China ICT (Info Communications Technology) Industry, Infra, Commerce, Exports: News & Discussions

[ahojunk]

Alibaba's strong earnings seen as good news for China's economy
January 29, 2016
Paul Mozur

Employees at Alibaba's headquarters in Hangzhou, China. Photo: Nelson Ching

Gu Minghui's sugar-cookie business is enjoying growing sales and continued profits. The big question, for China's Alibaba Group and the Chinese economy, is whether the country's appetite will last.

Gu, a 37-year-old in Shanghai, worries that falling demand could hurt her business despite the current good times. "I'm not very confident" on e-commerce, she said. "The economic situation is not good this year, and I don't expect it to be any better next year."

Economists and investors alike are watching Gu and the millions of others who sell goods on Alibaba's Chinese e-commerce platforms for signs of resilience from consumers. That has made Alibaba a proxy for Chinese consumption and the economy - a proxy whose shares have been hurt in recent weeks amid growing unease about China.

On Thursday, the US-traded Alibaba offered investors a reason to cheer up. It said its profit doubled and its sales rose by nearly a third in its quarter ended in December in a potentially positive sign for consumer strength in its home country.

Gross merchandise volume, a closely followed measure of the total transactions on the company's websites, rose 23 per cent from the same period a year earlier to $US149 billion ($210 billion).

"The Chinese economy is going through a structural shift to more moderate, but more sustainable, growth," Joe Tsai, Alibaba's executive vice chairman, said in a conference call. He added, "it's still one of the fastest-growing economies in the world and we have no reason to think anything different in the future."

Citing the fact that retail sales in China grew more than 10 per cent in 2015, and that Alibaba is taking business from traditional bricks-and-mortar shops, Tsai said he thought Alibaba was insulated from the deceleration of the Chinese economy.

Betting on China's prospects

China's emerging buying class has grown in importance as the country's previous growth engines, like heavy manufacturing and exports slow, hurting global markets. Investors are using Alibaba's shares to make bets on the country's prospects.

Beijing is hoping that consumer spending on sites like Alibaba's will counterbalance the slowdown in other parts of the economy. Many investors doubt that will happen. They argue that market volatility, along with China's slowing economy, will eventually leak into consumer sentiment and hit companies like Alibaba and another US-traded rival, the search provider Baidu. Investors this year have punished Alibaba, pushing its shares down about 16 per cent.

"If you're sitting in Boston or New York and you want to trade China, the most liquid proxies are Alibaba and Baidu," said Chi Tsang, an analyst at HSBC.

Alibaba on Thursday said it made continued progress in tapping the growing numbers of Chinese who use their smartphones to buy goods and services online. The company's sales on smartphones almost tripled from the same period last year, and its monthly active smartphone users rose to 393 million, a jump of 47 million from the previous quarter.

In 2015, Alibaba captured about 35 per cent of the $US15.8 billion mobile ad market compared with just 29.2 per cent in 2014, according to the research firm eMarketer.

If the company wanted to, it could also do more to extract money from vendors like Gu. With the power to drive traffic, Alibaba is mostly in the business of selling ads and spots that get internet traffic to vendors.

Still, the company has been spending big to bolster growth in new sectors, including an expensive dive into online-to-offline services, which allow customers to use their smartphones to order a variety of goods and services, including meals and massages.

The New York Times

 

[TaiShang]

Jack Ma's business school picks new students
CRI, January 30, 2016

Jack Ma, founder of China's largest online shopping platform Alibaba, is starting a second round of courses on entrepreneurship for 40 business people in March at Hupan University.

Jack Ma, founder of China's largest online shopping platform Alibaba, speaks at the Hupan University. [Photo: qq.com]

Located in Hangzhou City, east China's Zhejiang Province, the university was established last year by Jack Ma, and co-founded by seven other well-established entrepreneurs and distinguished scholars. The non-profit college was created to foster China's next generation of top entrepreneurs.

Applicants need to have at least three years' experience of being the CEO of their own businesses; employ a team of more than 30 people; and have been recommended by three referees, drawn from Hupan's trustees, sponsors or alumni.

Entrepreneurs including Fok Kai-man, Vice-president of Fok Ying Tung Group and grandchild of the Hong Kong tycoon Henry Fok, and Jared Psigoda, co-founder and CEO at Reality Squared Games, who will be the first foreign student at Jack Ma's class, have already been selected out of 1800 aspiring applicants.

Many of the students already play a leading role in their own fields, such as the internet, real estate, manufacturing, the entertainment industry, and high-tech business.

 

[ahojunk]

Good move.
This will reduce corruption and conflict of interest.

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Officials prohibited from running e-commerce
2016-01-26 09:10 | Global Times | Editor: Qian Ruisha

Civil servants and Party members are banned from running stores on online shopping platforms like taobao.com, a newspaper affiliated with the Central Commission for Discipline Inspection, China's top disciplinary watchdog, and the Ministry of Supervision, said in a report on Monday.

In response to a question whether it is legal for officials who are members of the Communist Party of China (CPC) to own online stores on e-commerce platform taobao.com or social networking app WeChat, the Zhongguo Jijian Jiancha Bao newspaper said on its website officials who were Party members were prohibited from operating online stores, according to a set of Party rules on sanctions for those who violate the Party code of conduct, which stipulates that members engaging in profit-making activities will be punished.

According to the Party rules, the profit-making activities include running businesses, owning shares of an unlisted company, purchasing and selling stocks as well as securities as a means of investment, offering paid agent services, and registering or investing in companies abroad.

Those who breach the Party rules will be warned, deprived of their Party positions, or expelled from the Party, depending on the seriousness of their violations, said the article.

The CPC Central Committee in October 2015 issued the set of Party rules which took effect since January 1, 2016.

 

[ahojunk]

"The Chinese Internet has helped Chinese people overcome poverty and I think this is a great success," said Nebe.
This is good stuff!

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Internet helping Guizhou lift millions out of poverty
Editor: zhangrui 丨Chinadaily
01-13-2016 06:31 BJT

With the booming development of e-commerce and big data technology, a southwestern Chinese province aims to lift millions out of poverty as the nation is making its final five-year dash to make all of its 1.3 billion people live a comfortable life.

In Guizhou province's five-year plan to develop society and the economy between 2016 and 2020, big data and big poverty alleviation are highlighted as two major strategies, according Liu Yuankun, the province's vice governor who is in charge of poverty alleviation.

"This means we will make full use of big data technology to reduce poverty," said Liu.

According to the province's schedule, more than 3 million of the remaining 6.23 million people living below poverty line will be lifted out of poverty by the end of 2017 and all will shake off poverty by 2020.

With the help of big data technology, a "poverty alleviation cloud" has been built, an electronic platform that pools all updated information about residents living below the poverty line such as their location, the causes of their poverty, how much subsidies they get and by what kind of poverty alleviation project they are covered, said Liu. "

By following the data stored in the 'poverty alleviation cloud', we are able to deliver more precise and targeted help to those in poverty," added Liu. Statistics show that Guizhou managed to lift 5.29 million people out of poverty from the beginning of 2011 to the end of 2014, which means that more than one million people in the province shook off poverty annually during the period.

Weining, a gathering place for Yi, Hui and Miao nationalities, is one of Guizhou's poorest counties because although it has favorable natural conditions to grow apple trees it's very difficult for local residents to sell them due to poor marketing skills.

However, now with the help of WeChat, the most widely used instant messaging and also one of the most influential e-commerce mobile app in China, local residents are able to sell ten tons of apples in a week, said Chris Nebe, CEO of Monarex Hollywood, who is currently shooting a documentary about Guizhou.

Rough estimates reveal that the province lifted 1.3 million out of poverty in 2015.

Nationwide, China was the first developing country to meet the Millennium Development Goals target of reducing the population living in poverty by half ahead of the 2015 deadline. Over the past three decades some 700 million rural residents across China have shaken off poverty.

"The Chinese Internet has helped Chinese people overcome poverty and I think this is a great success," said Nebe.

By the end of 2015, China still had 70.17 million people in the countryside living below its poverty line of 2,300 yuan ($376) in annual income by 2010 price standards.

Chinese President Xi Jinping urged local governments and Party committees in November to place poverty alleviation at the top of their work agenda.

But helping more than 70 million shake off poverty will be much harder than the lifting of 700 million out of their impoverished conditions that has been achieved in the past more than three decades, since those still living in destitution are either stranded in rural areas that are hard to reach or endure difficulties that they cannot overcome on their own.

"Internet has become a tool for poor Chinese people to make a better life," said Nebe.

 

[TaiShang]

China is determined to fully utilize Made in China 2020 objectives along the same line with Germany's Industry 4.0.

With its mature manufacturing and exceptional logistics (and huge affluent consumer basis), it is impossible not to materialize within the said timeframe.

 

[ahojunk]

Internet firms battle for relevance in red envelope race
(Xinhua) 09:13, February 10, 2016

Traditionally, Chinese people gives red envelopes filled with money, known as "Hongbao," to friends and relatives during the Lunar New Year celebrations. [Photo by Liu Junfeng/for China Daily]

BEIJING -- Worried about losing traffic on their smartphone apps while people are distracted by Spring Festival celebrations, Chinese internet firms vied to keep users tuned in with cash gifts.

Traditionally, Chinese people gives red envelopes filled with money, known as "Hongbao," to friends and relatives during the Lunar New Year celebrations. Tapping into the tradition, internet firms including Alibaba, Tencent, Baidu and Sina Weibo launched apps that enabled users to send, snatch and draw cyber red envelopes on their smartphones.

Alibaba's financial arm Ant Financial allowed users of its mobile payment app Alipay Wallet to draw money in the run-up to the Lunar New Year Eve.

It partnered with the state broadcaster's annual Spring Festival gala as its official red envelope distributor during the gala's five-hour broadcast on the new year's eve.

Tencent got the upper hand on the social front as its popular instant messaging app WeChat was the primary platform for hundreds of millions of smartphone users sending and opening digital red envelopes between friends, colleagues and family.

Tencent launched the red envelope service two years ago in hope that tradition would encourage people to exchange cyber red envelopes on WeChat and spend the money through its payment service Tenpay.

The plan worked, with millions of users tying their bank card with Tenpay to transfer money, shop online or simply send out more cyber envelopes on WeChat. Other domestic internet firms followed suit, but with mixed results.

The enthusiasm for various forms of cyber red envelopes has been high among Chinese smartphone users, though the money they get is often minuscule.

Despite shaking her phone day after day for pocket money from Alipay this year, Hao Yueyua often received less than one yuan. But she never gets bored.

"It has a lot to do with luck, but that's what makes red envelopes on the smartphone so fun," Hao said.

For others, cyber envelopes have made gift-giving during this time of the year less burdensome.

"Sending out money envelopes on smartphone is so much more efficient than handing out physical ones," said Wu Yan, who works at a bank in central China.

"It really saves me from all the usual back-and-forth when friends and relatives show their politeness by pretending to refuse your money envelopes," she said.

Chinese microblog Sina Weibo reported a surge in daily active users on Sunday thanks to the red envelopes distributed on its apps and a surge in discussions about the Spring Festival gala.

Sina said the number of active users from Sunday to the early morning of Monday, when the five-hour live broadcast of the Spring Festival gala ended and the Chinese Lunar Year of the Monkey officially began, surged 31 percent from last year's Lunar New Year eve on Feb. 18, 2015.

It said promotional cash gifts have been distributed to 100 million users through the platform.

Celebrities and dignitaries from Hong Kong and Taiwan to the United States and the United Kingdom also used Weibo to send out celebratory greetings for the Lunar New Year. The United Nations teamed up with Chinese actor Liuxiaolingtong, known in China for his portrayal of Monkey King in the TV series Journey to the West, to send out wishes to the Chinese for the Year of Monkey.

 

[ahojunk]

Target HR chief Jodee Kozlak heads to Alibaba
Longtime manager Stephanie Lundquist to replace Jodee Kozlak.

By Evan Ramstad Star Tribune
FEBRUARY 12, 2016 — 7:25PM

Jodee Kozlak, who has been Target's human resources chief for the past nine years, is heading to Alibaba Group as global HR chief.

Jodee Kozlak, who was Target Corp.’s human resources chief for the past nine years, will join Alibaba Group as global senior vice president of human resources, the Chinese e-commerce company announced Friday.

Target separately announced that it promoted Stephanie Lundquist, a human resources executive with a decade of experience at the Minneapolis-based retailer, to succeed Kozlak as HR chief.

With the move, Kozlak, 52, joins a company that is smaller than Target but one that is growing far more quickly and considered by investors to be much more valuable. Alibaba has dominated the Chinese e-commerce market for more than a decade. Its 2014 initial public offering on the New York Stock Exchange was the largest in U.S. history.

For Target, Kozlak’s departure marks another significant change in the group of executives who directly report to Chief Executive Brian Cornell, who has been with the company for 19 months.

The company’s human resources department becomes the fifth major unit with a leadership change since Cornell took over. He also hired a new chief financial officer, chief information officer and chief risk and compliance officer, and is looking for a chief merchandising officer. He created the role of chief operating officer, shifting finance chief John Mulligan into that job.

Kozlak became Target’s top human resources leader in March 2007, after serving as a senior vice president in the department for a year. She had previously been an executive and general counsel in the human resources unit.

“Jodee’s contributions in the past 15 years have made a tremendous impact on Target and our team members globally,” Cornell said in a statement.

Kozlak joined the company in 2001 from the Minneapolis law firm of Greene Espel, where she was a partner. She has been active with a number of Twin Cities cultural and educational institutions, including the boards of the Guthrie Theater and the University of Minnesota’s Carlson School of Management. She is also on the board of C.H. Robinson, the logistics company based in Eden Prairie.

Lundquist, 40, was most recently senior vice president of human resources at Target and was responsible for personnel at the company’s Minneapolis headquarters as well as its operations in India.

“Stephanie has played a critical leadership role in Target’s transformation efforts, developing and initiating the human resources strategies necessary to drive long-term growth for Target,” Cornell said. “She’s been a leading voice as we push ourselves to think differently and work in new ways across Target.”

Lundquist wasn’t available for comment, a Target spokeswoman said, and Kozlak couldn’t immediately be reached for comment.

At Alibaba, Kozlak is expected to play a key role in the company’s international expansion. The firm, which generated about $15 billion in revenue last year, provides software that is used by both consumers on smartphones and businesses in their data centers to facilitate transactions. Alibaba services are used by 450 million people daily. Its main shopping site, called Taobao, accounts for about 80 percent of all e-commerce transactions in China. Its Alipay financial payments system is ubiquitous in the country, used for purchases of all kinds and even to transfer money between people’s smartphones.

The firm now employs about 250 people in the U.S., chiefly in offices in the San Francisco area and Seattle with new ones to open in New York and Washington. Kozlak is likely to divide her time among the Bay Area, New York and the company’s headquarters in Hangzhou, China. She will report to Jane Jiang, who co-founded Alibaba with Chief Executive Jack Ma and is its HR chief, and to Michael Evans, the company’s president.

The firm is trying to attract more American businesses to sell products to Chinese consumers, an effort that is driving its expansion in the U.S.

 

[ahojunk]

Is it going to be 5th time lucky for Applepay?
Let's wait and see, but I don't think so.

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Apple Pay launches in China, takes on entrenched rivals Alibaba and Tencent

Paul Carsten
February 18, 2016:

Apple Inc launched its mobile payment system in China on Thursday in a bid to convince the hundreds of millions of users of the country’s entrenched, dominant services to switch.

“We think China could be our largest Apple Pay market,” Jennifer Bailey, vice president of Apple Pay, told Reuters in an interview in Beijing.

In an early boost, China’s biggest lender, Industrial and Commercial Bank of China Ltd (ICBC), was among the banks that said earlier this week that customers would be able to use Apple Pay from Thursday.

However, Apple Pay has not had an easy ride so far in China, the fifth country to get the service. Even in its U.S. home market, Apple has faced sceptical retailers in its effort to develop a new revenue stream.

China is not likely to prove any easier to crack.

“People switch applications for significantly better experiences, it (Apple) has to deliver not just a little bit more secure, or a little bit easier to use,” said Mark Natkin, founder of Marbridge Consulting.

Greater China is Apple’s second-largest market by revenue, and the world’s biggest smartphone market. By the end of 2015, 358 million people, more than the U.S. population, had already taken to buying goods and services by mobile phone, according to the China Internet Network Information Center.

The vast majority are using payment services from China’s two biggest Internet companies that have existed for years.

Social networking and gaming firm Tencent Holdings Ltd operates WeChat Payment, and e-commerce company Alibaba Group Holding Ltd, through its Internet finance affiliate Ant Financial Services Group, runs Alipay.

“With 100 percent saturation of local payment systems, no one in China is clamouring for Apple Pay,” said one retailer who declined to be named for fear of harming business prospects. “Today, everyone has a local payment option on their phone, so Apple Pay is a solution in need of a problem.”

BANKS ON BOARD

Deeply ingrained in China’s Internet, domestic payment services cover much more than ride hailing, food delivery and online shopping. Users can invest in wealth management funds, pay utility bills, send gifts to friends and give to charity.

An Ant Financial spokeswoman said Alipay has over 400 million active users, with 80 percent on mobile.

“Alipay is an app for both (Google software) Android and (Apple’s) iOS system and has little requirements for the make and model of the mobile phone,” she said.

The U.S. firm has 19 of China’s biggest lenders as partners. That means 80 percent of China’s credit and debit cards are eligible for Apple Pay, usable at about one-third of all locations that accept those cards, Apple’s Bailey said.

Apple’s approach is to not compete with banks and UnionPay, said Bailey.

“China UnionPay and our Apple Pay solution has a huge advantage, given the footprint of China UnionPay,” she said. “Its merchant acceptance network far exceeds what any of the other mobile platforms have today.”

Though banks have been rivals elsewhere, industry watchers say this tactic may offer Apple its best prospect.

Zhao Longkai, associate professor of finance at the Peking University Guanghua School of Management, said China’s banks, and state-backed payment card monopoly China UnionPay, have rankled at the popularity of alternative mobile systems associated with Alibaba and Tencent.

“The entry of Apple Pay has the potential to change the strategic landscape,” said Zhao. “UnionPay now has an opportunity to bring a new alliance to defend the market that it is losing to Tencent or Alibaba – Apple Pay first needs to figure out a way to win over Chinese customers.”

 

[JSCh]

Alibaba expands e-commerce in rural China under gov't support
Source: Xinhua 2016-02-18 01:04:01

BEIJING, Feb. 17 (Xinhua) -- Alibaba, China's biggest online trader, reached an agreement on Wednesday with the top economic planner to expand e-commerce in rural areas.

The National Development and Reform Commission (NDRC) will work with Alibaba in more than 300 rural areas to develop e-commerce, which is expected to optimize the agricultural industrial chain and encourage rural people to start their own businesses.

E-commerce is developing quickly in rural China as farmers begin selling produce online. E-commerce giants such as Alibaba and JD have set up service stations in villages to help those who lack the necessary skills to shop online. Villagers can order goods at the stations and return a few days later to collect their packages.

The number of Alibaba village service stations has risen from three in 2009 to 780, with plans to build a total of 100,000 such stations and 1,000 county-level stations by 2019. Total investment is projected to be 10 billion yuan (1.53 billion U.S. dollars).

China's online sales remained strong in 2015, jumping 33.3 percent year on year to 3.88 trillion yuan.

Online sales in rural areas grew more rapidly, doubling the pace of growth in urban areas. Rural netizens, who account for nearly one-third of the total, spent 195 million yuan online last year.

Online retailers made great efforts to tap the potential of the rural market. Last year, 22.4 percent of online shoppers came from rural areas.

"Developing e-commerce in rural areas is not only beneficial to entrepreneurship and employment, but also helpful to upgrading the economic growth mode at the county level and relieving poverty," said Wang Xiaotao, deputy head of the NDRC.

 

[JSCh]

Alibaba Blazes a Trail with Online Health Care Pilot
Internet giant launches service providing diagnoses and prescriptions to fishing village in Hubei, and other companies are mulling similar businesses

By staff reporter Li Yan

(Beijing) – Villagers in the central province of Hubei recently spoke with doctors hundreds of kilometers away through the Net and then had prescriptions delivered to their doors as part of China's emerging Internet health care service.

Like many fishing villages, Hongshiyuchang has poor public transportation and is far away from major public hospitals. Villagers usually have to spend hours on a bus to get to doctors in nearby cities, but now these isolated villages are having some of their health care needs met by Internet companies.

On January 18, a pilot launched by the e-commerce giant Alibaba Group Holding Ltd. in Hongshiyuchang attracted many villagers who wanted to test out the new medical service. One villager, Hu Tianshun, said that after making a reservation and putting details of his health history online, he was interviewed by a doctor in Wuhan, the capital of Hubei, in a video call. After the diagnosis, the doctor placed an electronic prescription so Hu could order medicine in Alibaba's online shops. Hu got his drugs the next day, and completed the transaction by paying the deliveryman.

Hongshiyuchang is among the several villages that are part of the Alibaba pilot. Over the past two years, the company has provided various services on its e-commerce and payment platforms that allow users to make hospital appointments, buy medicines and pay their medical bills.

"We want to build a health care product sales platform that links manufacturers, wholesalers and retailers to offer various medical products and services to customers," said Ni Jianwen, vice president of Alibaba's health business division.

Other Internet companies are also eyeing the online health care sector. Tencent Holdings Ltd. has invested more than US$ 100 million in the medical service provider We Doctor Group, also known as Guahao. In December, We Doctor launched the country's first Internet-connected hospital in Wuzhen, in the eastern province of Zhejiang.

According to market research group iResearch, the country's online medical service sector had revenue of 10.9 billion yuan in 2014, up from 200 million yuan in 2009. The figure for last year would be about 16 billion yuan, iResearch predicted.

Alibaba announced its Future Hospital strategy in May 2014. The first stage of the plan is to offer online reservation, payment and health check reports for users. Next, the company wants to sell prescription drugs and delivery services. Finally, Alibaba plans to cooperate with medical institutions and equipment manufactures to offer disease prevention and health management services based on its data analysis technology.

Alibaba says its online and mobile platforms have allowed 400 major hospitals nationwide to offer reservation and payment services to more than 50 million people. The pilot in Hubei would be part of the second stage of the Internet company's plans.

Going Online

Alibaba's Hubei pilot has partnered with the Central Hospital of Wuhan, a major public hospital. Central Hospital agreed to offer medical inquiry services from 13 of its departments, including gastroenterology, endocrinology and dermatology.

"The cost to cooperate with Alibaba is not high," said Sun Changlin, the Communist Party chief of the hospital. "We just established an Internet office and assigned doctors from different departments to take up rotating duty for the online inquiries."

The partnership with Alibaba is part of the hospital's plan to divert some of its patients to smaller hospitals to reduce its workload, Sun said. It is a response to central government's reform plans announced last year that call for using Internet technology to direct patients to different medical institutions based on their needs to reduce the pressure on big hospitals and improve the efficiency of medical resources.

Sun said the partnership with the Internet giant generates no profit for his hospital, but he expected benefits down the road because "Alibaba can bring valuable traffic to the hospital."

Tencent also wants to be part of the trend. In September, We Doctor announced a plan to invest US$ 300 million to set up an online medical service platform within five years that would link 1,600 hospitals nationwide in offering offer online reservations, diagnoses and payment services.

In December, We Doctor launched its Wuzhen Internet Hospital to offer online medical services. It is based at the Tongxiang No. 3 People's Hospital, in Jiaxing, Zhejiang Province, in which We Doctor holds a controlling stake.

However, Sun said online medical services face limits because "many diagnoses need to be checked onsite, so Internet hospitals mainly focus on referrals and chronic disease management."

Liu Qian, an independent Internet medical service analyst, said that how well Internet companies help hospitals redistribute patients remains a question because the relationships between medical facilities are complicated.

Another obstacle facing Alibaba and Tencent is how to get their medical services covered by the national medical insurance system. Ni said due to the different regional policies, Alibaba's drug sales receipts sometimes are not accepted by local medical insurance authorities, creating difficulties for people buying medicines from the Internet firm.

Drug Sales

Before it partnered with Central Hospital, Alibaba sought cooperation with hospitals in Beijing and the northern province of Hebei, but failed, said a source close to the matter. The problem was that "Alibaba can't offer benefits to the hospitals," he said.

For hospitals, partnering with Alibaba to offer online prescription means they would allow patients to buy medicines from the Net firm's online pharmacies, giving up a business that accounts for nearly 70 percent of a public hospital's revenue.

The cooperation with Central Hospital was timely. In August, Wuhan severed the links between hospital income and drug sales. Instead, public hospitals in the central city were allowed to raise their prices for medical services to offset the loss.

The most important aspect of Alibaba's pilot in Wuhan is the access it gives Alibaba to a doctor writing prescriptions, the source said. "Electronic prescriptions can form a great medical database that is likely to create business value," he said.

Nearly 90 percent of prescription drugs sales are controlled by hospitals. If they are opened up to the market, total sales, including prescription drugs and over-the-counter (OTC) medicines, will hit 3 trillion yuan, predicts UBS Securities. OTC sales currently stand at about 200 billion yuan.

As part of the Hubei pilot program, Alibaba cooperates with Haoyaoshi Pharmacy Co., a subsidiary of China's largest private medicine distribution company, Jointown Pharmaceutical Group Co. After prescriptions are placed by doctors at the Central Hospital, Alibaba will send the orders to Haoyaoshi's online store and then deliver the medicines to villagers.

A person close to Jointown said deliveries handled under the pilot are being done for free, with Jointown and Alibaba sharing the costs. The question is how long this can be sustained.

"Logistics need big volumes to reduce costs," said Liu, the analyst. "If the volume can't increase quickly, it will be difficult to sustain."

And competition in the new field is already grower fierce. The China Medical Pharmaceutical Material Association said that between 2010 and 2013, online medicine sales in the country grew 250 percent every year on average. And the number of online pharmacies has risen accordingly, to 249 in 2014 from 35 in 2010. Some 10 billion yuan worth of medicines were sold online in 2014.

Alibaba's major e-commerce rivals, JD.com and yhd.com, have both gotten licenses from the government to sell medicines online. "With so many competitors joining in the game, it will be difficult for Alibaba to dominate the market," Liu predicted.

Alibaba will also face challenges with how to replicate the Hubei pilot elsewhere. An industry expert said that while We Doctor, which relies on its own hospital, Alibaba will need to find more partners to expand the pilot. But the partnership with Central Hospital has many special features, the expert said, and "it is difficult to find partners with those same features."

(Rewritten by Han Wei)

 

[ahojunk]

Alibaba in Talks With Banks for up to $4 Billion Loan
China’s biggest online shopping company plans to use funds for expansion plans

Alibaba’s plans to add to its war chest come after it spent billions of dollars on investments and acquisitions over the past year. Above, Alibaba's headquarters on the outskirts of Hangzhou, Zhejiang province, China.PHOTO: REUTERS

By JURO OSAWA
Feb. 26, 2016 7:10 a.m. ET

Chinese Internet giant Alibaba Group Holding Ltd. is in discussions with banks for a loan of up to $4 billion to fund expansion plans, including acquisitions, according to people familiar with the matter.

Alibaba’s plans to add to its war chest come after it spent billions of dollars on investments and acquisitions over the past year, both in China and overseas markets such as India.

The discussions, involving several banks, started with plans for a $3 billion loan, but the amount could be increased to $4 billion, the people said. One of the people said that the loan is expected to be finalized next month.

China’s biggest online shopping company has been ramping up its investments in a wide range of businesses, from mobile apps and logistics partners in China to online payments in India.

In June, Alibaba and its financial-services affiliate said they would together invest nearly $1 billion in Koubei, a food-ordering app, to turn it into a broader service that connects online users with brick-and-mortar businesses like restaurants. Two months later, Alibaba announced it would spend about $4.5 billion for a nearly 20% stake in Chinese electronics retailer Suning Commerce Group Ltd., as part of its efforts to beef up its logistics by teaming up with a major bricks-and-mortar retail chain. In November, Alibaba said it would turn Youku Tudou Inc. into a wholly-owned unit in a deal that valued the online video provider at about $4.4 billion.

In India, Alibaba invested in online shopping startup Snapdeal.com and One97 Communications Ltd., which runs a dominant local online-payment service called Paytm.

Write to Juro Osawa at juro.osawa@wsj.com

 

[JSCh]

Alibaba's Internet lender extends 45 bln yuan in loans in 8 months
Source: Xinhua 2016-02-29 18:53:22

BEIJING, Feb. 29 (Xinhua) -- An Alibaba-backed private lender said on Monday that its focus on providing financial services to clients who are underserved by traditional banks has resulted in billions in loans to small businesses and individuals over the past eight months.

E-commerce giant Alibaba holds a 30-percent stake in MYbank through its financial arm, Ant Financial. MYbank said it has lent a total of 45 billion yuan (around 6.88 billion U.S. dollars) to farmers, merchants on Alibaba's online marketplace, restaurant owners and mom-and-pop stores, extending loans to 800,000 borrowers that have trouble accessing financing through traditional banks.

In the eight months since it opened for business last June, MYbank's loan balance has grown 30 percent each month on top of a client base that has been expanding 12 percent for the past five months.

Its rival, Tencent, also runs a private lender called WeBank based in the southern Chinese boomtown of Shenzhen. Neither lender has a physical presence, instead providing services online or through mobile applications.

They are among a group of private lenders approved by the Chinese banking regulator under a trial program to encourage lending to the country's small and private businesses and the rural population.

China's large, state-owned banks have been more inclined to lend to big, state-owned companies as the implicit guarantee they have from the government has made lending to such firms almost risk-free.

Smaller companies and individuals don't have such backing, and without adequate credit records, banks don't know how much risk they are exposed to when lending to these companies.

MYbank has tended to lend to companies and firms that have historically been underserved by big banks, while WeBank has focused on consumer credit and wealth management. Both touted their ability to accurately evaluate clients' creditworthiness based on their online activity, in addition to information gathered through traditional due diligence work.

MYbank didn't disclose the aggregate amount of credit extended to farmers, but said average credit for rural household across 2,425 villages in 24 provinces stands at 44,000 yuan.

 

[JSCh]

Infographic: Charting growth of e-commerce in rural China
(chinadaily.com.cn) Updated: 2016-03-09 07:06

 

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Alibaba to train 1 million rural e-commerce gurus
Source: Xinhua 2016-03-15 21:20:17

BEIJING, March 15 (Xinhua) -- Alibaba reached an agreement Tuesday with China Communist Youth League, a CPC reserve force, to train 1 million teenagers to take e-commerce to rural areas.

The agreement sealed in southwest China's Guizhou Province, means Alibaba will help the rural youth to jumpstart online businesses offering training, funds and partnerships.

Alibaba's Internet finance arm Ant Financial will earmark 1 billion yuan (154 million U.S. dollars) to support college graduates who want to return to their hometowns to start businesses.

E-commerce is developing quickly in rural China with farmers selling produce online. Service stations have been set up in villages to help those who lack the necessary skills to buy and sell online. Villagers can order goods at the stations and return a few days later to collect their packages.

The number of these village hubs has risen from three in 2009 to 780, with plans in place to build another 100,000 village stations and 1,000 county stations by 2019 at a cost of around 10 billion yuan.

China's online sales remained strong in 2015, jumping 33.3 percent to 3.88 trillion yuan. Online sales in rural areas grew at double the pace of urban areas. Rural shoppers, who account for nearly one-third of the total, spent 195 million yuan online last year.

 

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China Focus: Agricultural e-commerce bridges China's urban-rural gap
Source: Xinhua 2016-03-15 19:34:56

BEIJING, March 15 (Xinhua) -- A year ago, farmer Liu Tongyong, who lives deep in the mountains and had never used the Internet, was worried about his snake gourd sales.

Now the 45-year-old from east China's Anhui Province is selling his produce online. "I have not only sold out of product, but also gotten a better price," he said.

Liu's home in Taiping Village is about a two-hour ride from the seat of Yuexi County.

In the past, he had to wait for someone to collect the gourds. Sometimes the collectors wouldn't even show up. Liu had no choice but to let the fruit decay in the field.

This year, an e-commerce service center was set up in Taiping Village, which has helped more than 300 farmers sell their products. About 7,500 kilograms of snake gourds were sold in a year.

A report by the China Internet Network Information Center showed that of China's 688 million Internet users by the end of 2015, 195 million, or 28.4 percent, were rural residents.

China has witnessed a boom in rural e-commerce in recent years, with 780 villages exceeding 10 million yuan (1.5 million U.S. dollars) each in online transactions in 2015, according to a report released by online retail giant Alibaba.

China's online sales remained strong in 2015, jumping 33.3 percent year on year to 3.88 trillion yuan, with 22.4 percent of online shoppers coming from rural areas.

E-commerce has not only helped farmers sell their products, but also helped them buy things.

With the spring growing season on the way, Zhou Zhuwen in east China's Jiangxi Province is buying fertilizer for his grain online.

"It is cheaper, and I have more choices," he said. The fertilizer can be delivered to his home, saving him the trouble of transportation. "This time, I bought 20 tonnes and saved more than 10,000 yuan," he added.

"E-commerce is changing farmers' work habits and boosting their efficiency," said Zheng Fengtian, vice head of the School of Agricultural Economics and Rural Development at Renmin University.

Last year, China's Ministry of Finance and the Ministry of Commerce announced 200 counties that would serve as demonstration bases for rural e-commerce and earmarked two billion yuan to help with development there.

According to Minister of Commerce Gao Hucheng, the country will reduce logistics costs, which are 15 to 16 percent of total product costs on average, almost double that in developed countries.

"Methods of consumption will be improved," he said, adding that online sales have become the trend.

In this year's government work report, Chinese Premier Li Keqiang promised to "encourage the introduction of e-commerce into rural areas", and increase the accessibility of broadband networks in both urban and rural areas.

The government has pledged to spend 140 billion yuan by 2020 to provide at least 50,000 villages with broadband Internet access. At that time, about 98 percent of the nation's rural areas will be hooked up to the Internet.

Alibaba plans to invest 10 billion yuan to establish 100,000 village service centers in the next three to five years, which will serve to teach rural people how to use the Internet for shopping or business.

Farmer Liu has just expanded acreage of his snake gourd fruit. "With the help of the Internet, I hope that more products could be sold," he said.