Singles Day promotions kindle China's spending power (2)

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Singles Day promotions kindle China's spending power (2)

By Hu Tao and Zhang Yao (Xinhua) 08:38, November 11, 2013

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RELEASING SPENDING POTENTIAL

Of course, China's government is delighted with the efforts of these players having unleashed a major force for the national economy.

Taobao has made Nov. 11 "Chinese customer day," Jack Ma, founder of Alibaba Group, told Chinese Premier Li Keqiang at a recent meeting on the economic situation.

The premier replied, "You created a time-point of consumption."

The Chinese leadership is striving to steer the country's economy with a slower, more sustainable growth model based on domestic consumption instead of investment and exports. Online shopping is no doubt a growth point to release spending potential, insiders have noted.

During times of global economic downturn, the government would rather encourage domestic consumption than release a stimulus package, indicating tolerance for slower growth during the reform process, said Xu Shaoshi, minister in charge of the National Development and Reform Commission.

China had 564 million netizens as of the end of last year.

As online retailers and conventional stores square off in the world's largest Internet community, online retail sales have risen steeply, reaching 1.3 trillion yuan in 2012, according to the China e-Business Research Center.

The figure accounted for 6.3 percent of the retail market in 2012 and is likely to expand to 7.4 percent this year.

With an estimated 296 billion U.S. dollars in online retail sales, China will soon surpass the United States as the world's largest online retail market.

"The emerging time-points of online consumption attract millions of people to spend money and enjoy life. E-commerce opens a new channel for China to stimulate domestic demand," said Liu Yin, vice president of the China International Electronic Commerce Center.

More importantly, it promotes employment and the logistics industry with its sales model of "online purchasing plus express delivery," he added.

E-commerce is only likely to become stronger as online shopping spreads throughout China. Taobao has recorded surging purchases from third- and fourth-tier cities, as well as medium and small towns in the past three years.

"E-commerce is quickly extending to these regions, which are immature in conventional retail networks. And the country's ongoing urbanization will definitely bring a boom to the new business model," Liu added.