Economy

How China's Internet Commerce Boom Sways The Real Estate Market

A busy shopping street in Beijing
A busy shopping street in Beijing
Yang Qiubo

Online business is booming in China. According to data from iResearch, an Internet market research firm, the current scale of China’s e-commerce is similar to that of the United States, at $206 billion. A recent study by the Boston Consulting Group estimated that by 2020 China’s e-commerce market will exceed $1 trillion.

What tangible effects can we expect from this expansion? Stuart Ross, director of the China department at Jones Lang LaSalle — an American real estate investment management company — said that the e-commerce boom will bring with it massive development opportunities.

As the e-commerce white paper released by Jones Lang LaSalle shows, certain large consumer websites have begun to establish their own logistics networks, building and managing warehousing facilities independently. Real estate developers will have the opportunity to use their expertise to cooperate with digital businesses, with high-tech businesses not only supplying quality tenants to developers — but also helping developers in obtaining necessary land from government authorities.

As China’s largest logistics developer, Global Logistics Properties, revealed in its annual report that among its total warehouse capacity the space available for lease by e-commerce has increased from 14% in 2011 to 20% to 2012.

According to the data from iResearch, the Chinese online commerce market is growing faster than in all other major countries. While annual growth has stabilized at around 17% in the U.S., China’s e-market started from virtually non-existent in 2003 to an average annual growth of 90% over the past five years.

There is huge room for growth in China’s online retailing businesses. Compared with the developed world where 70 to 80% of residents are connected to the Internet, only 40% of people in China are online — and only 40% of those have shopped online. In the United States, 70% of Internet users are also Internet shoppers. Boston Consulting estimates that by 2015, China will see annual increases of 40 to 50 million Internet users, and 30 to 40 million online shoppers.

Window shopping

Michael Klibaner, director of the Greater China Research Department at Jones Lang LaSalle, reckons that China has become a large e-commerce nation and the development of this market will alter the commodities’ consumption, purchase, stocking, and delivery methods. Only the developers, brands and operators that are at the leading edge of this trend will manage to remain competitive.

Chinese online brands and retailers are actively expanding their distribution capabilities in the market outside of the usual first-tier cities. As for logistics developers, they ought to be attentive to the major inland cities where the emergent consumers are clustered, and consider constructing new storage facilities to comply with future warehouse rental needs.

In developed countries, the rise of e-commerce has already demonstrated its strong impact on retail companies, and the real estate market for retailers.

Deng Rushun, director of Greater China Retailer Real Estate at Jones Lang LaSalle, is convinced that these worries exaggerate the threat of e-commerce while at the same time underestimating the resistance of various types of physical stores. Easy and practical online shopping won’t extinguish the desire to go out shopping. Still, certain retailing businesses will indeed lose their competitiveness. Inexpensive and highly fragmented mass non-branded apparel outlets will be the ones most at risk. Shopping centers that mostly have these kinds of low-end generic retailers as tenants will be the first to be affected, and may not wind up surviving.

Compared with the low-end retail shopping centers, the shopping malls belong to one single operator and can use a top-down strategy to adapt to the new environment. By taking into consideration a unifying theme, positioning, marketing and technical factors, they can provide customers with different shopping experiences.

In China “window shopping” as a recreational and social activity is still deeply rooted — and is something that one simply can’t get by logging on.

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Spencer Tunick Nude Installation in Israel

Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

👋 Salam!*

Welcome to Monday, where the UK pays homage to slain MP David Amess, Myanmar frees thousands of prisoners, and Facebook gets ready to build its "metaverse." Please fasten your seatbelts: Worldcrunch also takes stock of the long-lasting effects — good and bad — the pandemic has had on the air travel industry.

[*Azeri - Azerbaijan]

🌎  7 THINGS TO KNOW RIGHT NOW

Myanmar to free political prisoners: Myanmar's junta chief Min Aung Hlaing has announced the release of 5,636 prisoners who had been jailed for protesting the coup that ousted the civilian government in February 2021.

• Powerful Haiti gang behind the kidnapping of U.S. missionaries: The notorious 400 Mawozo gang is believed to be behind the kidnapping in Haiti of a group of Christian missionaries, including 16 U.S. citizens and one Canadian. The brazen kidnapping on Saturday comes as crime is spiking since the killing of President Jovenel Moise in July.

• UK to pay tribute to David Amess: British lawmakers will pay homage in parliament to colleague David Amess, who was stabbed to death Friday in what was described by the police as a "terrorist incident." Officers arrested a 25-year-old suspect whose father, Harbi Ali Kullane, worked as a media adviser to a former prime minister of Somalia.

• COVID update: Russia has registered more than 34,000 cases of new infections in the past 24 hours, a new record since the start of the pandemic. Meanwhile, police in the northeast Italian city of Trieste used water cannons to clear striking dockworkers protesting Italy's new requirements that all employees be vaccinated.

• At least 26 killed in floods in India: Torrential rain has triggered floods and landslides in India's southern coastal state of Kerala, killing at least 26 people.

• Facebook to hire 10,000 in EU to develop "metaverse": The U.S. social media giant plans to hire 10,000 workers in the European Union over the next five years to build a "metaverse," a virtual reality version of the internet that the company touts as the future.

Punishing parents for children's bad behavior: After limiting gaming hours for minors, China is now considering legislation to reprimand parents if their children exhibit "very bad behavior" or commit crimes.

🗞️  FRONT PAGE

Colombian daily El Espectador dedicates its front page to Alex Saab, "owner of the secrets" of Venezuelan President Nicolas Maduro. The Colombian businessman, wanted by U.S. authorities for allegedly laundering money on behalf of Venezuela's government, has been extradited from Cape Verde to the U.S. where he is scheduled to appear in court today.

#️⃣  BY THE NUMBERS

4.9%

China's economy registered its slowest pace in a year as the country faces a looming energy crisis with power shortages and increasing pressure on its property sector. Gross Domestic Product (GDP) for the period between July-September rose 4.9%, the weakest numbers since the third quarter of 2020 and significantly lower than forecasts. The world's second-largest economy faces a debt crisis linked to the China Evergrande Group debt crisis, while energy shortfalls have dropped factory output to its weakest since early 2020, when heavy COVID-19 curbs were in place.

📰  STORY OF THE DAY

7 ways the pandemic may change the airline industry for good

Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.

⛽ Cleaner aviation fuel: With air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel. In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials

.🛃 Smoother check-in: The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.

✈️ The billion-dollar question: Will we fly less? At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel, in particular, is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.


➡️ Read more on Worldcrunch.com

📣 VERBATIM

"The crimes committed that night are unforgivable for the Republic."

— Emmanuel Macron became the first French president to commemorate the killing of as many as 200 Algerian independence protesters by Parisian police in 1961. For 40 years, French officials ignored the massacre, which took place a year before Algeria gained its independence from France after an eight-year war. In 2012, French President François Hollande acknowledged the killings for the first time on a visit to Algeria, and Macron took it further by attending Sunday's commemoration at the site where the events happened in the French capital. Still, many had hoped the French President would go further and take responsibility for a "state massacre," for a crime many historians consider the most violent repression of a peaceful demonstration in post-War Europe.

📈💥  IN OTHER NEWS

​Low trust, high risk: The global rise of violence targeting politicians

The deadly stabbing of British Parliament Member David Amess confirms an ongoing study on trust and governance in democracies around the world: It's bad. In The Conversation, James Weinberg — the study's author and a lecturer in Political Behavior at the University of Sheffield — writes:

⏪ The assassination of Amess, who was stabbed to death in his constituency on Friday, is a tragic moment for democracy. What makes it even more devastating is that such a catastrophic failure is not without precedent or predictability. Labour MP Jo Cox was shot at her constituency surgery in 2016. Before her, another Labour MP, Stephen Timms, survived a stabbing in 2010. And Andrew Pennington, a Gloucestershire county councilor, died in a frenzied attack in 2001 while trying to protect local Liberal Democrat MP Nigel Jones.

☝️ Beyond these critical junctures in the public debate about politicians' safety, elected representatives must live with an increasingly insidious level of popular cynicism that threatens violence on an almost daily basis.

🇬🇧🇳🇿🇿🇦 Not only are these experiences of abuse or threats of physical violence felt across both sides of the political aisle in the UK — they also appear to be growing more common in other democratic contexts where the climate of politics has been presumed to be both calmer and more volatile, from New Zealand to South Africa.


Read the full piece from The Conversation, now on Worldcrunch.com

✍️ Newsletter by Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

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