E-commerce to Make Even Bigger Gains

Women pass an ad for shopping websites in Zhengzhou, Henan province. China is expected to double its e-commerce transaction volume to 18 trillion yuan ($2.86 trillion) by the end of 2015. Provided to China Daily

Ministry aims to double the value of online shopping to 18 trillion yuan

China aims to double the value of its e-commerce sales to 18 trillion yuan ($2.86 trillion) by the end of 2015, which would make it the leading market for global e-commerce.

That's according to an E-commerce 12th Five-Year Plan (2011-15) that was released on Tuesday by the Ministry of Industry and Information Technology, the nation's top industry regulator.

China, with 513 million Internet users, is home to more residents who are online than the United States, according to a China Internet Network Information Center report in January.

"During the 11th Five-Year Plan (2005-10), the growth rate for China's e-commerce sales increased by an average of 250 percent, reaching 4.5 trillion yuan by the end of 2010," the ministry said.

In 2010, about 161 million Internet users purchased 513.1 billion yuan in goods online, an amount making up 3.3 percent of the value of all retail sales in China.

"E-commerce has expanded into various industries such as the agriculture, trading, transportation, finance and travel industries and is merging with China's substantial economy," the plan said.

As online shopping becomes more popular, so do methods of making payments through third-parties online. From 2005 to 2010, the amount of payments made through third-party services increased 60-fold to hit 1.01 trillion yuan.

"Business-to-customer e-commerce will become the main driver of China's online shopping industry," said Ding Jiaqi, an analyst with the domestic information technology research company iResearch Inc.

Websites that allow businesses to sell directly to customers, such as Taobao.com, Amazon.com.cn and 360buy.com, held about 23.2 percent of the e-commerce market last year, having about 179 billion yuan in sales, Ding said.

The company said China may surpass Japan and the US in three years to become the country with the world's largest market for online goods and services.

The research company said 26.5 percent of online retail sales in 2011 were sales of garments and luggage and 24.2 percent were of electronic devices.

The development of mobile Internet devices has also boosted e-commerce. The number of people who had devices that could connect to third-generation, or 3G, networks in China hit 47 million by the end of 2010, and many websites have developed Internet applications for use in online shopping.

The value of online trading among Chinese businesses, meanwhile, is expected to reach 15 trillion yuan by 2015, and such businesses' online purchases are expected to make up more 50 percent of all such purchases in China. The ministry also said the government will encourage large companies to move their businesses online.

Small and medium-sized companies brought in 13.1 billion yuan in online sales revenue last year. The ministry said it will foster the development of third-party purchasing systems online to encourage those companies to adopt e-commerce.

Many small companies have also established online stores for group buying, which enable customers to obtain goods at a discount so long as a certain number of people make the purchases. China had about 4,000 group-buying websites in December, up from 2,630 in January 2011.

"About 1 million small companies were brought into the e-commerce market through online group buying last year," said Chen Shousong, an analyst with the research firm Analysys International.

"Shopping centers, whole sale markets and supermarkets should create online stores to reduce their costs and develop product-tracking systems," the ministry said.

"E-tickets are something else that the government will place a greater emphasis on to improve the country's public transport system."

Shopping centers and luxury brands have placed a priority on the e-market in recent years. Online trade in luxury goods was expected to have reached 10.7 billion yuan in 2011, showing a 68.8 percent growth rate year-on-year, according to iResearch's report.

The plan also says the ministry is targeting markets overseas.

Even so, there are some difficulties in the market, the ministry said. The new business has not reached its potential for making contributions to the economy, and online shopping services and legislation need to be improved.

Source: China Daily

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