The file photo shows China’s Wanda Department Store. [Photo: soufun.com]

A new industry report shows China's general merchandise firms have shut down more physical stores due to their shrinking profits last year.

The report, jointly issued by China Commerce Association for General Merchandise and Hong Kong retailer Fung Group, says total profits of 80 major Chinese department chains fell by 12 percent in 2015.

The report attributed their profit loss to the rising costs and growing e-commerce market in China.

Among these major department chains, half suffered drops in sales.

Wanda Group alone closed 56 outlets in 2015.

As such, Chinese department stores are now seeking to move their business online as 55 percent of the surveyed firms have launched their e-commerce experiments.