E-commerce sales hit record high in China, but traditional industry may lose out

E-commerce sales in China hit a record 13.4 trillion yuan in 2014, up about on a third on the year before, according to new research released this week.

The volume of the online business-to-business (B2B) market reached 10 trillion yuan, up 21.9 per cent, the China E-Commerce Research Centre said, warning that traditional industries are facing increasing threats from online competitors.

Online retail trade, which makes up about 21 per cent of mainland Chinese e-commerce, reached 2.82 trillion yuan, up about 50 per cent, the Hangzhou-based firm said.

Alibaba maintained its towering position in the B2B market, with a 39 per cent share. Shanghai Ganglian, a platform that carries iron and steel trading information, among other things, came in second with a 19 per cent share. Global Sources, with about 5 per cent, was a distant third.

Analyst Zhang Zhouping said the study shows digital retail has become a new growth engine for the mainland Chinese economy, and that the internet has brought on revolutions in the way many industries do business, all the while threatening traditional industries that are largely offline.

Industries including retail, education, healthcare, automobile, and energy have adopted changes in their operation and business models to catch up with the e-commerce wave, he said in the report.

Separately, a recent survey done by Linkshop, a Chinese website that tracks the retail sector, found that 201 major department stores and supermarkets closed shop last year, a record high and a fourfold increase from 2013.

E-commerce has also created a lot of jobs, even though a lot of positions in especially customer service, logistics, and technical support suffered a constant dearth of workers, he said.

As of the end of 2014, more than 2.5 million people in mainland China worked directly in e-commerce and more than 18 million indirectly, such as logistics workers, the study said.

Cross-border e-commerce generated 4.2 trillion yuan in sales last year, the report also said. Such ventures would likely benefit from policies as Beijing continued to boost digital cross-border trade to offset slowing growth in offline foreign trade, Zhang said.