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13 Dec, 2012

Chinese Young Consumers Boost Online Shopping Spree

Edited and translated by Liang Jun, Huang Beibei and Ma Xi, People's Daily Online

Beijing, (People’s Daily Online / China Youth Online), December 12, 2012 – Cui Wanzhi, a 36-year-old man, owns four stores on Taobao and one store on Tmall, two websites operated by the Alibaba Group. On this years’ Singles Day, November 11, Cui’s five online shops realized some 35,000 transactions worth millions of yuan.

But his way to starting a business was not going smoothly.

After graduation from university in 1999, Cui failed to find a job because of physical disability and had struggled for eight years by setting up a stand on the street and running an Internet cafe till he opened an online shop on Taobao in 2007.

Cui is an example of inspiring online shop owners. He comes from Hefei, China’s second-tier city, without any experiences and even sound body, but from 2007 to now, he has opened five online shops one after another and created his own dress factory.

Established by Jack Ma, Alibaba Group owns Tmall and Taobao, China’s largest business-to-consumer (B2C) and consumer-to-consumer (C2C) online marketplace respectively by transaction value.

By the end of November 2012, the total transaction volume of Taobao and Tmall had topped 1 trillion yuan, ranking after east China’s Guangdong, Shandong, Jiangsu and Zhejiang province in terms of social consumption goods retail volume as compared to the number of 2011, announced Alibaba Group, headquartered in Hangzhou of east China’s Zhejiang province.

Young people, aged between 25 and 30, contribute to 59 percent of the transaction revenue of Tmall and Taobao. Ma said, “One trillion yuan is just a beginning, we are embracing for a 10 trillion era. Future of e-commerce belongs to China.”

Ma hopes ordinary people and even just graduated students can realize their dreams of starting a business through Alibaba’s e-commerce platforms.

Open Tmall training center nationwide

Huang Yehong, 23, walked into his apartment carrying a bundle of nightclothes. His living room was piled up with nightclothes.

The house with 300 yuan rental is 500 meters away from his school—Guangdong Puning Chaoshan College. He is a sophomore of this college, and he also runs an online store selling nightclothes.

Chaoshan College enrolled 62 students from 800 candidates for its first online store training center this February.

The director of the business park of the Chaoshan College Yan Huixiong said these students did not get a high score in the college entrance exam; it is better for them to learn starting a business.

The college also invited vice director of Yiwu Industry and Commerce Technical College Jia Shaohua as honorary president

Jia Shaohua is famous for opening Taobao University three years ago. He encouraged students to take electronic business venture, and reformed student evaluation system. His students can exchange credit by online store level. In the past three years, Jia Shaohua has set up Taobao school “branch” in Puning city of Guangdong province.

Puning city is the largest pharmaceutical, clothing, textile distributing centre and the largest shirt production base in Guangdong province. The GDP of textile clothing and medicine industry of this city accounts for more than 80 percent of the total value. It is said that one of seven pajamas nationwide is produced here.

In Taobao class, teachers teach how to implement Internet marketing, how to make good photo, how to butt warehousing and logistics. The classroom wall is plastered with photos of Jack Ma, Ma Huateng, Robin Li and “famous aphorism”.

Yan Huixiong said, in half year, operating income of the Taobao class surpassed 1 million yuan, with per capita monthly income of 4,395 yuan, including 10 students’ average monthly income surpass 10,000 yuan.

These “losers” in others’ eyes have become the winner who stand on their own feet through online store business. Jia Shaohua said any student can succeed by starting online business.

If the Chaoshan College data is true, the school students’ income is considerable. According to the national bureau of statistics, China’s urban per capita income is 23, 900 yuan in 2011, or 2,000 yuan a month or so. These students’ income is twice as much of urban residents.

Success and worries

According to data released by IDC, as of now, Taobao and Tmall directly create 4,677,000 jobs and indirectly provide 13,330,000 jobs.

Statistics said the success rate of university graduates’ start-up companies is less than 2 percent.

Cui Wanzhi said, it is determined by whether those people are potential entrepreneurs or not; Alibaba just provides a platform.

When it was launched in 2003, the whole year transaction of Taobao amounted to only 20 million yuan. In 2004, the transaction volume increased rapidly to 1 billion, in 2005 to 8 billion yuan, and exceeded 1 trillion yuan in 2012. Transaction volume of Taobao and Tmall grows almost 40,000 times in 10 years.

Taobao’s rapid development is attributed to the fact that China’s economic growth has never suspended for a moment over the decade.

Accompanied by the development, a variety of problems surfaced.

Homogenization of goods leads to the situation that in online sales, low price has become the only means of competition. A lot of entrepreneurial students earn only a couple of hundred yuan each month.

Ni Wenming said, although some shops are making big money, many shopkeepers have to go tp bed at two or three o’clock and get up at six in the morning. “I have to be online at any time, so that buyers can find me.” Shopkeepers also do the packaging themselves, therefore health overdrafts inevitable.

At the end of October this year, due to excessive fatigue, the 29-year-old Taobao clothing store owner Xu Wenjun died on the way in the purchase. As women’s clothing is the most competitive section of Taobao, he can only guarantee four to five hours of sleep every day.

These things cannot stop the enthusiasm of entrepreneurs. Taobao shopkeepers keep putting commodities that you can name it online.

Jiang Qiping, Secretary-General of the Information Research Center of the Chinese Academy of Social Sciences, said that over the next decade, China will enter a critical period of domestic demand to promote economic. Singles Day online shopping spree reflects the power of e-commerce in stimulating and creating domestic demand. The online shopping activated China’s huge domestic demand.

When online shopping accounted for 5 percent of the total retail sales of social consumer goods, it will cross the critical point, showing the potential of the outbreak and start generating global impact, turning into the starting point for changing the pattern of China’s retail, Jiang Qiping said.