E-commerce wave threatens to engulf small businesses

The industry has made it easier and cheaper for merchants to reach consumers and has supported the development of logistics infrastructure, according to a Hong Kong-based Alibaba spokeswoman.

"With an under-developed and fragmented retail sector, more consumers are going online to find what they need and at the same time stimulating consumption in China's economy," she said.

Premier Li Keqiang is cheering the new economy. On Jan 4, he pressed the enter key on a keyboard for WeBank, a private online bank funded by Tencent Holdings Ltd, granting a 35,000 yuan loan to a local truck driver.

Without the cost of bullet-proof glass, uniformed tellers and branch outlets, services such as WeBank's "may be the future", said Cao. Ma's Alibaba also has approval to set up an online lender.

The expansion of Internet-related businesses is "where our hope lies", said Ma Jiantang, the head of the National Bureau of Statistics, at a news conference in Beijing on Jan 20 after releasing GDP data that showed the slowest expansion since 1990.

Property developer Dalian Wanda Group Co Ltd, owned by China's second-richest man Wang Jianlin, plans to close 10 malls across the country and redesign another 25 to cut retail space, China Business News reported last month.

Zong Qinghou, China's fifth-richest man with a beverage and chain-store conglomerate, said in August that online businesses are "affecting China's economic security" by suffocating stores that have to pay rents.

Li Ning Co, the Chinese sports-clothing maker, is expected to post losses for the third consecutive year and has closed more than 1,000 retail outlets since 2012.

Anta Sports Products Ltd, a maker of shoes, has also been shutting down stores partly due to competition from online shopping.

At least 300 wholesale markets in Guangzhou are teetering on the edge of survival, especially cloth and garment markets, the Guangzhou Daily reported in December. The biggest of those can house hundreds of outlets and thousands of staff.

"Online shops are virtual, and if they kill all the real economy, what business can they do? What products can they sell?" Zong said in comments published on the People's Daily's website in August. He said the government should enhance supervision on virtual shops.