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Alibaba key to China's new consumer-led economy?

August 28,2015: As stock markets in China continue to roil locally and reverberate globally, observers have been speculating whether the central government can solve the current upheaval by migrating successfully from an investment to consumer-led economy.

Coincidentally, the day before Beijing devalued its currency on August 11, the Alibaba Group announced it would spend US$4.63 billion for a 19.99 percent stake in Suning, one of China's largest consumer electronics chains, to develop what it describes as the "on-demand economy".

According to Alibaba, the on-demand economy, or 'O2O e-commerce', is geared to deliver greater convenience to consumers by marrying mobile Internet technology with traditional brick-and-mortar stores.

Currently Suning's logistics network covers over 90 percent of China via eight national and 57 regional distribution centers, 353 city forwarding centers and over 1,700 last-mile delivery stations. Now, as part of the partnership, Suning will work with Cainiao, Alibaba's logistics affiliate, to ensure delivery of future customer orders in just two hours.

Jack Ma, Alibaba executive chairman comments: "Over the past two decades, e-commerce has become an inextricable part of the lives of Chinese consumers, and this new alliance brings forth a new commerce model that fully integrates online and offline."

"This alliance will benefit consumers and merchants by cultivating an open and transparent integrated ecosystem that will be the backbone of the future economy," he adds.

Sounds like the government's migration plan has already begun.

- Simon Keeble is the editor of freightweek

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