Spring is over: China's e-commerce winter sets in

Wed Dec 21, 2011 10:50pm EST
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By Melanie Lee

DONGFENG VILLAGE, China (Reuters) - It was a Cinderella story: a pig-rearing and vegetable-growing hamlet in China's eastern Jiangsu province that transformed itself into a village boasting millionaires and expensive cars, all through plywood, ingenuity and the Internet.

In 2007 Sun Han, the 30-year-old de facto e-commerce chief in Dongfeng Village, fell in love with the designs of Swedish furniture giant Ikea and decided to make similar furniture of his own to sell on the Internet.

Others in his village soon followed suit and the fairytale of wealth was born.

What were once vegetable plots have been converted into workshops and storefronts. Sun's factory, sitting on just over an acre of land, now churns out knock-off Ikea shelves and beds to fill the 200 orders he gets a day on his two online shops.

But the story may not have a happy ending for everyone.

Intense competition has fuelled price wars among furniture vendors. That, combined with fee hikes from China's leading online e-commerce platform, Taobao Mall, this year forced the closure of some of fledgling businesses in this dusty village that is home to more than 1,000 Taobao furniture sellers.

"There is more competition now, but we need to continue to innovate and meet customer needs," said Sun, who looks more like a professor than a village business chief, in his black leather loafers, grey tweed jacket and half-rimmed spectacles.

Another furniture maker in the village, Wang Le, is more blunt about the situation. As others have rushed to imitate those making the copycat furniture, he says, profit margins have been undermined for all.   Continued...