Wal-Mart Stores, Inc.(NYSE:WMT) on Wednesday announced
that it had got the Chinese government's nod to take a majority stake the
country's leading online e-commerce portal, Yihaodian.
This piece of news has come as nasty piece of jolt to
the Chinese retail sector, where retailers are struggling with the slowdown and
get their goods moving off the shop shelves.
Wal-Mart had submitted the details of the deal to the
Chinese government in December last year and has been awaiting approval ever
since.
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Chinese consumers might not be thronging the brick and
mortar malls and shops but they are not averse to shopping online.
According to the official Xinhua news agency, 210
million Chinese are shopping online. The value of online shopping transactions
in China jumped 51.6 percent year on year, to 268.4 billion Yuan, in the second
quarter of 2012, Xinhua reported, citing iResearch, a market research firm with
offices in China and Silicon Valley.
E-commerce is a fairly recently phenomenon in China,
where it was slow to take off. As recent as in 2008 e-commerce accounted for
only 2 percent of total retail sales in the country, with very few Chinese
possessing credit cards. But then suddenly there has been a virtual explosion
in this segment with growth of payment services such as Alibaba Group's AliPay,
which is driving the segment.
This year, online’s share of total sales will be
between 6 percent and 7 percent, Michael Clendenin, RedTech’s managing director
told Bloomberg. That puts China at the same level as the U.S. “It will more
than likely surpass the U.S. in the next two years,” he added.
Online retailers have slashed their delivery charges
and there is very little incentive for Chinese shoppers to go to the malls
which are anyway crowded. The Chinese are discovering the luxury and
convenience of sitting at home and ordering things that catch their fancy.
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