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CBBC Insights: ICT & Retail | Can British O2O technology save China's malls?

BritCham / CBBC
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By Kirk Wilson
Sector Lead for ICT and Retail
China-Britain Business Council
Ecommerce has taken China by storm. The rapid adoption of smartphones combined with a relatively under-developed mall culture has seen a huge shift to mobile ecommerce in particular. Alibaba is now considered the key commercial channel for foreign brands coming to China. The malls have staged a fightback though, best exemplified by Wanda’s 2014 ecommerce joint venture with Baidu and Tencent, which was heralded as the beginning of a mall revival based on O2O (online to offline) integration. A year on and slow progress has some wondering if the end has indeed come for traditional retail spaces in China.
CBBC's sector lead for ICT and retail, Kirk Wilson, considers how British companies with the right technology can bridge the online to offline divide.
Chairman of Wanda Group Wang Jianlin
China’s mobile ecommerce revolution
The last few years have been a good time to be in ecommerce in China. After a turbulent start that saw the exit of US giant eBay, and Amazon struggling to get traction, the domestic champions including Alibaba and JD.com have driven Chinese ecommerce to the cutting edge.  Once these tech leaders saw off the competition to consolidate their platforms and user bases, they were quick to identify major opportunities to monetise through epayments, efinance (taking advantage of China’s strict rules on bank interest rates) and microloans (making use of their huge data sets to provide an alternative source of credit data). Now they are literally moving into the malls’ own backyard by opening stores within them and setting up service delivery points across the country as they build out a new logistics infrastructure.
Ghost malls and the O2O opportunity
Along with this boom in ecommerce has come a reduction in the market share of offline retail. After a decades-long mall-building boom boosted by strong local government support to develop land assets, overcapacity is proving a challenge. Less popular retail locations - ghost malls – are now falling away. More innovative locations are beginning to fight back though by altering the retail/entertainment mix, introducing multi-brand stores, and paying more attention to the quality and environment of the malls to encourage leisure use. They are also changing their mind-set to embrace online ecommerce rather than fighting the losing battle against it.
As a result, O2O promotions, indoor mapping linked to offers, pop-up stores promoted through social networks, and the ubiquitous QR code links to stores’ WeChat accounts are being combined with O2O cinema advertisement and the opening of ecommerce offline stores to directly link the online platforms with offline retail and entertainment experiences.
Alibaba's Jack Ma and Wanda's Wang Jianlin
In 2014 the major mall developer Wanda led a joint venture with two of the largest technology companies, Baidu and Tencent, to drive this trend forward. Baidu is China’s main online search/mapping/data tool and recently invested US$10 million in Finnish magnetic-positioning technology company IndoorAtlas to boost its indoor mapping capability. Tencent is now the main online social media platform in China and provides an online link to shoppers for advertising and epayments.
With such impressive resources, the deal was hailed as a major step forward. Later last year Dong Ce, CEO of the joint venture, stated very simply: “Wanda will become the world’s largest O2O ecommerce platform.” But a year into the deal, little has been heard about on-the-ground developments, which has some wondering about the strategic ability of these three giants to work together, and what this may mean for Wanda’s O2O ambitions.
The opportunity for the UK
Whatever the result for the Wanda deal, it’s clear that there is a huge amount of investment moving into the area and an active market for O2O solutions that can help to bridge the online-offline divide. British companies with technology for online payments, digital marketing, niche ecommerce platforms, mapping technology (mobile-social based, magnetic positioning), retail consultancy, internet of things (IoT) and smart retail operations (RFID, sensors, wireless, networking & connectivity, IC design, supply chain logistics) should be observing carefully.
For more information, please contact Kirk Wilson, CBBC's sector lead for ICT and retail, in Beijing: kirk.wilson@cbbc.org.cn.
Kirk Wilson(卫可)
欲知更多信息,请联系英中贸易协会信息通信技术与零售行业商务顾问Kirk Wilson:kirk.wilson@cbbc.org.cn


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