As a traditional manufacturing base, Zhongshan has a collection of clusters in home appliances, lighting and apparel. That might not set anyone’s hair on fire, given how the Greater Bay Area has been turning gung-ho on industrial upgrading since the release of the masterplan in February. However, they are just what is needed by some of the country’s biggest e-commerce behemoths.
Alibaba, for one, likes what it sees. For three consecutive years, Zhongshan has been voted one of the most active ecommerce cities in China, according to a keenly followed “e-commerce development index” put together by the Alibaba Academy.
Such optimism is backed by strong numbers. According to Zhongshan’s Bureau of Commerce, in the first five months of 2019, 124.29 million e-commerce packages were delivered from Zhongshan, up 16.03% year on year, worth a total of RMB19.9 billion in gross merchandise value.
Alibaba’s biggest rival is moving just as fast. On August 8, online retail giant JD.com announced it had established a supply chain joint venture in Zhongshan, Jingmao Science & Technology, with Latt Liv, a local retail brand. JD is to become the company’s second largest shareholder.
Latt Liv is a great local success story. Founded in 2014, the company was initially focused on consolidating manufacturing units in Zhongshan into an integrated supply chain for a domestic retail market. It started with offline sales. Today, Latt Liv has retail outlets in more than 170 counties and cities across 28 provinces. Nearly 75% of its shops are located in the third or fourth-tier cities.
Currently there are more than 7,700 registered garment merchants and over 400 upstream and downstream supporting enterprises in Shaxi town, where Latt Liv is based. The output value of the garment industry accounts for more than 60% of the total industrial output value of the town.
This has obvious appeal for JD. Chang bin, head of JD’s self-branded business, said that the joint venture will rely on Latt Liv’s integrated supply chain. “The enormous annual purchase volume of JD will bring lots of business opportunities to our joint venture.”
Alibaba and another tech heavyweight, Hong Kong-listed Xiaomi, have been attracted to Zhongshan’s well-established industrial chain in home appliances. In July, Xiaomi had a press conference in Zhongshan to announce its cooperation with the local lighting industry in IoT development. It was followed a week later by Alibaba Cloud IoT, expressing a similar interest.
The home appliance industry in Zhongshan has a solid foundation and a complete chain of supporting industries. Its backbone is the Huangpu Town cluster in the north, whose output exceeds RMB100 billion per year.
Then there is the lighting industry in the “City of Lights”, Guzhen Town. Since 2010, traditional lighting manufacturers in Guzhen have started to embrace e-commerce sales and marketing models with gusto.
The city’s leadership likes what it sees. It has launched a five-year plan to facilitate the development of e-commerce, along with a series of supporting policies and financial funding. They include building e-commerce trading platforms, cultivating leading e-commerce enterprises, building an e-commerce industry cluster, hosting an e-commerce related business forum, and nurturing industry related talents.