China Headlines: China's online/offline synergy--a marriage of convenience

The eating habits of urban Chinese have changed dramatically since the proliferation of takeaway food delivery apps has brought restaurant-quality meals to almost everyone's front door.

Engineer Zhao Baijun, 29, now eats in more often than he eats out. "Before these apps, most restaurants did not offer deliveries. I had very few choices, mostly fast food chains," he says.

Besides the matter of convenience for busy people like Zhang, online to offline (O2O) means extra sales for traditional food suppliers and beyond.

A MATCH MADE IN CYBERSPACE

Connecting online to offline is the new Holy Grail for the biggest players in China's Internet shopping explosion, whether they be domestic or overseas operators.

On Monday, China's largest e-commerce company Alibaba and electronics retailer Suning agreed a multi-billion dollar deal on platforms, logistics and payments. Alibaba will pay about 28 billion yuan (4.5 billion U.S. dollars) for 19.99 percent of Suning, becoming its second-largest shareholder, while Suning will buy no less than 28 million new shares in Alibaba for 14 billion yuan.

Suning owns more than 1,600 stores and 3,000 aftersales service centers which will now be "seamlessly connected" with Alibaba's online network. A Suning online sales center on Tmall.com, part of Alibaba's retail operation, completes the new setup. The arrangement was described as a "wedding" by Alibaba chairman Ma Yun on Monday.

"If we do not integrate with offline, we will not have a future," he said. The deal is set to reshuffle China's e-commerce deck and help Alibaba in its battle against archrival JD.com.

EVOLVE OR PERISH

There is nothing anomalous about this deal; e-commerce companies are queueing up to find bricks-and-mortar stores to align themselves with.

In its quest for existing networks of physical stores, JD.com on Friday announced that it had taken a 10-percent stake in domestic supermarket chain Yonghui Superstores for 4.31 billion yuan. Early last year, Alibaba became the main shareholder of Hong Kong-listed department store operator Intime. In July, after the cap on the number of shares that foreign firms can hold in Chinese e-commerce platforms was lifted, Walmart took a 100-percent stake in Yhd.com.

The local advantages of Yhd.com combined with Walmart's global procurement resources, retail stores and supply chain will be a huge fillip to Walmart's campaign to win the hearts and minds of China's consumers.

Moving in the opposite direction, property and entertainment group Dalian Wanda is scaling down its traditional department stores and karaoke bars as it begins to feel the strain of the tug-of-war against online competitors. Tencent and Baidu joined together to create Wanda's e-commerce site Ffan.com, launched in late July, and it is reported that there are plans to close more than 40 stores and 80 karaoke bars as the company actively moves online.

OFFLINE IS THE NEW ONLINE

Xie Wen, former president of Yahoo China, believes online-offline cooperation will spawn a new mindset and bring unexpected opportunities to traditional retailers.

"Online-offline synergy is the main feature of China's current development phase and is in line with the general trend of the economy," he said.

Internet companies are meeting barriers as they attempt to transform themselves from information providers into full-blown retailers, forcing them to learn lessons from the traditional industry, he said.

"The hopes of Internet firms for the next 30 years depend on offline business, while those of traditional companies lie online," Ma Yun said.

For Zhao Baiju, the most important aspect of the rapidly evolving industry is that he can have a decent meal in the comfort of his own home. Witness and beneficiary of the burgeoning growth of mobile apps, he is now a confirmed fan of the services.

"Now I use those apps about four times a week, mainly on weekends. They save me time to go and wait in a restaurant, the food is clean and the choice is great," he said. Endi