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E-Commerce Is A Bright Spot In China's Slumping Economy

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E-Commerce Is A Bright Spot In China's Slumping Economy

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E-Commerce Is A Bright Spot In China's Slumping Economy

E-Commerce Is A Bright Spot In China's Slumping Economy

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  • <iframe src="https://www.npr.org/player/embed/455717478/455717479" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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China's old industrial sector continues to decline. One of the economy's sectors that is doing well is e-commerce. But is its rapid expansion enough to halt the overall slide in China's growth?

STEVE INSKEEP, HOST:

Something encouraging happened yesterday in China's sputtering economy. It was Singles Day, and Alibaba, the e-commerce giant, generated more than $14 billion in online sales.

LINDA WERTHEIMER, HOST:

Singles Day is China's version of America's Cyber Monday, except, of course, it is much bigger. Recently, NPR's Frank Langfitt spent a day with an e-commerce deliveryman in southwest China to see how companies are trying to reach new customers and new markets.

FRANK LANGFITT, BYLINE: It's a rainy morning in the small city in Sichuan province. I'm with Zhang Xiaobo, who delivers packages for jd.com, Alibaba's main rival. He's hunting for a customer in a warren of apartment blocks.

Mr. Zhang is yelling up to the balconies, trying to find the person who has purchased these diapers that he's delivering right now.

ZHANG XIAOBO: (Speaking Chinese).

XIONG TAO: (Speaking Chinese).

XIAOBO: (Speaking Chinese).

LANGFITT: So she's waving outside the window, and it looks like it's a good six-floor walk up.

XIAOBO: (Speaking Chinese).

TAO: (Speaking Chinese).

XIAOBO: (Speaking Chinese).

TAO: (Laughter).

LANGFITT: A 24-year-old nurse named Xiong Tao greets us. She's ordered the diapers for her 14-month-old son, Yiyang.

TAO: (Through interpreter) I used to like to buy a well-known Japanese brand of diapers. They cost about 30 bucks in the store. If I buy from JD, I can save eight to 10 bucks. The products are the same. JD's price is cheaper. Why not use JD?

LANGFITT: Hundreds of millions of Chinese consumers have flocked to e-commerce for the same reason. Low prices and a rapidly growing delivery network allow people like Xiong more choice and convenience, even in this city about 1,200 miles west of Shanghai.

TAO: (Through interpreter) I have my own apartment, and I'm about to decorate it. I plan to buy a lot of furniture online. I feel there isn't anything you cannot buy online.

LANGFITT: Josh Gartner is in charge of international communications for JD. He's come along on today's delivery run. Gartner says customers like Xiong, who live in far-flung cities, are now helping to drive JD's growth.

JOSH GARTNER: Maybe three or four years ago, the overwhelming portion of our business would be coming from what we call first and second tier cities like Beijing and Shanghai. As of last quarter, the majority of our - more than 50 percent of our orders are coming from third tier and lower cities, So I think it's a major shift.

LANGFITT: JD's revenue grew about 60 percent in the last quarter compared to the same time last year. Those are strong growth numbers, but they may not be easy to sustain. We meet another die-hard JD customer, a new mom named Liao Qi. Her husband sells wallpaper. She says the slowdown in China's construction industry has hurt his salary.

LIAO QI: (Through interpreter) Business this year isn't good. Generally, the problem is the real estate market. Now it's difficult to find jobs, and many people have returned from the cities. I'll probably buy less next year.

LANGFITT: After chatting with Liao, we drive into the countryside to see a rural delivery. China's made huge investments in its road network, but getting goods to some customers can still be tough. Consider this flat screen TV that JD's trying to deliver to a farmer. The problem - the road to the farmer's house is still under construction. Xia Lei, a JD employee, explains.

XIA LEI: (Through interpreter) The customer buys the TV and stores it here first. When the road is finished, the TV will be driven to the customer on the back of a motorbike.

LANGFITT: That delivery is about half a month away. China's leaders are trying to turn their country's economy into one that's more sustainable and consumer-driven. Jeongwen Chiang, who teaches marketing at China Europe International Business School here in Shanghai, says consumer spending online is helping, but not enough to offset the decline in the country's old industrial economy.

JEONGWEN CHIANG: I think it's still way too small because collective - put together, all the e-commerce - they are no more than, like, 10 to 15 percent of the total retailing volume.

LANGFITT: E-commerce is one of the bright spots in China's economy - just not yet bright enough to change the overall picture. Frank Langfitt, NPR News, Shanghai.

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