Chinese Government encourages e-commerce to boost domestic consumption

By Danny

In a move to increase domestic consumption and services, the Chinese government recently outlined plans to make online sales account for at least 10.0% of sales nationwide. According to Hangzhou-based China e-Business Research Center, online retail transactions accounted for 6.8% of all retail sales in China for the first half of 2013. By the end of this year, it is expected online retail’s share will increase to 7.0% of total retail sales.

China’s economy has largely been export-driven but as the growth for exports wane and some manufacturing shifts to other locations, China has turned its attention to the Chinese consumer to energize its economy.

e-commerce has been viewed as a means to reach consumers faster and in a more efficient way versus traditional brick and mortar retail. As such, China’s Ministry of Commerce announced plans to provide policy and financial support for businesses conducting e-commerce cross-border as well as encourage domestic e-commerce retailers to establish overseas subsidiaries and improve offshore warehousing and customer service.  The Ministry will also provide incentives to small and mid-sized businesses to establish online operations.

While Chinese e-commerce companies such as Alibaba and JD expand their logistics network across China, Suning Commerce Group Co Ltd, is expanding its cross-border functionality and in fact has established its first R&D centre in Silicon Valley, California. According to the company, the goal of these R&D centres is to achieve its long-term vision for retail which includes:

• 
  
  Implement the large-scale standardisation of key retail processes including    logistics, information and cash flow.


• 
  
  Eliminate the imbalance of information between the consumer and retailer.


• 
  
  Satisfy the needs of the world’s global shoppers via an integrated all-inclusive shopping experience that offers the convenience of online and offline.


• 
  
  Offer better capital solutions for upstream suppliers and better consumer finance experience for clients by employing an online, terminal-to-terminal financial industrial chain for suppliers and consumers.

China’s e-commerce providers’ strategies are becoming more sophisticated. This sophistication includes expanding payment capabilities, linking to suppliers and creating an omnichannel approach by technologically joining physical stores to online retail websites. e-commerce providers are also investing in data analytics and are eyeing overseas expansion for additional growth opportunities. All of this will not only benefit consumers but logistics providers as well.