Introduction
Online shopping connotes the type e-commerce that involves consumers purchasing services and goods directly from sellers through the internet. The growing number of smartphones and users, in particular, has facilitated online retail. China’s online retail industry has been growing in leaps and bounds over the past years amidst a myriad of challenges. However, the recent past has seen the industry grow rapidly and become a central contributor to the country’s economy. Alibaba, China’s number one e-commerce company exemplifies the success of online retail and its incessant growing popularity. China’s cross-border (international) trade, projected to have a cumulative growth rate of 18% by the end of the decade, is quickly overtaking other major global players in the industry like the U.S.A, thanks to Alibaba. The unhinged growth and stardom overlie several factors both national and international. A profound comprehension of the factors and primary facilitators of China’s online retail industry lies in the tenets of international trade theory. The theory is instrumental in analysing international trade trends, origins, and welfare implications, and in this manner, an insider view into the Chinese online retail industry.
Historical underpinning of China’s online retail industry
The history of China’s online retail industry can be traced back to the inception of the Alibaba Group. The company started in the year 1999 with the unveiling of Alibaba.com, a B2B portal aimed at linking Chinese producers with international buyers, under the leadership of Jack Ma (McHugh, 2015). In the years leading up to 1999, China had no records of participation in online retail trade. The idea of creating Alibaba group was conceived in Malaysia in a coffee shop. ‘Ali Baba’ was a legendary character in ‘One Thousand and One Nights’, an Arabian literature, lauded for his business-conscious mind and willingness to help the community. In December the same year, following the coffee shop encounter, Jack Ma, in conjunction with 17 other business people, came up with ‘Alibaba Online’, which was the first online store in China, and marked the beginning of the modern-day flourishing online retail industry in the country. The following years saw the company embark on an innovation spree whose success led to the creation of Taobao in May 2003, and Alipay in December the following year. The former served as an online consumer platform while the latter, though was created to serve Taobao, later became a separate online business. The Alibaba group was slowly, but surely, expanding with completely no local competition. In 2005, the company acquired China Yahoo as a way of initiating a merger with Yahoo Inc. It is noteworthy that from its inception till the time it was listed in the Hong Kong Stock Exchange in the year 2007, Alibaba Group had no domestic competitor (Chang, Chen, Dobbs, Orr, Manyika & Chui, 2013), thus, allowing it to rapidly build its brand and acquire as much domestic support as it could garner. The Group’s timeline is typical of an actual success story.
Most recently, in the year 2011, the Alibaba Group achieved two landmark milestones yet: the reorganisation of Taobao into eTao, Taobao Marketplace, and Taobao Mall, and the unleashing of its mobile operating system (Aliyun OS) as an achievement of the Alibaba Cloud Computing branch of the group. Throughout the history of Alibaba, and China’s online retail industry, it is apparent that innovation, acquisition and the quest for complete dominance has driven the industry into its current status of success and growth. The pinnacle of this success is evident in the Groups massive IPO offering and the Roewe RX5 (the internet car) in the year 2016. In general, the Alibaba Group, according to the company’s founder, boasts the creation over 30 million jobs in China. However, while Alibaba and its affiliate companies still run China’s industry presently, it has to overcome the stiff competition from other industry players including international online retail giants like eBay and Amazon. A strong home market support (Sahney, 2015), however, still ensures that Alibaba tops the ranks. The figure below summarises the historical and projection of China international online retail sales from 2010 to the year 2020.