China's Commerce Chief Cozies Up to E-Shopping

BEIJING (TheStreet) -- China's commerce minister has put his official stamp of approval on the nation's burgeoning Internet shopping sector, signaling a stronger government commitment to online retailers.

Web sites catering to Chinese consumers run by public listing hopefuls Alibaba and JD, agribusiness conglomerate Cofco and appliance retailer Suning are a few of the stars of the country's online retail galaxy. All could benefit from future government support. Wal-Mart (WMT) and Amazon (AMZN) have also grabbed pieces of the China e-commerce pie.

China's business and Internet regulators have already blessed the e-shopping revolution, which started about six years ago. But a Ministry of Commerce press release Wednesday said Minister Gao Hucheng had given personal backing by chairing a closed-door meeting on the government's role in "promoting research for the healthy development of e-commerce and online shopping."

Without describing any specific initiatives, the statement said that "the commerce ministry wants to strongly push plans from the top" by enacting "scientific regulations to guide the industry's development" and "give full play to market forces in allocating resources."

The China Internet Society says online consumer retail transactions last year totaled 1.8 trillion yuan, up from 100 billion yuan in 2008.

American stock market investors will get their first shot at backing Chinese e-retailing if JD launches an IPO as expected later this year. The company, which posted $10 billion in revenues last year, in January became the first Chinese online retailer to file for a public listing. Alibaba, which operates the Tmall and Taobao websites, is expected to seek an IPO in Hong Kong soon.

While big companies dominate the country's e-commerce sector, the commerce ministry said it sees Internet shopping as a way to support small to mid-sized companies. It also wants to encourage domestic consumption, upgrade the country's industrial base and create jobs through Internet commerce.

There's apparently plenty of room for growth. A National Bureau of Statistics survey recently found more than 30 million businesses nationwide are using e-commerce websites. But that's only about 10% of all China's companies; the other 90%, the bureau said, have yet to buy or sell online.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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