Cyber wars between stores are heating up

13:48, June 20, 2011      

Email | Print | Subscribe | Comments | Forum's booth at an exhibition in Beijing. The online retailer's annual revenue hit 10.2 billion yuan last year. (Photo/China Daily)

When Miao Zhipeng, who works for a Beijing State-owned enterprise, moved into his new apartment of the North Fourth Ring Road, he bought all his electrical appliances, including television, washing machine and microwave oven, online.

"When my parents got married in the 1970s, they bought those household goods from department stores. The task took them almost four weekends," Miao said.

The young man appreciated the high-efficiency, lower-cost and home-delivery service of Internet purchases. With just a few clicks one morning and a two-day wait he had everything he needed.

An increasing number of Chinese people prefer buying computer, communication and other electrical products through the Internet. It's a trend that is resulting in the decline of traditional white goods stores to the benefit of their cyber equivalents. Or, as one writer put it, shopping is moving from bricks to clicks.

According to a report issued by Nuremberg-headquartered German research firm GFK Group, China's online shopping market reached revenues of 498 billion yuan ($76.88 billion) in 2010, rising by 96 percent over the previous year. Online household appliance sales experienced even faster growth, up by 200 percent to about 80 billion yuan.

The growing demand and market potential have thrilled Richard Liu, the founder of He said he hopes the company will become one of the top five e-commerce businesses in the world, rivaling the likes of Inc.

Born in 1974 in Suqian, Jiangsu province, a place known for producing commercially minded individuals since the Chinese feudal ages, Liu inherited his forefathers' astuteness and courage, and invested 12,000 yuan in 1998 to run a small booth in Zhongguancun, the technology district of Beijing, selling CD writers.

The business quickly developed into a chain of 12 IT-related stores in Beijing, Shenzhen and Shenyang, Liaoning province. When the SARS epidemic erupted in China in 2003, Liu was forced to sell excess stock online. Had it not been for this act of providence he may well have set up another electrical products empire similar to Gome Electrical Appliances Holdings Ltd.

Liu closed his stores in 2004 and focused on trading online exclusively. He said he "hated the process of having two things going at the same time" and wanted to "be dedicated".

The online website is called, or Jingdong Shangcheng in Chinese. Jingdong incorporates the last Chinese characters of his first girlfriend and his first name.

The online business-to-customer (B2C) retailer has seen its annual revenue increase by more than 200 percent in the past six years. It brought in annual revenue of 10.2 billion yuan in 2010 and accounted for a third of the Chinese B2C market last year, according to the consulting firm iResearch.

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Source:China Daily
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