China to Surpass US on Retail E-Commerce

With China surpassing the U.S. by having the most number of mobile phone and Internet users today, the Asian giant is also set to overtake the U.S. as the largest digital retail market, based on a study conducted by Bain & Company.

According to Bain & Company’s report titled China’s e-commerce prize released a week ago, “Chinese spending on e-commerce has grown more than 70% annually since 2009, and is expected to continue its exponential increase in the coming years reaching 3.3 trillion yuan, or $550 billion in 2015.”

Also reported yesterday was China’s biggest footwear retailer Belle International claims to buy a smaller domestic rival retailer, Longhao Tiandi, for 700 million yuan (or US$117 million). Longhao Tiandi owns the SKAP and other footwear and leather brands.

“The acquisition would complement its existing brands and give it a self-owned label in the high-end casual brand market,” said Belle in a statement.

Earlier this year, retail giant Zhejiang Semir Garment, led by China’s apparel retailing business mogul and billionaire Qiu Guanghe, acquired leisurewear brand Ningbo Zhongzhe Mushang.

However, these recent acquisitions only signify that traditional retailing business in China is put to pressure by the rapidly growing domestic retail e-commerce. “That growth online is sapping gains in traditional sales channels”, Forbes reported.

“Weak share prices for titans like Belle – whose Hong Kong-traded stock has lost a quarter of its value in the past year – are making IPOs less attractive and trade sales like Belle’s purchase of Longhao Tiandi more appealing to smaller companies and their investors from private equity funds looking to exit,” continued Forbes.

Belle’s bleak earnings, particularly its 3.4% first-half decline, may spell more mergers and acquisitions in Chinese retailing. Multinational retailers such as Nike and Walmart may also experience challenges in the country as the digital retail market springs up, driven by the increasing clout of the younger Chinese consumer buying behavior.

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