EXECUTIVE SUMMARY
- The authorities announced E-Commerce Part for China Development Plan in the Fourteenth Five Year Plan.
- We believe it is a sign that the authorities do not plan to erase the non-state-owned internet companies.
- We believe non-state-owned companies are important to employment rate.
DETAILS
This week, three ministries together (Ministry of Commerce, Cyber Space Administration, and Development and Reform Commission) announced the E-Commerce Part for the China Development Plan in the Fourteenth Five Year Plan.
We believe it is a sign that the authorities do not plan to erase the non-state-owned internet companies, although they have investigated and fined many of such companies.
Exhibit 1: E-Commerce Gross Merchandise Value – Retail
Source: Ministry of Commerce and Aequitas Research.
The authorities expect, in China, e-commerce will grow 4.3% annually in following five years, in which online retail will grow 7.6% annually (Exhibit 1). As we understand, a growth rate over 5% can be defined as “aggressive”.
Exhibit 2: E-Commerce Gross Merchandise Value – Rural and International
Source: Ministry of Commerce and Aequitas Research.
The plan also expects Gross Merchandise Value (GMV) can grow 9.4% in rural area and 8.1% overseas (Exhibit 2). Similarly, the two niches do not account for a large part of total GMV, but the authorities mentioned them for different reasons.
International trade has already recovered. For example, Alibaba started its own shipping line this year. This part of plan might be easily fulfilled. On the contrary, the authorities really hope e-commerce can extend to rural areas to narrow the gap between big cities and rural areas.
The plan also mentioned that e-commerce employees should be 70 million in 2025, compared to 60 million in 2020. This is the key why online retailing will continue. The authorities may not like non-state-owned companies, but these companies do reduce unemployment.
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Originally Posted on October 28. 2021 – Alibaba (BABA): E-Commerce in New National Plan
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