Stamps, meat, cars & islands, too

E-commerce has had a huge flow-on effect in China's economy and society

Staying in the good graces of butchers was a matter of survival in China in the early 1980s, for it was they who decreed who among their customers got the best cuts.

"Fatty meat was at the top of everyone's shopping list because people were so desperate to get some oil," says Jiang Meifeng, 58, of Xi'an, Shaanxi province.

Those were the days when there was a strict rationing system, shoppers being required to buy food and other daily necessities with coupons.

"Even if you had a bit of money it was slim pickings because everything was in such short supply," Jiang says.

Compare that with today, when the range of choice seems almost limitless, particularly as e-commerce continues to revolutionize the way people go about their everyday business.

Jiang, who is now retired, can, smartphone in hand, order whatever meat - domestic or imported - she desires from an overflowing pool of goods online. Not only that, but the curt take-it-or-leave-it butcher and his ilk have been replaced by cyber salespeople who are wont to address her as "dear" and send out all manner of jovial emoji to keep her loyal.

As China's retail industry has modernized it has gone through various reincarnations, the most notable being individual stores turning into chain stores and department stores turning into shopping malls. However, for James Roy, principal at China Market Research Group, the most remarkable change has occurred in the past five years: the arrival of e-commerce and its hearty embrace by hundreds of millions of Chinese.

"It is a completely disruptive change as e-commerce provides constant access to a limitless choice of goods while a brick-and-mortar store is constrained by its opening hours and location - which means it can only cover a certain radius - and its shelf space," says the Shanghai-based Roy, who has been a specialist researcher of China's retail industry for 10 years.

Taobao is the supreme example. The online marketplace run by Chinese e-commerce giant Alibaba Group sells everything from stamps to furniture, and from cars to overseas islands. And it is not only those in big cities who can enjoy shopping online, but also those in small villages. In fact, even as you read this, folks who work for the e-commerce major JD.com are likely to be working on drone delivery technology that they hope will help those in rural areas receive purchases faster.

At the heart of the online sales surge in China are the seemingly boundless range of goods and the internet technology that puts it all within ready grasp of buyers. As with anything to do with the internet in China, the numbers are apt to set your head spinning. In just five years the value of online shopping in the country has grown nearly five-fold, to 3.83 trillion yuan ($587.5 billion), last year, the China E-Commerce Research Center said in a report published a fortnight ago.

As many as 460 million Chinese shopped online last year, the center in Hangzhou said, and their spending accounted for 12.7 percent of overall retail transactions in China, almost triple the figure four years ago.

Roy says several factors account for how quickly e-commerce has changed the way people spend their money.

"A combination of transformations happened at the same time, including the rapid increase in the penetration rate of the internet, the adoption of online payments, people's willingness to trust online channels and the rising spirit of entrepreneurship in the country."

The Hangzhou-based Alibaba is one such e-commerce company successfully riding this tidal wave in China. The company, founded in 1999 by Jack Ma, a former English teacher, said in April that it has overtaken Wal-Mart Store, becoming the world's largest retailer, having sold merchandise worth 3 trillion yuan in the fiscal year ended in March.

"The shift toward consumption and services is a massive transformation that will drive a new Chinese economy for years to come," said Alibaba's vice chairman, Joseph Tsai, in a post on Alizila, a blog the company operates.

The huge growth in online sales has obviously had a flow-on effect that has rippled through the Chinese economy and society generally, creating millions of jobs such as those of online sales assistants, in the express delivery business, and in internet financing and personal credit.

Xiong Yuan, 27, a white-collar worker in Beijing, says she buys almost everything online, including groceries, and pays using funds from Ant Check Later, an internet consumer finance product of Ant Financial Service Group.

"I don't really need to borrow money, but by doing so and repaying on time I can significantly boost my online credit score."

The rise of e-commerce companies and others in related industries has reshaped how people spend their money and has piled pressure on traditional retailing, and in some cases the profits of department stores have taken a severe hit, forcing many to close.

In 2014 Dalian Wanda Group, which runs the largest shopping mall network in China, teamed up with the internet giants Baidu and Tencent Holdings in an effort to forestall the dangers that e-commerce poses.

Adam Xu, partner of PricewaterhouseCoopers' Strategy&, says e-commerce supplants some activities once handled by physical stores, but some activities will still need to be carried out on premises and immediately, such as food service or some complex selling activities.

"Therefore physical retailing will still have its own role (but) a different one. I believe the future of retailing will become multi-channel. Online channels will provide the wide range of choices and flexibility of shopping time while physical stores will provide in-person service and interaction."

1999

Alibaba Group is founded in a residential apartment in Hangzhou, Zhejiang province.

2012

Transactions in China's online retail industry for the first time exceed 1 trillion yuan, reaching 1.32 trillion yuan.

2013

Suning, China's leading electronics retailer with 1,600 brick-and-mortar outlets, officially changes its name from Suning Appliance to Suning Commerce Group with ambitions to expand business both online and offline.

2014

Alibaba lists on the New York Stock Exchange in the world's largest IPO of $25 billion. China's online retail for the first time accounts for more than 10 percent of the overall transactions of the retail industry in the country.

2015

Alibaba buys 20 percent stake in Suning to form an alliance to combine the e-commerce giant's online strength with Suning's offline resources and to give consumers a better shopping experience.

2016

Alibaba announces in April that it has officially become the world's largest retail platform, with its total trading volume online in the fiscal year ending in March 2016 surpassing Wal-Mart's annual sales.

(China Daily 05/30/2016 page6)