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ONLINE RETAIL


Dawn of China’s e-commerce a feast for investors


As China’s online retail market booms, investors and consumers are tipped to be the big winners. Chinese consumer online spending nearly doubled in 2010 to 513 billion yuan and could exceed one trillion yuan in the next two years, according to the China e-Business Research Centre.


W


ith online shopping penetration in China below 30 per cent (compared to 80 per cent in the USA), retailers are increasingly working towards harnessing the internet


platform. The September eTail conference in Shanghai, bringing together international and local e-commerce leaders and retailers, is but one indication of the growing interest in this booming market. “What we are hearing from the industry is that it’s a


very different model of e-commerce in China from the rest of the world,” says Worldwide Business Research spokesperson, Cheong Yewsung. “It’s a closed business that works through its own Google (Baidu) and its own social media networking platforms. Therefore it takes highly specialized knowledge to work within it. That’s part of the reason for the eTail conference. It is for informing retailers and investors.” Less than 15 years ago, online retail in China didn’t


exist. The entry of Alibaba.com in 1998 and its consumer- to-consumer (C2C) retail portal Taobao.com, followed by the entry of Western multinationals a few years later, such as Amazon taking a controlling stake in Joyo or eBay in Eachnet, has expanded the platform to include


“Good distribution networks are difficult to build in China and take a lot of time and money, and online sales are a good way for companies to reach consumers in lower-tier cities”


106 FAMILY OFFICE: ASIA TOMORROW


approximately 25,000 e-commerce websites as of December 2010. The establishment of third party


payment systems, such as Alibaba’s Paypal-like Alipay, cheaper prices and improved online services has increased consumer confidence in online retail. There are over 158 million online shoppers in China today. Of course, none of this would be possible without the


surge in credit card usage in China. Five years ago, the total number of China’s credit users was 13.5 million. At the end of 2010, a total of over 230 million cards were issued. Much of the spending on these cards will continue


through Alibaba Group’s Taobao.com, which enjoys a market share of over 80 per cent. However, many shoppers are also buying on smaller sites, or niche sites such as luxury product discount retailer Vipku.com or MarketYiWu.com. Industry experts agree that China’s


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