healthy and growing but needs more e-commerce

By Zhao Lei (China Daily)
Updated: 2010-12-13 13:50
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Shortfalls

"The high cost of circulation really hinders the development of China's retail business," Yang pointed out. "Also, the logistics network is still young and doesn't know how to meet high-quality, efficient distribution needs."

This view was shared by a number of people at the second annual meeting of China Distribution 30 Forum, in Beijing, on Dec 4. It drew more than 100 participants, including 30 industrial elites, as well as major scholars and senior government officials.

They were there to share their thoughts and experiences on the distribution business' present situation and future developments.

One of them, Chen Wenling, chief economist at the China Center for International Economic Exchanges, one of the country's top think tanks, said that the business is expected to play a very important role in macroeconomic growth in the next five years.

"The distribution business trend is characterized by expansion to rural areas and the integration of regional distribution operations. It is also making a close connection between intangible and tangible markets," Chen said in a keynote speech at the meeting.

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Another participant, eFuture's Board Chairman Yan Yanchun, predicted that China's retail market will reign in the global retail battlefield as early as 2020. Its size is estimated at as much as 10 trillion yuan (about $1.5 trillion) by 2030.

"However, China's retail giants are still 'sleeping lions', now, in online retailing, which is already a major source of revenues for their US counterparts.

"So, distribution and e-commerce companies need to improve their technology so they can support the development of the retail sector. Their future will partly be shaped by the application of the Internet of Things and cloud computing technologies," he added.

The economist Chen commented on this by saying, "The distribution and e-commerce business boom has produced more than 25,000 online shops in the eastern manufacturing hub of Yiwu and its suburbs (in Zhejiang province)," and pointing out that the city government there is cooperating with the China Academy of Sciences to introduce the Internet of Things to the local market.