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China faces a retail revolution as stores push quality standards

October 14, 2011

As western markets slow and Chinese vendors are looking at offloading excess stock, consumers are fighting retail wars both offline and online.

In one of the largest consumer redressals of late, close to 50,000 people logged on to an online voice  chatroom referring to themselves as the “temporary anti-Tmall union headquarters,” to discuss ways to disturb the website and complain against  fee hikes on China’s largest Business to Consumer Marketplace – Taobao Mall or Tmall.com.

Commodities sold on tmall.com range from daily necessities such as bread and fruit to home appliance and cars. Set up on April 4, 2008, the platform now features more than 400 million registered users, 50,000 registered businesses and 70,000 commodity brands.

The protest started after Taobao Mall announced on Monday that it would raise the annual service fees vendors have to pay from Rmb6,000 (US$900) to as much as Rmb60,000, and increase the deposit it takes from vendors from Rmb10,000 to up to Rmb150,000 from next year.

Owner of Tmall, Jack Ma the billionaire behind Alibaba.com, the worlds most popular Business to Business site which gave the world easy access to China’s factories however claims that competition and a maturing e-commerce market demanded the fee hike. Taobao which controls 90 percent market share, also claims that the fee hike is to ensure consumers that they are buying quality products Vs fakes. However the move has angered millions of small home businesses that cannot afford the fee hike, sell genuine products and are now left with huge inventories.

Reflecting the sentiment in the real world, Chinese government authorities are temporarily closing down 10 Wal Mart stores and fining the American retail giant 2.69 million yuan (US$421,200) in the central Chinese city of Chongqing following accusations that they sold ordinary pork as organic pork.

The retail revolution within China is a fight to push the quality of products higher, however few can afford the change and many are suffering in the bargain. As aspirations soar and consumers disposable incomes rise, this transition time will be rough for both vendours and consumers.

eferring to themselves as the “temporary anti-Tmall union headquarters,” todiscuss ways to disturb the website

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