Jack Ma, the Chinese e-commerce tycoon, has predicted that almost a third of China’s retail will be online in five years, suggesting an unprecedented transformation of consumption in the world’s most populous country.
“People always ask me what is the difference between ecommerce in the US and ecommerce in China,” Mr Ma said at an investor conference held by Credit Suisse in Hong Kong.
“In the US, ecommerce is just a dessert – it is supplementary. The infrastructure of commerce is already so good. In China, ecommerce is the main course. We are building China’s infrastructure,” said Mr Ma, who will step down as chief executive of Alibaba Group in May but will stay on as its executive chairman.
Online retail sales now account for slightly less than 6 per cent of China’s total retail sales, according to McKinsey, the consultants. In the US, ecommerce sales accounted for 5.2 per cent of total retail sales last year, according to the US department of commerce.
A much larger role for online commerce could help raise the role of private consumption in the Chinese economy but force foreign companies to adapt their strategies for penetrating this market.
“Today, Alibaba is 5 per cent of the whole retail market in China . . . I think 30 per cent of all retail in China will be online in five years,” said Mr Ma.
But the industry has been growing at an average 120 per cent a year for the past decade and there are indications that online retail websites have triggered new consumption, giving Mr Ma’s prediction credibility.
Online retail in China “is not just a replacement channel for purchases that would otherwise have taken place offline – it actually spurs incremental consumption”, McKinsey says in a new report to be published on Thursday.
Richard Dobbs, a director of the McKinsey Global Institute, the consultancy’s research arm, said data from 266 Chinese cities suggest that only about 60 per cent of online consumption is replacing sales in brick-and-mortar stores.