E-commerce wave threatens to engulf small businesses

Shop owners at an empty booth at Zhongguancun E world in Beijing, Jan 20, 2015. [Photo/IC]

That's no consolation for Li Feng, who has a store on the fourth floor of Kemao Electronics City, just across the street from Hailong Electronics City.

"The market was packed with people when it first opened in 2004," said Li, looking up from the TV drama he was watching, for want of customers.

"Business has gone from bad to worse in the past five years. The impact from online sales is huge."

Li has shut down the retail side of his business and now tries to eke out a living providing IT services to existing corporate customers, he said, as fellow shopkeepers played poker in the otherwise empty stall next door.

JD's Liu started renting a stall in Zhongguancun in 1998 with an initial investment of 20,000 yuan.

Back then, China had 2.1 million users connected to the Web via 747,000 computers, according to the China Internet Network Information Center, the government body tasked with managing online resources.

By the end of June 2014, the number of users had jumped to 632 million, with 83.4 percent of them able to access the Internet via smartphones.

Liu is now worth an estimated $7.3 billion, according to Bloomberg Billionaires.

"Traditional retail networks in the US are strong, but Chinese consumers long faced an archaic, inefficient brick-and-mortar network," said Josh Gartner, a Beijing-based spokesman for JD. "Consumers flock to superior service."

Alibaba has created 14 million jobs directly and indirectly, Ma said at the World Economic Forum in Davos, Switzerland, last month. Ma is one of China's wealthiest men and the world's 13th richest person with an estimated $35 billion fortune.

Explaining his company's sales growth versus traditional retailers, Ma said: "If you want to have 10,000 new customers, you have to build a new warehouse, this and that. For me, two servers." He's aiming for 2 billion customers around the world.