Market dying for a change

Updated: 2011-09-28 09:49

(China Daily)

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It was when SARS practically emptied Beijing's previously bustling Zhongguancun electronics market in 2003 that vendor Liu Qiangdong decided to move his counter space into cyberspace.

It was the genesis of the country's largest online electronics retailer, The company accounted for 32.5 percent of the country's online business in 2010.

"My dream is to make one of the top five e-commerce companies in the world," he says.

But he looks back sentimentally on his humble beginnings in Zhongguancun, where he started his business selling CD burners in 1998.

"Although vendors are confined to a small counter, they work hard all day long," he says.

He opened a store in the market selling electronics that earned a turnover of 60 million yuan ($9.38 million) in 2001. The following year, he expanded to Liaoning's provincial capital Shenyang and Guangdong's Shenzhen city.

In 2004, he operated in a cramped room in Zhongguancun - a space like many used by the market's vendors as they move their businesses online. Now the company has 10,000 employees working in a modern office building, which receives 35 million clicks and 120,000 orders a day from 15 million registered users.

The initial strategy has remained the same - that is, offering low prices, even if that means sacrificing gross profit. This approach has pushed down prices industry-wide, Liu tells the business magazine Global Enterprise.

Many suppliers initially refused to deal with But Liu says a solid reputation with many clients has provided momentum.

Liu told in May that Haidian government's announcement that it will clear 50 percent of Zhongguancun's vendors by yearend is a lifesaver for the unregulated gray market.

"Those who stay will be stores with good reputations," he says.

"That will bring order to the market's chaos. And it will make it more difficult for to compete with them. Zhongguancun's reform is the best way to stop China's Silicon Valley from dying."