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China 2.0

Macy's And Costco Come To China, But Only Online

ECONOMIC OBSERVER (China), ECONOMIC DAILY (Taiwan), MCKINSEY GLOBAL INSTITUTE

Worldcrunch

BEIJING - While many of the traditional retailing giants have been struggling lately in China, another form of consumer sales is thriving. According to a new report by the McKinsey Global Institute, China’s online retail revolution has exploded, as the country has just become the world’s second-largest e-tail (electronic retail) market with estimates as high as $210 billion for revenues in 2012 and a compound annual growth rate of 120% since 2003.

Betting on this new consumer trend are the American department store Macy's and the largest chain warehouse store Costco. Rather than brick-and-mortar operations, both plan to enter China this year by opening online storefronts. This comes just weeks after German electronics chain Media Markt announced it is shutting all its stores in China, and Walmart shutters operations at three of its Chinese locations, the Economic Observer reported.

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According to the McKinsey report, in 2012, China's year-on-year e-commerce growth was 64.7% with a colossal online shopper population of 247 million people. That figure is expected to reach 310 million by the end of 2013.

If forecasted growth rates continue, China’s e-tailing could generate anywhere from $420 billion to $650 billion in sales by 2020, and the market may equal that of the United States, Japan, the United Kingdom, Germany, and France combined today. A recent Reuters report has said that China's largest e-commerce firm, Alibaba, is already selling merchandise this year worth more than that sold by Amazon and eBay combined.

However, as the Economic Daily pointed out, unlike the other countries where online shopping is largely led by few mega size B2C (business to consumer) websites, nearly 70% of China’s e-tailings are C2C (consumer to consumer). This highlights the important contribution that small and medium-sized enterprises have played in this growth.

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Economy

Russian Diamonds Are Belgium's Best Friend — But For How Much Longer?

Belgium has lobbied hard for the past year to keep Russian diamonds off the list of sanctioned goods. Indeed, there would be a huge impact on the economy of the port city of Antwerp, if Europe finally joins with the U.S. and others in banning sale of so-called "blood diamonds" from Russia. But a 10th package of EU sanctions arriving this month may finally be the end of the road.

Photo of a technician examining the condition of a diamond in Antwerp, Belgium

A technician examining the condition of a diamond in Antwerp, Belgium

Wang Xiaojun / Xinhua via ZUMA Wire

Since Vladimir Putin's invasion of Ukraine, the European Union has agreed to nine different packages of sanctions against Russia. With the aim to punish Moscow's leadership and to cripple the war economy, European bans and limits have been placed on imports of a range of Russian products from coal, gas and steal to caviar and vodka — were successively banned over the past 11 months.

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Still, one notable Russian export is a shining exception to the rule, still imported into Europe as if nothing has changed: diamonds.

Russian state conglomerate Alrosa, which accounts for virtually all of the country's diamond production (95%) and deals with more than one-fourth of total global diamond imports, has been chugging along, business as usual.

But that may be about to change, ahead of an expected 10th package of sanctions slated to be finalized in the coming weeks. During recent negotiations, with 26 of the 27 EU members agreeing on the statement that ALSROA’s diamonds should no longer be imported, the one holdout was not surprisingly Belgium.

The Belgian opposition to the ban is explained by the port city of Antwerp, where 85% of the rough diamonds in the world pass through to get cut, polished, and marketed. There are estimates that 30,000 Belgians work for Alrosa.

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