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The Economic Observer: Do Online Stores Drive Retailers Out of Business?

The Economic Observer, a weekly, Beijing-based national paper featuring economic developments, published a commentary on its website, discussing a government commission’s concern that online e-commerce stores have driven retail stores out of business.  The Central Economic Work Conference brgan December 18, 2015, the National Development and Reform Commission (NDRC), directly affiliated with the State Council, submitted a report to the central government. The NDRC report noted: "Despite some jobs have been created by online stores, courier delivery services, and associated new lines of business, one must not ignore the impact on physical retail store, which are being replaced." While people are cheering the record setting one-day sale of RMB 91 billion (around USD 14 billion) on November 11 at the Tmall online website, owned by Alibaba Group, retail outlets for books, clothes, and household appliance are hit the worst. There are even cases that retail stores are being closed en masse. Some traditional department stores have also lost their appeal. All negatively impacted employment outlook in these areas. While the commentary did not challenge the claim by Ma Yun (Jack Ma), chairman of the board of the Alibaba Group, that Alibaba’s online e-commerce platform has 8.5 million active vendors, which created directly 10 million employment positions, and indirectly 3.5 million more. Ma categorized this group as "online merchants," which include merchants with well-known brands, vendors specializing in channel marketing, logistics, and indirect participants doing outsourcing work in communications, design, and sales. However, the commentary focused on the retail sector, spanning urban communities as well as rural areas. It raised the question that those who have been displaced by e-commerce platform, such as Tmall, are not in the position to get into logicstics, or manufacturing, or name branding due to technology and intellectual property barriers. The commentary looks up to the government to offer assistance to people losing their retail jobs. Source: The Economic Observer website, December 21, 2015