Proposal for submission
1) Research topic and rationale
Our assignment topic would be E-Commerce in China. We choose China because the potential in China has blossomed over the past years. As we all know, China is the world’s most populous nation with approximately 1.3 billion populations. The number of internet user in China is 59.1 million (Mindrelief, 2007). China is a country considered to have low density population and delivery and distribution problems are common due to under development infrastructure (Mindrelief, 2007). However, the government‘s strong support has helped China grow massively in using internet (Mindrelief, 2007). The speed of China’s internet infrastructure has been improving rapidly in terms of international bandwidth to the internet and domestic connections between China’s internet backbone providers. This is mainly due to the emergence of competition as the government gave approvals to two new internet backbone providers – UniNet and CNCNET ( Mindrelief , 2007).
Since then, many companies have ventured into click and mortar hybrids to be on par with the trend and keeping close with customers. However there are issues that customers are doubtful of for instance, quality of products, after service or security/ privacy issues.
In 2009, China's e-commerce market totaled 263 billion RMB (approximately $38.5 billion) with growth equivalent to about 105% increase year-on-year (Readwriteweb, 2010). Currently, consumer-to-consumer (C2C) represents the largest segment of China's e-commerce market; however, business-to-consumer (B2C) is increasingly growing in importance due to two trends (Readwriteweb, 2010). Therefore, e-commerce in China is defenitely booming fast.
In this assignment, we will we focusing only on a handful of China top websites like Taobao, QQ, Baidu and a few others. We are curious to know how these mega companies succeed.
Therefore, we would like to explore further e-commerce strategy used by top Chinese websites and challenges faced by these websites.
2) Research objectives
After doing extensive research earlier on and spending time on our blog postings mainly on a few prominent Chinese websites, we have decided to come up with 3 main research objectives
There are:
What are the strategies used to make top Chinese websites so successful?
We also want to know the success factors that led these websites to major success
Lastly, what are the issues and problems faced by top Chinese Websites?
3) Proposed structure of Paper
1.0 INTRODUCTION
1.1 Brief description of China
1.2 The Explosion of e Commerce in China
1.3 The power of China
2.0 REASONS WHY CHINA BECOME SUCCESSFUL
2.1 Taobao
2.2 SINA
2.3 The almighty QQ
2.4 China prefer to buy luxury online
3.0 ISSUES AND PROBLEMS FACED BY CHINA
3.1 Problems faced by Taobao.com
4.0 RECOMMENDATIONS
5.0 CONCLUSION
6.0 LIST OF REFERENCES
4) Literature review and background
According to research by Wong et al 2004, China’s entry to WTO, its commitment to development to telecommunication, and financial services sectors can enhance e-commerce development in the China. The growing number of telephone users and increasing number of internet users and continuing competition among telecommunication sector has been pre- requisite for e-commerce development but they do not indicate the existence of expansion of the same pace in e-commerce.
Wong et al 2004 research also found that difference in traditional business models, conventional consumer behaviours, and consumer expectations make China’s focus in e-commerce differ from Europe and America. In the 90’s, less developed infrastructures and lack of computer skills of consumers in China, some possible factors mentioned business models may not be appropriate for conducting e-commerce in China. The population of Internet users has increased rapidly in China. Based on the survey in July 2003, China has an Internet user population of 68 million. These Internet users have their unique online-shopping behaviour, the distinctive patterns of using online information, computer technology, banking services, and logistics service. Internet users do not have enough information on online shopping, and instead their goals are to search for news and sending e-mails.
Wong et al 2004 also mentioned that three important factors that play important roles in the development of China’s e-commerce are uneven economic development, the traditional business model, and users’ behaviour and perceptions. For people in the relatively poor areas where the retail network is not strong, they are more cautious about online purchase.
The traditional business model also influences what people purchase online. People put more emphasis on getting the physical contact with the products. Internet users were worried about product quality, post-sale service, and the credibility of the manufacturer. This has resulted in limited online purchase. Most often bought products online are low value items; people usually choose low price delivery method. Therefore, the postal delivery seems to be the best alternative for consumers. Three major payment options are payment on delivery, payment online via credit card or debit card, and remittance through postal office.
Martinsons 2008 examined the distinctive challenges e-commerce in China. The research suggests that personal trust, contextual, and informal information and blurred boundaries between business and government has shaped e-commerce in mainland China. E-commerce in China is based on personal relationships as China deeply relied on Guanxi unlike other countries where rule-based commerce prevails. China is challenged by an incomplete set of commercial rules and arbitrary interpretation and/or enforcement of those rules. E-commerce also increases worries about counterfeiting since sellers can remain anonymous or provide false identities and goods cannot be inspected physically. China also faced delivery problems as heavy regulations and/or competitive restrictions remain, especially for postal services and transport by both rail and water. Financial service problem is an obstacle as trouble in payment systems and commercial insurance have resulted in sluggish marketplace development. Thus, improvements in the physical and financial infrastructure can help online ventures to achieve operational scales that are profitable. Based on Martinsons, 2008 research the author suggests that institutional factors (including both the physical infrastructure and socio-economic institutions) will influence e-commerce more than cultural factors.
Trust is an important issue when it comes to e-commerce in China. Pang et al 2007 did a research on exploring online shoppers’ e-trust in China suggested that the most effective marketing strategy for an e-commerce firm targeting shopper in China is to promote, attract, and convince shoppers to make their first online purchase and with a higher e-trust level, these customers will be more willing to purchase and spend more money online.
5) List of references and sources
Chinese E-commerce Tops $38.5 billion, What Comes Next? http://www.readwriteweb.com/archives/chinese_e-commerce_tops_385_billion_what_comes_next.php, viewed 27 September, 2010
China tech news.com 2006, Taobao.com announces fake goods blacklist, viewed 24 September 2010.http://www.chinatechnews.com/2006/07/31/4184-taobaocom-announces-fake-goods-blacklist
China tech news.com 2006, Taobao.com Chinese users who sell fake products will be terminated http://www.chinatechnews.com/2009/02/10/8742-taobaocom-chinese-users-who-sell-fake-products-will-be-terminated
China 2.0: Rise of Digital Superpower,http://www.youtube.com/watch?v=BvDVgtekW2A, viewed 9 September 2010
E-commerce opportunities in Modern Business China,http://www.mindrelief.net/e-commerce_opportunities.html, , viewed 27 September 2010
Martinsons , M 2008 , Relationship e-commerce: theory and evidence from China, Vol. 18 Issue 4, p331-356, Information Systems Journal, EBSCOHOST, viewed 10 October 10, 2010
Olsen,R., 2010, China’s Migration to E-Commerce , http://www.forbes.com/2010/01/18/china-internet-commerce-markets-equities-alibaba.html, viewed 4 September , 2010
Pang C, David C, Tarn J, 2007, Exploring online shoppers' e-trust in China, Vol. 26 Issue 3, p193-198, Human Systems Management, EBSCOHOST, viewed 10 October 10, 2010
QQ: Quite Quality, http://www.telco2.net/blog/2009/03/qq_quite_quality.html, viewed 13September 2010
QQ:China's monster Facebook, http://www.telco2research.com/articles/AN_QQ-China-Facebook-coming_Summary, viewed 13 September 2010
QQ marketing: Reaching 340 million QQ users,http://www.china-online-marketing.com/blog/qq-marketing/qq-marketing-reaching-340-million-qq-users/, viewed 13 September 2010
Shanghai Daily 2008, Taobao.com launches online shopping mall, viewed 7 September 2010
Sina website (1996-2009), You are the one, viewed 13 September 2010
http://corp.sina.com.cn/eng/sina_index_eng.htm
Wong X, Yen D, Fang X., 2004, E-commerce development in China and its implication for business, Vol 16 issue 3, Asia Pacific Journal of Marketing and Logistics, Emerald, viewed 8 October 2010
