UBS expects China's eCommerce penetration to surpass US

China's eCommerce has grown " rapidly" with the penetration set to surpass the United States in 2014, Erica Poon Werkun, head of Asian Consumer and Internet Research of UBS, said here on Wednesday.

Briefing a media conference, Poon said the two-trillion-yuan size (about 323 billion U.S. dollars) eCommerce business accounted for about 8 percent of the total retail sales in China last year, up from 6 percent in 2012.

She expects China's eCommerce penetration to surpass the United States this year thanks to the fast growing online shoppers, highly competitive pricing and the improving payment systems as well as logistics.

Poon said there are currently 300 million Chinese online shoppers, with "very tremendous growth opportunities" coming from urbanization, which China is still aggressively pushing.

"When the urbanization rate continues to rise, we are going to see more people to be the incremental market for the eCommerce companies in terms of online shopping," she said.

On the other hand, eCommerce effectively drove down the cost and retail price, while the "quick and mature" development in payment systems such as Alipay and Tenpay boosted confidence for both online buyers and sellers, Poon said, adding that all the above factors attested to the impressive penetration of eCommerce into businesses and people's livelihood in China.

However, Poon said eCommerce has been a "very disruptive force" in retailing, and exacerbated the structural weakness of the physical retailing business in China.

"The underlying retailing structure has been experiencing overcapacity in physical retail stores in China for years, and many retailers see their revenue per square meter is deteriorating, so they keep doing promotions," she said, "But discounting year after year only compromises the price integrity."

Poon urged Chinese physical retailers to adjust operations strategy in order to compete with the thriving eCommerce business.