Business Intelligence on Retailing, Franchising, and Consumerism in China


Retailers Urged To Go Online By Beijing Municipality

Beijing Municipal Business Commission has issued a circular which encourages retailers to set up online stores and virtual featured commercial streets, and to increase the number of categories of goods offered based on the offline stores.

According to the circular "Opinions on Promoting the Development of Online Retailing Industry" issued by BMBC, operations such as department stores, boutique stores, wholesale markets, and supermarkets that have already had computerized management in place shall try offering online retail services by setting up online stores and increasing the number of goods categories offered. In addition, mature online retailing service providers should provide online services for small and medium trading companies.

To prevent online stores being just adjuncts of their offline counterparts, the Opinions encourage companies to open online boutique stores and featured stores to offer a variety of rare and hard to find products to meet a diverse range of consumer demands, as well as merely extending their retailing operation by making use of Internet. The Opinions also encourage retailers and wholesale companies to introduce goods from foreign countries and featured goods from different parts of the country by means of e-commerce. The Opinions ask existing online retailers to integrate their resources and build virtual business streets to create an online retailing brand for the capital.

The Opinions say that online promotions will be regulated to protect the interest of consumers. In addition, the government will offer technology support and training to small and medium businesses regarding the application of e-commerce, enhancing their capability in using modern circulation tools for market expansion and operation. The Opinions state that middle and small size trade companies should use e-commerce to improve their operational efficiency, and support should be given to time-honored brands, renewable resources, and area franchises.

The Opinions suggest that logistics and payment problems be settled via a third party for online retailing businesses.

So far, major Chinese retailers including Wu Mart, Jingkelong, Gome, and Suning have launched online stores, but due to the many limits they impose on consumers — such as a minimum consumption of CNY200 if goods are to be delivered — these online stores have received few customers.

A recent survey shows that online transaction volumes in China reached about CNY130 billion in 2008: an increase of 130% over the previous year. Taobao.com was the largest comprehensive online retailer by accounting for 1% of the country's total social retailing services.






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