China must grasp opportunities of new retail era

By Zhang Ying Source:Global Times Published: 2017/10/26 21:48:39

Illustration: Peter C. Espina/GT

A new retail era is beginning, largely thanks to the upgrading of technology and consumption. Modern technology enables us to truly understand the needs of consumers and convert this information into the data needed by the production side so that more accurate predictions can be made. Based on this massive amount of data, the entire value chain can be more efficient in meeting the needs of consumers, and the supply side can be optimized.

To some extent, acting as organizers, new retail platforms can make the entire chain work more and more efficiently as they help manufacturers do a better job. In fact, manufacturers and retail enterprises are becoming like an integrated community.

At the level of national strategy, the new retail era can provide a basis for the entire industrialization system, and it will be of great significance for China's rural economic development and the narrowing of the urban-rural gap. Relying on online supply information and professional talent, the new retail platforms can help traditional offline companies to sell goods such as fresh agricultural products. Combined with localization efforts, this can provide consumers with convenient delivery services and promote more innovative business models. This change also reduces the former dependence on physical commercial space. Through the new digital retail platforms, rural production can be more easily incorporated into China's modern economic system, and this is also an important way to achieve poverty alleviation.

In addition, new retail will enhance employment capacity and create more job opportunities. From a macroscopic point of view, this is actually a part of the country's overall industrial upgrading. Some industries are concerned that the so-called new retail will result in more automation and reduce the number of current jobs. In reality, I think that the changes in employment opportunities brought about by retail development cannot be considered only from the existing retail perspective, but should be based more on the value network for the whole of society.

Industrial optimization will undoubtedly lead to occupational transfers. But as some jobs end, their place will be taken by new jobs. And with guidance both from the government and the market, these jobs are more likely to have value in modern society than the original ones, as well as helping to boost wider industrial upgrading.

The new jobs generated in the upgrading process can be decentralized. Coupled with appropriate guidance, human resources can achieve wider matching of people and occupations. Numerous new retail-based jobs are no longer overly dependent on physical location, which is conducive for the synergistic development of regional economies.

The new retail era is an important historical opportunity for China. Developed countries have industrial systems that have been mature for a long time and they have established and coherent retail systems. These factors have endowed them with certain advantages in global competition in the past. However, it is the existence of these intact systems that makes it necessary for them to rebuild and adapt to the digital era. China, on the other hand, is in the process of developing a whole new industrial and retail system, to a large extent. Based on the speed and success of the development of new retail in China nowadays, we have already seen how much of an advantage this is.

As far as I am concerned, the new retail era must prioritize data, consumer demand data in particular. This will be highly meaningful for China's continued industrial upgrading.

We should by no means take the old paths used by developed countries, as they were suited to the historical and economic conditions of the time. Nowadays, both technology and demand are seeing great changes, and we need a modern approach, in which a data-based industrial system can be built to benefit China's economy and society.

The author is deputy dean of the Guanghua School of Management of Peking University.

Posted in: INSIDER'S EYE

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