Successful e-Commerce in China

E-Commerce in China Operated by

Size and demographic structure of Internet-Users
Role of the Internet
B2C & C2C Market
Obstacles for E-Commerce
Legal and Technical Requirements
Case Study: eBay EachNet
Content

China – World's Largest Internet Market
Online population is now at 220 million , overtaking the US as the world's number one (BDA China 03/2008)
China had 210 million Internet users, 163 million broadband users and 50.4 million handset mobile Internet users by December 2007 (CNNIC 01/2008)
Growth rate was up to 53.3%
Growth of Internet Users in China

China's Internet Penetration Rate Still Very Low Internet penetration rate in tier 1 provinces: Beijing: 46.6% Shanghai: 45.8% Guangdong: 35.9% Comparison Internet Penetration Rate among Countries

Young and Educated Internet Population
Opposed to total population, Internet users are groups with higher education background
But Internet is diffusing to groups with lower education background
Since 1999, the ratio of users with tertiary education has dropped from 86% to present 36%
Chinese users are mainly youngsters
31.8% are aged 18-24
Student users account for a heavy proportion
Age Structure of Internet Users in China Education Structure of Internet Users in China

Low Income Internet Population
74.9% or 157 million of the 210 million Internet users are urban users
Rural Internet users increased sharply by 127.7% last year
Urban users increased by 38.2% in 2007
Internet penetration rate for urban residents is 27.3% , for rural residents 7.1%
Almost 3/4 Internet users have an income of less than RMB 2,000 per month (CNNIC 2008)
Income Structure of Internet Users in China

Entertaining Role of Internet Is In Front Row 1 st Application used when going online Application Rate 1. Instant message 39.70% 2. Online news 20.00% 3. Others 14.30% 4. Online games 9.30% 5. Search engine 7.40% 6. E-Mail 3.50% 7. Online music 3.40% 8. Online Video 2.40%

Online Shoppers Are a Group of High Class
Online shopping rate in China was 22.1% at the end of 2007 (CNNIC 01/2008)
41.4% Shanghai
36.0% Beijing
28.7% Sichuan
27.9% Zhejiang
26.6% Jiangsu
55 million Internet users have shopped online in 2007 (iResearch 2008)
Over 80% of the shopping groups reside in urban areas
The longer the history of surfing online, the higher the shopping rate is
Online before 1999: 42.4%
Online in 2007: 5.7%
Online Shopping Rate of Users by Education Level

Level of Online Spending Remains Modest
Online shopping turnover (B2C & C2C excl. Online-travel booking) reached RMB 59.4 billion in 2007 (iResearch 2008)
Turnover of RMB 406 billion expected by 2011 (iResearch 2008)
Level of online spending per consumer was about RMB 1,000 in 2007 (CNNIC 2008)
Online Spending accounts for only 0.66% of total retail spending in China (total retail sales of consumer goods in 2007 reached RMB 8,921 billion; National Bureau of Statistics 2008)
Shopping Amount of Internet Users within 6 Month

Taobao dominates C2C Market 2007 Q3 Market Share C2C Platforms China
Taobao trading volume in 2007 RMB 43.3 billion
~ 80% of C2C turnover
~ 70% of total online shopping turnover (B2C & C2C, excl. online-travel booking)
53 million users
Taobao and Paipai charge no fees
eBay EachNet charges listing and transaction fees
 no C2C platform is making any money at the moment
Top selling products on Taobao in 2006 in terms of number of transactions
perfume and cosmetics (40 million items)
telephone recharge cards (20 million)
Health care commodities (20 million)
Books (9.4 million)
Shoes (4.5 million pairs)
Lighters (4.3 million)
Underwear (2.3 million pairs)
Mobile phones (2.2 million)
Top Selling Products on Taobao in 2006 by transaction volume
Mobile phones and other communication equipment
Cosmetics
Notebooks
Online game merchandise
Computer hardware
Digital cameras
Jewellery
Exercise equipment
Mobile phone recharge cards and IP cards
Mobile accessories

Obstacles for E-Commerce
Fake goods, Credit card theft
Small number of credit card users – 75 mil. credit cards in circulation by 2007
Payment systems are safer now – no longer a technical problem, but a problem of confidence
E-commerce Logistics
Size and vast distances in China – delivery for most companies limited to major metropolitan areas using couriers
high delivery cost due to the small scale of some logistics enterprises
Over 70% of all purchases in the B2C market are paid cash-on-delivery (Analysis International)
COD presents challenges and risks for online merchants
Buying online is a dramatic change from conventional shopping practices
Consumers in China still prefer to look over the goods, determine their quality, and then, if satisfied, pay in cash
Online commerce, in comparison, is an alien experience that only increases risk
 Challenge for Internet companies to win consumers' confidence

Failure of eBay EachNet
In 2003, eBay entered China’s C2C market by acquiring EachNet (USD 180 million )
EachNet, founded in 1999, was China’s No. 1 auction with peak market share of more than 90%
Alibaba invested USD 52 million in 2003-04 to enter C2C market (Taobao.com)
In 2004, Taobao occupies over 50% of China’s C2C market; eBay’s EachNet about 35%
The battle continues – eBay spent another USD 100 million to strengthen its presence in China
In 2006, eBay sold 51% of it’s China division EachNet to Tom Online
eBay Eachnet continued to lose market share to Taobao - today, Taobao has over 80% of the C2C market share in China

eBay Did Not Focus on Building Up Trust
eBay's listings fees were only one of the reasons why customers used Taobao over eBay Eachnet
Many Internet users dislike eBay because of its service
eBay's Paypal did not seamlessly integrate escrow into the sales process
Taobao's popular Alipay made escrow an important component of the online buying experience
Later attempts by eBay to incorporate escrow were too late to help it regain lost market share
Initially EachNet did not allow buyers and sellers to communicate directly, while from the very beginning, Taobao allows for direct instant messaging between the two parties

Regulatory System WTO-Protocol China's Regulation Telecom Services Basic Telecom Service "BTS" Value-Added Telecom Service "VATS"
Registered Capital
National/Interprovincial min. RMB 2 bn .
I ntraprovincial min. RMB 200 m .
Foreign Equity Ratio Limit: 49%
Telecom Operating License
Internet Information Service = any provision of Information through Internet to web users  Registration or VATS License + Registration
Registered Capital
National/Interprovincial min. RMB 10 m.
I ntraprovincial min. RMB 1 m.
Foreign Equity Ratio Limit: 50%
Telecom Operating License

Fundamentals for a High Quality Website
Design
Original CI guidelines can / should be followed
Colorful designs possible
Technology/Hosting
Content Management Software and Web Server have to be UTF8 enabled
Website Hosting in China recommended (Speed)
Online-Marketing
Baidu.com is the biggest player (> 60% market share)
Google.com follows with about 20%
Chargeable services are dominant (Keyword buying)
Viral marketing strategies (Blogs, Forums)

The Meaning of Colors Meaning Color China Europe Black „ color of death“, darkness, glory, winter, north death, darkness, mourning White mourning, bad luck, age, autumn, west cleanliness, brightness, hygiene, virginity Red Traditionally: joy, good, wealth, bright, summer, south, recently: government, authority danger, forbiddance, war, sexuality Yellow traditionally: emperor, earth, middle and china, recently: pornography caution, envy, avarice, cowardice Blue algid, ill sky, water, reliable, authentic Brown misfortune laziness, old-fashioned Grey cheap, dull elegant Gold glory, royal, wisdom, perfection money, sun, nature, friendliness Green life, vitality, spring, east nature, hope

The Meaning of Symbols Meaning Symbol China Europe Magpie 鹊 que joy, fortunate marriage thievery, robbery, defraud Owl 鸮 xiāo disaster, scare, crime wisdom, clever, bright, intelligent Rat 鼠 shǔ wealth, avarice, demonical possession dirt, cloacae, illness Spider 蜘蛛 zhīzhū luck fear, disgust, threat Clock 送終 short life, wish death time Swastika 卐 wàn luck, numerousness, all war, death, terror Fish 鱼 yú wealth, luck Christianity, Jesus Christ Dragon 龙 lóng power, strength, wisdom, luck, emperor power, danger, chaos Bamboo 竹 zhú integrity, pertinacity, conservativeness, long life -

The Meaning of Numbers Positive 6 problem-free, promising, smooth 8 fortune, wealth 9 forever, long-lasting Negative 4 sì ( 四 ) sounds almost like death, dying ( 死 ), disaster 10 shì ( 十 ) sounds almost like „4“, therefore death 13 failure, imperfection 14 yao si sounds almost like “going to die”

Contact W eb2 A sia Room 2022-2026 No. 1438 Shaanxi Road (North) Shanghai 200060, China Phone: +86 21 32270872 Mobile: +86 159 2100 2780 Fax: +86 21 32270875 E-Mail: [email_address] Web: http://www.web2asia.com

http://www.vtint.com	363
http://www.slideshare.net	209
http://www.web2asia.com	181
http://laeboutiquedelcomprador.blogspot.com	102
http://www.info-ecommerce.fr	83
http://www.laeboutiquedelcomprador.blogspot.com	35
http://sinau.me	27
http://www.noo-noo.org	12
http://www.agglom.com	12
http://www.linkedin.com	11
http://yq1205.googlepages.com	6
http://insight2results.blogspot.com	4
http://agglom.com	4
http://translate.googleusercontent.com	3
http://www.techgig.com	3
http://health.medicbd.com	3
http://phamleuyen85.blogspot.com	3
http://www12.jimdo.com	2
http://static.slideshare.net	2
http://movetheneedle.blogspot.com	2
http://www.antom.info	2
http://www.e-presentations.us	2
http://209.85.135.104	1
http://www.laeboutiquedelcomprador.blogspot.com.es	1
http://ns312859.ovh.net	1
http://static.slidesharecdn.com	1
http://athicha.wordpress.com	1

Successful e-Commerce in China

by George Godula

Accessibility

Categories

Upload Details

Usage Rights

27 Embeds 1,076

Statistics

Successful e-Commerce in China Presentation Transcript