Though computers have been widely used in our country over the past 50 years, e-commerce is only with a history of 10 years. The first e-mail sent in Sep., 20, 1987 crossed the Great Wall to the world marked the prelude to Internet in China.
E-commerce in China can be divided into 4 phases:
1. E-commerce based on EDI (1990-1993)
The application of EDI has been carried out in China since the 1990’s Since then, State Planning Commission and National Science and Technology Commission of China have put the application of EDI into the list of “the 8th Five” national science and technology promotion project. As the result, a series of EDI systems come into application, such as the import and export license EDI system of original Ministry of Foreign Trade and Economic Cooperation, PRC, Ocean/Airway shipment management EDI system of China National Foreign Trade Transportation (Group) Corporation, the EDI system of financial affairs, petroleum, and rubber trade of China National Chemical Import and Export Corporation, the EDI system of Shandong Artex Import and Export Corporation et al. In September, 1991. The Electronic Information System Promotion and Application Office of State Council leads and coordinates original State Planning Commission, National Science and Technology Commission of China, Ministry of Foreign Trade and Economic Cooperation, PRC, Ministry of Communication of the PRC, Ministry of Post and Telecommunication of the PRC, Ministry of Electronic Industry of the PRC, The State Bureau of Quality and Technical Supervision, State Administration of Foreign Exchange, China Commodity Inspection Bureau, China Customs, Bank of China, Industrial Commercial Bank of China, People’s Insurance Company of China, State Administration of Taxation, China Council for the Promotion of International Trade etc, originating to establish the Coordination Group of EDI Application and Promotion. Meanwhile, the EDI/FACT Commission of China established in October 1991 became the member of Asia EDI/FACT Council. EDI has been widely used in sectors such as trade, communication, bank etc.
2. “Three Golden Projects” carried out by governments in 1993 - 1997 establish, the foundation of e-commerce
The National Economy Informationization Joint Conference and its office coming into being in 1993 with the vice premier of the State Council as president, carried out “Three Goldens”(Golden Customs, Golden Card, and Golden Bridge) project and made great progress. “Beijing E-commerce International Forum” hosted by People’s Bank of China, Ministry of Electronics and Global Information Infrastructure Committee (GIIC) in Beijing in May. 1994 attracted up to 700 participators from the United States, Great Britain, France, Germany, Japan, Australia, Egypt, and Canada etc. The “Asian and Pacific E-commerce Seminar” in Beijing in Sep., 1994 brought about the spread of e-concept in China. In 1995, China Internet became commercialized and network companies began to rise.
State Council National Informationization Team was set up in Jan. 1996 with the vice president as the group leader and more than 20 ministries as its members to lead the construction of information. And it is in 1996 that China got Internet connected.
National Information Office organized some departments involved to draft and draw up the program of China informationization. National informationization working conference was held in Shenzhen in Apr., 1997 and soon after informationization executives of different provinces, cities and areas began to come into being and carried out informationization construction programs, including construction of e-commerce. Advertising companies began to make advertisement on line. China Goods Ordering System (CGOS) has been put into practice since Apr., 1997.
3. E-commerce based on Internet since 1998
The first Internet transaction in China succeeded in Mar., 1998. China Commodity Trading Market was declared to come into being in Jul., 1998, which was called “Never Closed China Export Commodities Fair (Guangzhou Fair)”. China Commodity Spot Transaction Market was the first spot transaction market for e-commerce with transaction volume up to 200 billion in 1999. China’s first e-commerce application system based on SET security standard was released by Bank of China and Teledata Bureau with the Bank of China in Hunan Province as its experimental unit. Committee of Economy and Trade and Ministry of Information Industry declared to start the “Golden Trade Project” centering on e-commerce, a large-scale experimental project to popularize the application of Internet and to carry out e-commerce in commercial and trade circulation domain. Beijing, Shanghai and many other cities have started to e-commerce Engineering, opened the experimental units of electronic shopping center, electronic shopping market, online shopping and transaction, built up financial and non-financial certification authority, made corresponding laws and regulations to lay a foundation for future e-commerce. Medical e-commerce network was put into operation in 1998, in which ten thousand enterprises and public institutions in medical and health industry got connected and information of over thousands of Chinese Traditional medicine and Western medicine was provided. National reconciling inventory network, national online construction and real state online promotion and many others have opened up.
The B2C websites such as 8848 formally opened in Mar., 1999, which shows that online shopping has come into application stage, such as the presence of online governments, online enterprises, online taxation, online education (online universities of Hunan University and Zhejiang University), and remote diagnosis (many large hospitals in Beijing and Shanghai).
The B2C websites such as 8848 formally opened in Mar., 1999, which shows that online shopping has come into application stage, such as the presence of online governments, online enterprises, online taxation, online education (online universities of Hunan University and Zhejiang University), and remote diagnosis (many large hospitals in Beijing and Shanghai).
4. The pragmatic development phase in 2000
E-commerce focuses on the traditional B2B. E-commerce service providers have turned to reality market from venture capital market and some successful businesses have emerged. E-commerce software and solutions developed by domestic enterprises or domestic enterprise-oriented have dominated the market with the perfection of exterior environments such as infrastructures; the perfection of application methods of e-commerce; the maturity of market for e-commerce; and the rapid localization of e-commerce software and solutions. The e-commerce in China has taken its initial shape.
E-government has come into the overall implementation stage in 2002. National government procurement investment of 35 billion (hardware 25 bilion, software 4.5 billion, and information service 5.5 billion) has increased by 25% compared with the corresponding period of the former year. Instructional Advice on China’s e-government given out by National Information Office in Jul., 2002 proposed the following three measures: 1 Construct two universal e-government network platforms, the interior for official business and the exterior for different business
enterprise sectors, enterprises and public. 2 forge ahead the “12 Golden projects” construction (golden taxation, golden customs, golden financial affairs, golden audit etc.). 3 speed up strategic data base construction (information data bases of population and agriculture etc.). Domain names applied by government departments at all levels in China increased to over 7796 in Dec., 2002 from 4615 Jan., 2001. In the developed coastal provinces, the rural governments have got Internet connected. Governments at all levels have released governmental information in the Internet and opened channels for public communication and service. Many a local government has set up the masses-oriented information release inquiry systems and “Mayor Mailbox” and “Government Mailbox” to facilitate the public’s participating in the management of state affairs. The overall implementation of e-government forcefully speeds up the development of e-commerce. The gradual perfection of the e-commerce environments (network infrastructure construction, legal environment, market environment, online payment, information security, certification authority construction etc.) and the constitution of national corresponding polices, laws and regulations on e-commerce have provided the fundamental conditions for the development of e-commerce. Network bandwidth has increased. The international export gross aggregate bandwidth reached 82.6G in Jun., 2005; the number of wide band access users has reached 53,000,000, exceeding the number of user surfing the net by dialing-up for the first time. National modern credit system has made material progress. Real-time payment system for a large amount of cash in Beijing, Wuhan was successfully put into practice on Oct. 8, 2002, which have been popularized in economically advanced cities such as Shanghai, Tianjin, Jinan, Shenyang, Chengdu, Xi’an, Shenzhen, and Haikou etc. Moreover, a national cross-banks, cross-areas information exchange network of credit cards had taken its initial shape by the end of Feb., 2003. Great achievements have been made in distribution. For example, China Post, the most powerful network transfer in China, joined the e-commerce, and some professional distribution enterprises for e-commerce projects came into existence one after another.
China government attaches much importance to the security related the application and development of e-commerce. For example, industry security CA has been organized with Telecom, Customs, and People’s Bank of China as initiators. CA’S have come into existence in Shanghai, Guangzhou, and many other cities. Much attention has been paid to the development of corresponding core technologies of security standard, electronic signature and password system, and investment in such fields has been intensified. Corresponding laws and regulations have driven to maturity stage and many laws are in embryo. For example, in 2005 electronic signature law was put into practice.
Current situation of e-commerce in China is as the following:
(1) E-commerce in China is still in its initial stage.
(2) The application of e-commerce in China is still of its primary level. Most e-commerce is non-payable, that is, online sales and offline payment; a small part is paying, that is online sales and online payment; some even make cooperatedcommerce.
(3) Minority of ten million enterprises in China has got Internet connected, carried out online marketing, to say nothing of online procurement. Majority of medium and small enterprises and a small fraction of large and medium enterprises have not carried e-commerce. In other words, enterprises are less information-based and have not become the main force of e-commerce.
(4) Most e-commerce websites in China are making electronic information research, making e-advertising, e-catalog, e-inquiry, exchanging commodity information on line; minor enterprises make such e-transaction on line (e-bargain and ordering), as making business negotiation, signing contracts, exchanging documents on line; few enterprises complete e-shopping and e-payment.
(5) Owing to the disparate development of different industries and areas, there are great differences in e-commerce between southeast coastal areas and the central and western areas. For the moment, metropolises in southeast coastal areas have carried out e-commerce while most cities and countryside in the central and western areas have not. However, it is likely that the new arrivals will surpass the old-timers.
(6) Various, multiple and multimodal strategies for e-commerce development shall be adopted for the following factors: the weakness of information foundation of national economy, the low-level business automation, the coexistence of traditional business and modern e-commerce, and the coexistence of traditional market and online market.
Open questions in the development of e-commerce in China:
(1) There are no clear development strategies and forceful technical and economic policies for e-commerce development. There is no specific programs for e-commerce development. Though policy frameworks for e-commerce have been drawn up for many years, no one has come into existence.
(2) Laws and regulations, standards, specifications of e-commerce seriously lag behind current situations and shall urgently be strengthened, and the unsuitable parts in the current administrative laws have not been revised timely. For example, there are no specific laws on electronic contract, the protection of online knowledge property and privacy, online information supervision etc. What is more, there are no enforcement regulations of network crime convictions and penalization.
(3) Because of the low level of computer application, there are not many enterprises and families connected with network. In addition, information technology has not become popular in both enterprises and families. Though netizens in China has been up to 210 million by the end of 2007, it only took up 15.6% of the total population, which is relative low comparing with 19.1% of average global popularization rate. In addition, the netizens are mainly in metropolises such as Beijing, Shanghai, Guangzhou and many other eastern cites. Only not more than 15% of enterprises in China do e-commerce, which is rather low compared with other countries. For instance, 60% of the small enterprises, 80% of medium enterprises and 90% of large enterprises in developed countries do e-commerce by means of the Internet.
(4) Economy and operation environments for the development of e-commerce are not complete. For example, social credit system has not been established; the network bandwidth cannot meet the requirement of e-commerce; e-payment methods are not mature; logistics distribution system does not match its own development.
(5) The technological level and occupancy of market of home-made products in China’s information industry are comparatively low. Hardware and software in significant applied engineering and systems of e-commerce are mainly from foreign companies. System integration and information service shall be improved. Corresponding standards and specifications of computer application are not universal and shall urgently be enforced. Standards of e-commerce lag behind the current conditions and apparently there is not adequate investment in it. Enterprise management systems, mechanisms, concepts and organization structure cannot meet the requirements of market economy. Apart from what have been mentioned, some leaders have not thoroughly realized the importance and urgency of e-commerce application. There are no internal force, labor force, financial and physical resources for an enterprise to adopt e-commerce. There are no adequate talents, especially inter-disciplinary for information technology and professional experts.
E-commerce in China can be divided into 4 phases:
1. E-commerce based on EDI (1990-1993)
The application of EDI has been carried out in China since the 1990’s Since then, State Planning Commission and National Science and Technology Commission of China have put the application of EDI into the list of “the 8th Five” national science and technology promotion project. As the result, a series of EDI systems come into application, such as the import and export license EDI system of original Ministry of Foreign Trade and Economic Cooperation, PRC, Ocean/Airway shipment management EDI system of China National Foreign Trade Transportation (Group) Corporation, the EDI system of financial affairs, petroleum, and rubber trade of China National Chemical Import and Export Corporation, the EDI system of Shandong Artex Import and Export Corporation et al. In September, 1991. The Electronic Information System Promotion and Application Office of State Council leads and coordinates original State Planning Commission, National Science and Technology Commission of China, Ministry of Foreign Trade and Economic Cooperation, PRC, Ministry of Communication of the PRC, Ministry of Post and Telecommunication of the PRC, Ministry of Electronic Industry of the PRC, The State Bureau of Quality and Technical Supervision, State Administration of Foreign Exchange, China Commodity Inspection Bureau, China Customs, Bank of China, Industrial Commercial Bank of China, People’s Insurance Company of China, State Administration of Taxation, China Council for the Promotion of International Trade etc, originating to establish the Coordination Group of EDI Application and Promotion. Meanwhile, the EDI/FACT Commission of China established in October 1991 became the member of Asia EDI/FACT Council. EDI has been widely used in sectors such as trade, communication, bank etc.
2. “Three Golden Projects” carried out by governments in 1993 - 1997 establish, the foundation of e-commerce
The National Economy Informationization Joint Conference and its office coming into being in 1993 with the vice premier of the State Council as president, carried out “Three Goldens”(Golden Customs, Golden Card, and Golden Bridge) project and made great progress. “Beijing E-commerce International Forum” hosted by People’s Bank of China, Ministry of Electronics and Global Information Infrastructure Committee (GIIC) in Beijing in May. 1994 attracted up to 700 participators from the United States, Great Britain, France, Germany, Japan, Australia, Egypt, and Canada etc. The “Asian and Pacific E-commerce Seminar” in Beijing in Sep., 1994 brought about the spread of e-concept in China. In 1995, China Internet became commercialized and network companies began to rise.
State Council National Informationization Team was set up in Jan. 1996 with the vice president as the group leader and more than 20 ministries as its members to lead the construction of information. And it is in 1996 that China got Internet connected.
National Information Office organized some departments involved to draft and draw up the program of China informationization. National informationization working conference was held in Shenzhen in Apr., 1997 and soon after informationization executives of different provinces, cities and areas began to come into being and carried out informationization construction programs, including construction of e-commerce. Advertising companies began to make advertisement on line. China Goods Ordering System (CGOS) has been put into practice since Apr., 1997.
3. E-commerce based on Internet since 1998
The first Internet transaction in China succeeded in Mar., 1998. China Commodity Trading Market was declared to come into being in Jul., 1998, which was called “Never Closed China Export Commodities Fair (Guangzhou Fair)”. China Commodity Spot Transaction Market was the first spot transaction market for e-commerce with transaction volume up to 200 billion in 1999. China’s first e-commerce application system based on SET security standard was released by Bank of China and Teledata Bureau with the Bank of China in Hunan Province as its experimental unit. Committee of Economy and Trade and Ministry of Information Industry declared to start the “Golden Trade Project” centering on e-commerce, a large-scale experimental project to popularize the application of Internet and to carry out e-commerce in commercial and trade circulation domain. Beijing, Shanghai and many other cities have started to e-commerce Engineering, opened the experimental units of electronic shopping center, electronic shopping market, online shopping and transaction, built up financial and non-financial certification authority, made corresponding laws and regulations to lay a foundation for future e-commerce. Medical e-commerce network was put into operation in 1998, in which ten thousand enterprises and public institutions in medical and health industry got connected and information of over thousands of Chinese Traditional medicine and Western medicine was provided. National reconciling inventory network, national online construction and real state online promotion and many others have opened up.
The B2C websites such as 8848 formally opened in Mar., 1999, which shows that online shopping has come into application stage, such as the presence of online governments, online enterprises, online taxation, online education (online universities of Hunan University and Zhejiang University), and remote diagnosis (many large hospitals in Beijing and Shanghai).
The B2C websites such as 8848 formally opened in Mar., 1999, which shows that online shopping has come into application stage, such as the presence of online governments, online enterprises, online taxation, online education (online universities of Hunan University and Zhejiang University), and remote diagnosis (many large hospitals in Beijing and Shanghai).
4. The pragmatic development phase in 2000
E-commerce focuses on the traditional B2B. E-commerce service providers have turned to reality market from venture capital market and some successful businesses have emerged. E-commerce software and solutions developed by domestic enterprises or domestic enterprise-oriented have dominated the market with the perfection of exterior environments such as infrastructures; the perfection of application methods of e-commerce; the maturity of market for e-commerce; and the rapid localization of e-commerce software and solutions. The e-commerce in China has taken its initial shape.
E-government has come into the overall implementation stage in 2002. National government procurement investment of 35 billion (hardware 25 bilion, software 4.5 billion, and information service 5.5 billion) has increased by 25% compared with the corresponding period of the former year. Instructional Advice on China’s e-government given out by National Information Office in Jul., 2002 proposed the following three measures: 1 Construct two universal e-government network platforms, the interior for official business and the exterior for different business
enterprise sectors, enterprises and public. 2 forge ahead the “12 Golden projects” construction (golden taxation, golden customs, golden financial affairs, golden audit etc.). 3 speed up strategic data base construction (information data bases of population and agriculture etc.). Domain names applied by government departments at all levels in China increased to over 7796 in Dec., 2002 from 4615 Jan., 2001. In the developed coastal provinces, the rural governments have got Internet connected. Governments at all levels have released governmental information in the Internet and opened channels for public communication and service. Many a local government has set up the masses-oriented information release inquiry systems and “Mayor Mailbox” and “Government Mailbox” to facilitate the public’s participating in the management of state affairs. The overall implementation of e-government forcefully speeds up the development of e-commerce. The gradual perfection of the e-commerce environments (network infrastructure construction, legal environment, market environment, online payment, information security, certification authority construction etc.) and the constitution of national corresponding polices, laws and regulations on e-commerce have provided the fundamental conditions for the development of e-commerce. Network bandwidth has increased. The international export gross aggregate bandwidth reached 82.6G in Jun., 2005; the number of wide band access users has reached 53,000,000, exceeding the number of user surfing the net by dialing-up for the first time. National modern credit system has made material progress. Real-time payment system for a large amount of cash in Beijing, Wuhan was successfully put into practice on Oct. 8, 2002, which have been popularized in economically advanced cities such as Shanghai, Tianjin, Jinan, Shenyang, Chengdu, Xi’an, Shenzhen, and Haikou etc. Moreover, a national cross-banks, cross-areas information exchange network of credit cards had taken its initial shape by the end of Feb., 2003. Great achievements have been made in distribution. For example, China Post, the most powerful network transfer in China, joined the e-commerce, and some professional distribution enterprises for e-commerce projects came into existence one after another.
China government attaches much importance to the security related the application and development of e-commerce. For example, industry security CA has been organized with Telecom, Customs, and People’s Bank of China as initiators. CA’S have come into existence in Shanghai, Guangzhou, and many other cities. Much attention has been paid to the development of corresponding core technologies of security standard, electronic signature and password system, and investment in such fields has been intensified. Corresponding laws and regulations have driven to maturity stage and many laws are in embryo. For example, in 2005 electronic signature law was put into practice.
Current situation of e-commerce in China is as the following:
(1) E-commerce in China is still in its initial stage.
(2) The application of e-commerce in China is still of its primary level. Most e-commerce is non-payable, that is, online sales and offline payment; a small part is paying, that is online sales and online payment; some even make cooperatedcommerce.
(3) Minority of ten million enterprises in China has got Internet connected, carried out online marketing, to say nothing of online procurement. Majority of medium and small enterprises and a small fraction of large and medium enterprises have not carried e-commerce. In other words, enterprises are less information-based and have not become the main force of e-commerce.
(4) Most e-commerce websites in China are making electronic information research, making e-advertising, e-catalog, e-inquiry, exchanging commodity information on line; minor enterprises make such e-transaction on line (e-bargain and ordering), as making business negotiation, signing contracts, exchanging documents on line; few enterprises complete e-shopping and e-payment.
(5) Owing to the disparate development of different industries and areas, there are great differences in e-commerce between southeast coastal areas and the central and western areas. For the moment, metropolises in southeast coastal areas have carried out e-commerce while most cities and countryside in the central and western areas have not. However, it is likely that the new arrivals will surpass the old-timers.
(6) Various, multiple and multimodal strategies for e-commerce development shall be adopted for the following factors: the weakness of information foundation of national economy, the low-level business automation, the coexistence of traditional business and modern e-commerce, and the coexistence of traditional market and online market.
Open questions in the development of e-commerce in China:
(1) There are no clear development strategies and forceful technical and economic policies for e-commerce development. There is no specific programs for e-commerce development. Though policy frameworks for e-commerce have been drawn up for many years, no one has come into existence.
(2) Laws and regulations, standards, specifications of e-commerce seriously lag behind current situations and shall urgently be strengthened, and the unsuitable parts in the current administrative laws have not been revised timely. For example, there are no specific laws on electronic contract, the protection of online knowledge property and privacy, online information supervision etc. What is more, there are no enforcement regulations of network crime convictions and penalization.
(3) Because of the low level of computer application, there are not many enterprises and families connected with network. In addition, information technology has not become popular in both enterprises and families. Though netizens in China has been up to 210 million by the end of 2007, it only took up 15.6% of the total population, which is relative low comparing with 19.1% of average global popularization rate. In addition, the netizens are mainly in metropolises such as Beijing, Shanghai, Guangzhou and many other eastern cites. Only not more than 15% of enterprises in China do e-commerce, which is rather low compared with other countries. For instance, 60% of the small enterprises, 80% of medium enterprises and 90% of large enterprises in developed countries do e-commerce by means of the Internet.
(4) Economy and operation environments for the development of e-commerce are not complete. For example, social credit system has not been established; the network bandwidth cannot meet the requirement of e-commerce; e-payment methods are not mature; logistics distribution system does not match its own development.
(5) The technological level and occupancy of market of home-made products in China’s information industry are comparatively low. Hardware and software in significant applied engineering and systems of e-commerce are mainly from foreign companies. System integration and information service shall be improved. Corresponding standards and specifications of computer application are not universal and shall urgently be enforced. Standards of e-commerce lag behind the current conditions and apparently there is not adequate investment in it. Enterprise management systems, mechanisms, concepts and organization structure cannot meet the requirements of market economy. Apart from what have been mentioned, some leaders have not thoroughly realized the importance and urgency of e-commerce application. There are no internal force, labor force, financial and physical resources for an enterprise to adopt e-commerce. There are no adequate talents, especially inter-disciplinary for information technology and professional experts.
