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 millions. 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.
References:
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
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
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
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