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

The Economic Observer, a weekly, Beijing-based national paper that features economic developments, published a commentary on its website which discussed a government commission’s concern that online e-commerce stores are driving retail stores out of business. 

While the Central Economic Work Conference, which started on December 18, 2015, was underway, 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 the fact that online stores, courier delivery services, and associated new lines of business have created some jobs, one must not ignore their impact on physical retail stores, which are being replaced." 

While people have been cheering the record setting one-day sale of RMB 91 billion (US$14.05 billion) on November 11 at the Tmall online website, which the Alibaba Group owns, retail outlets for books, clothing, and household appliances have been hit very hard. There are even cases in which retail stores have closed en masse. Some traditional department stores have also lost their appeal. This trend has negatively impacted the employment outlook in areas where it has occurred. 

On the one hand, the commentary did not challenge the claim that Ma Yun (Jack Ma), chairman of the board of the Alibaba Group, made. Ma claimed that Alibaba’s online e-commerce platform has 8.5 million active vendors, who directly created 10 million employment positions and indirectly created 3.5 million more. Ma categorized this group as "online merchants." They include merchants with well-known brands; vendors specializing in channel marketing and logistics; and indirect participants doing outsourcing work in communications, design, and sales. 

On the other hand, the commentary focused on the retail sector, spanning urban communities as well as rural areas. It raised the question about whether those who the e-commerce platform, such as Tmall, has displaced are in any position to get into logistics, manufacturing, or name branding due to such barriers as technology and intellectual property. 

The commentary looked to the government to offer assistance to people losing their retail jobs.

Source: The Economic Observer website, December 21, 2015