Big Chinese banks move into e-commerce

Shrinking margins from traditional businesses goad Chinese banks into a new revenue stream.

China Construction Bank and the China Bank of Communications, two of China’s top five ban ks, are diversifying into e-commerce to create new revenue streams.

China Construction Bank, the second biggest lender globally by market capitalisation, went into e-commerce in June 2012 and reported sales of US$561 million.

A ranking CCB executive said his bank has to keep customers on its platform, otherwise the space it occupies in the value chain and the service chain will be squeezed narrower and narrower.

Among CCB’s online products are AliLoan that extends loans to small business in partnership with online retail site Alibaba. CCB and Alibaba are now competitors with the end of their partnership agreement.

On the other hand, Bank of Communications has an e-commerce cite called Jiaobohui that has built a presence for its own products on Tmall, China's largest e-commerce site and a unit of Alibaba.

Analysts said China’s other top banks, ICBC, Bank of China and China Minsheng Bank, are also thought to be considering entering e-commerce.

The Boston Consulting Group predicts that Chinese online retail sales will riple from 2012 to 2015 to US$360 billion as China’s Internet users grows by 200 million to 700 million.