Categories of the E-commerce

Advanced digital technologys, combined with enterprises and customers of these technologys, boost e-commerce. Similar to digital technologys, e-commerce cannot reach its goal in one move. As to enterprises and customers, e-commerce of different types and levels imply different opportunities.

In terms of transaction categories, e-commerce falls into five categories: business to business (B2B), business to customers (B2C), business to governments (B2G), governments to governments (G2G), and customers to customers (C2C). B2B, the mainstream in e-commerce and the principal method to improve competition ability in the competitive market, has come into existence for many years with the characteristics of carrying out commercial activities by EDI via special networks or Value-Added Networks (VAN, for short). B2C takes place between business and customers, in which online sales are carried out by Internet, such as the online bookstore Amazon. In recent years, the increase of number of netizens and new transaction platforms created by Internet for enterprises and customers speedups the rapid development of e-commerce. With regard to customers, it is unnecessary to set an unified standard for document transmission because only credit cards, e-money or e-wallet are involved in online sales and payment. In addition, searching and browsing functions and multimedia interface supplied by Internet facilitate consumers to look for and give an insight into products wanted. B2C has enormous potential and will be the main drive for the development of e-commerce. B2G, the business between enterprises and governments, is still in its experimental phase, focusing on administrative management, governmental invitated tender, and the implementation of various economic policies etc. C2C, the individual consumption behaviors, has not yet taken shape, such as the second-hand market. But along with the development of B2C and B2G, all countries will perfect the personalized services in e-commerce. In the following sections, the above five basic e-commerce categories, the common ones in e-commerce, will be analyzed in detail.

The Impact of Management Science upon E-commerce

Because management theories conforms the objective economic environment, management technologys vary in different development stages. At the classical management phase, the focus of management is to raise labor productivity by managing equipments and staff manually with strict regulations.

Because this phase falls into the category of the seller’s market, a tight market, the main task of governors is to increase labor productivity and supply. In the behavior management phase, the focus of governors is to transform the volume-produce mode into small-lot versatile production mode. The competition has changed to the service of how to meet the customer’s requirement from pure price competition. In this phase, supply has been guaranteed, customers began to push forward their claims for high-quality products. Products of low-quality are difficult to sell. Since the main task of the administrator is to sell out their commodity, commodity of high-quality, small lot and diverse types should be manufactured to satisfy various requirements of customers.

In the phase of strategic management, administrators have began to make and carry out decisions dynamically, continuously and adapt themselves quickly to changing internal and external conditions to balance stability, continuity, suitability, and innovation. In this phase, enterprises made use of internal resources and information comprehensively, and collecting and processing of information proposed higher quest to management measures. Therefore, computers entered traditional manual operation management fields that cannot adapt to the development. EDI has made full-grown development.

In the times of enterprise reforger, enterprises, facing the never-ending changes, improvements and fierce race, are crying for regrouping of operation flow to improve enterprise operation status and efficiency. Regrouping of operation flow is the effective path for enterprise to regain competitive power and vitality. The implementation of Business Process Reengineering (BPR, for short) needs two foundations, that is, modern information technology and high-caliber talents. The need of information processing facilitates the extension of computers in enterprises and the rapid development and popularity of management information system (MIS, for short) and decision support system (DSS, for short), thus accelerating the rapid development of computer hardware and software, computer information processing technology and message-switching technology as well as setting up the foundation for the development of e-commerce.

In the organizational management phase of globalization and knowledge economy age, the waves of informatization and globalization spread all over the world rapidly. Because of the arrival of the knowledge economy, information and knowledge become significant strategic resources. Only by organizing the global resources reasonably and winning the support of the global customers may enterprises exist and develop. To reasonably organize the global resources, apart from multinational corporations, virtual enterprises also come into being. Accordingly, an upsurge in “virtual organizations” is coming, which makes greater demands on information acquisition, information processing, and information utility than the former periods. It is this objective need that requires enterprises to connect the former systems of MIS and DSS, speedups enormous progress of Internet with the function of information communication and releasing, and perfects the infrastructure of e-commerce.

To sum up, because any technical progress is based on commercial demands, e-commerce technology, a technology to process, acquire, and make use of information, is no exception. Therefore, the demand of management pushes forward step by step the development and technological perfection of computers, information processing and information transmission to the greatest degree organic integration of e-information technology and management technology. Management promotes e-commerce development by this means.

Impact of Communications Science upon the E-commerce

In e-commerce, communication system is the carrier of information flow and capital flow, and exchanges and transmission of information are both carried out through communication network consisting of transmission, switch, terminal equipments, signaling, protocol and corresponding operation support systems. It is necessary to build up wide communication channels for information transmission and exchange of e-commerce network. The rapid development of contemporary communication technologies laid the foundation of e-commerce vomitorium.

The birth of digital computerized telephone switching technology lays the foundation for modern digital communication technology. Its popularization brings about the global development of communication network and becomes the significant support network for the rapid development of Internet. The maturity of optical communication technology, especially the rapid development of the wavelength division multiplex (WDM, for short) promotes the sharp rise of bandwidth of principal networks and provides the guarantee for the extension of network and the smooth transmission of the expanding information. Moreover, the progress of wireless communication technologies such as mobile technology and satellite communication technology supplies the new way to achieve the universal overlaying and flexible application of information network and lays the foundation for the extension of e-commerce to wireless application fields.

Telecommunication network is the key to informatization. Presently, it is no longer a single tool for transmission but the integration of many technologies. It is the presence of data information network that extends communication coverage promotes communication to enter into the service stage and leads to the birth of such business based on public data network as e-mails, e-data interchange, e-numbering book, e-bulletin board system and e-commerce. Strictly speaking, all above business belong to e-commerce in a broad sense. Computers of different places and functions, terminals, and various accessory equipments are connected by computer network, a large-scale, powerful network, with communication routes so as to achieve information share in communication process, thus achieving information transmission and share of hardware, software, and data information between enormous computers.

Thanks to the combination of computer network and communication network, enormous computers can simultaneously process texts, data, images and voice etc. The above information can be available everywhere and exchanged within China or the world. Network system provides necessary methods for information exchange and transmission, the core of e-commerce. e-commerce will be groundless without the development of communication technologys and information exchange and transmission. The development of e-commerce demands for higher and higher communication. Safe, high-speed network transmission and multimedia communication have been the inevitable factors to carry out e-commerce.

The mobile communication (the information transmission process in which both parties or at least one party involved carry out information exchange while moving) is the determining technology for information exchange, usage, processing, and releasing between any communication subjects all over the world anytime and anyplace and the core technology to realize Mobile-commerce.

Internet is the technical foundation and indispensable for e-commerce. The development of e-commerce will definitely make greater demands on the communication technology and boost the development of communication technologys; the development of communication technologys provides technical support for new applications of e-commerce. Vice versa, along with the extension of e-commerce applications, the communication infrastructure network can carry on larger-scale information flow and this requires continuous increasing of infrastructure network bandwidth.

At the same time, e-commerce requires data informatization and challenges the traditional communication mode, and data informatization will become mainstream direction for communication network development. For e-commerce clients, a high-speed route of entry is required for online shopping and online work, which proposes the request to bandwidth. E-commerce application, the mainstream application of information network in the future, will definitely exert great influence on current communication network structure and communication mode.

The Impact of Computer Science Upon the E-commerce

E-commerce is based on electronic information technology, in which information storage, information exchange and information processing are all carried out by computers and Internet. Accordingly, the development of computer science and computer technology have a decisive effect on the development of e-commerce. Since the birth of the first computer with vacuum tubes, electronic devices have gone through the following steps: vacuum-tube circuit, transistor circuit, integrated circuit, large scale integrated circuit (LSI, for short) and very large scale integrated circuit (VLS1, for short). With the improvement of electronic device manufacturing technology, there emerge minicomputers, large computers and parallel computers. The computer technology, the core of information technology, has gradually become mature after the development of half a century. The computer system is developing to become intelligent, integrated and comprehensive. The birth of multimedia technology enables computers to process various information, such as graphs, texts, voice and images.

The success of specialized application software extends the application scope of computers from the single calculation to almost all application fields. The new technologys of computer network and data base a achieve the better share of software, hardware, and information resources within a shorter time, gathering and processing of information cooperatively within an extensive range. The global information revolution has been brought about by a series of breakthrough of digital technologies and the universality of computers and Internet. TCP (Transfer Control Protocol) / IP (Internet Protocol) translates the traditional network into the universal computer network. In addition, emergence and development of new technologies closely related to e-commerce, such as VPN (Virtual Private Protocol), Gigabyte Ethernet wiring system and modem, shape and urge the development of e-commerce.

The computer network has already become principal platform of e-commerce. The universality of TCP / IP greatly facilitates the transmission of information between the networks conveniently, lowers the cost of information acquisition; the emergence of routing technology and the continuous creative innovation of the routing algorithms give full play to network, thus comes the global outburst of Internet. At the same time, the rapid development of the intranet and extranet, based on IP, has turned into the foundation for enterprises to carry out e-commerce. The emergence of WWW technology leads to the boost in Internet users and makes online information more abundant, colorful, multimedialized and easy to accept. The wireless communication is heading for datamation and high bandwidth. For instance, the GPRS technology can realize the bandwidth of 115 kbps, the 3G mobile communication technology can realize the bandwidth of 2 Mbps and WAP has been widely approved and put into application.

Computer network system integrates the technologies of digitization, network and software, and makes telecommunication possible by computer network and computer intelligence node control technologys. It is the telecommunication that enables the rapid development of a series of long-distance applications, such as so called distance education and distance medical treatment etc. Therefore, the implementation of e-commerce is closely related to the development of computer network, and it is the development of information technology that speedups the development of e-commerce. Computer languages have developed, from machine language, to assembly language, advanced language and even to the intelligence language, and many operating system softwares (e.g. DOS, Windows, UNIX, and Linux), business softwares (Office series, Windows series, LOTUS-1-2-3 series), application softwares (Oracle, Sybase, SQL Server, DB2 data bank system software etc.), specialized application softwares (CAD / CAM, MatLab and financial software) and integrated development softwares (e.g. Power Builder, JBuilder, Delphi). All the above changes speedup software development, free people from the tiresome mental work of source code compiling to satisfy the basic need to assemble many basic software modules of excellent functions. The data base technology, the key technology of e-commerce, cannot only store all kinds of information (e.g. articles, transactions, and consumers) but also provide market information and decision-making basis by rearranging and analyzing data. The key factor to ensure the popularity of e-commerce is the security of information, for which various encryption technologys such as symmetric key encryption and public key encryption are developed to provide the basis of information privacy. In addition, technologys of firewall and intrusion detection keep information from being destroyed and stolen illegally.

If software design is compared to the construction of modern buildings, in the past it started by mixing pug, baking bricks, picking stones and burning concrete all by manual labors, while presently it is like the construction of a modern building with existing bricks, concrete, and a large number of prefabricated blocks by modern rooters, land scrapers, stirring mills and cranes. Accordingly, much energy can be concentrated on building design and construction management, which enables people to develop e-commerce software at their pleasure is the precondition for the popularity of e-commerce in all industries and work units of all sizes.

E-commerce in China

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.

The Definitions of E-commerce

As the term suggests, e-commerce refers to various online commercial activities focusing on commodity exchanges by electronic means, Internet in particular, by companies, factories, enterprises, industrial undertakings and consumers. A large number of well-known organizations and corporations also have their own definitions on e-commerce. For example, ISO defines e-commerce as: it is the general term for exchange of information among enterprise and between enterprise and customers; the Global Information Infrastructure Committee defines it as the economical activities using electrical communications, with which people can purchase products, advertise goods and settle.

The following are definitions given by transnational corporations Intel, IBM and HP respectively.

Intel: E-commerce = electronic market + electronic trade + electronic service
IBM: E-commerce = information technology + web + business
HP: E-commerce is to accomplish commercial business by electronic means.

Since e-commerce is a brand new science, it is not at all surprising that there are various definitions about it. In addition, a premature uniform definition of e-commerce may slow the development of e-commerce. E-commerce shall be social, economic activities between social principal parts by taking advantages of computers and network.

The implication of e-commerce: it refers to commercial trade activities carried out by electronic methods, the electronicization of traditional trades. The electronic means refer to electronic technologys, tools, equipments and systems, including telephone, telegram, television, facsimile, E-mail, electronic data interchange, computer, the communication network, credit card, electronic money and Internets. Commercial activities comprise inquiry, offer, negotiation, contract signing, contract fulfillment, payment. In a narrow sense, e-commerce refers to various online commercial activities focusing on commodity exchanges by electronic methods, computer network in particular, by companies, factories, enterprises, industrial undertaking and consumers. In a broad sense, electronic business (EB) refers to the electronicization of all business among all industries (including governments, enterprises, and institutional units), such as electronic government, electronic command, electronic education, electronic public business, electronic household etc. Components of e-commerce are illustrated in Fig. 1.2.



















Figure 1.2 Components of e-commerce

(1) Network: It includes Internet, Intranet, and Extranet. Internet is the foundation of e-commerce and the carrier of commercial business information. As to Intranet, it means for enterprises to carry out internal affairs. With regard to Extranet, it is the link between enterprises and users to carry out commercial activities.

(2) E-commerce user. It includes personal consumers and business consumers. The business consumer scientifically manages staff, wealth, goods, production,supply and sales by Intranet, Extranet and MIS. Personal consumer has access to information and purchases goods by connecting Internet with browsers, set-top boxes, PDA (the personal digital assistance), Visual TV etc.

(3) Authentication Authority: The authentication Authority (CA), the authority recognized by law, is responsible for issuing, managing digital certificates and facilitating parties involved in online sales to identify each other.

(4) Distribution center. It is in charge of sending goods that cannot be delivered on line to consumers and keeping track of goods flow.

(5) Online bank. It provides the sellers and buyers the traditional bank business, such as settlement, and round-the-clock service.

(6) The administration of the commercial activity. It consists mainly of
departments of industry, customs, tax and trade.

The Significance of e-concept

E-mail, called the Internet Killer User, attracts people to pay attention to the existence of the network, and sparks the rush of network gradually. E-mail transforms from receiving and sending e-mails to commercial use and becomes one of the principal tools for people to communicate on line. The e-wallet and e-cash etc. basically make it possible for people transfer fund on line and accordingly makes network and real life fuse further. The e-commerce has on a large scale began to impact the traditional pattern of trade and brought about intense changes of life style. It can be predicted that in future new concepts will spring up and the combination of electronic technologys and other ideas will give rise to new things, because electronic technology based on Internet is advancing continuously. “e-concept”, proposed in early 2000, is accepted and spreads quickly. That is to say, e-concept is a new thing taking electronic and network technology as foundation, other technologies and ideas as platform of upper level. After double integration with other technologies and ideas, e-concept will exert a great impact on social life style. In this sense, e-commerce is just a subset of e-concept.

E-commerce gives impetus to the development of society and provides broad space for future, though it is merely a subset of e-concept. The development of e-commerce may transform the whole social operation regulations, so the e-concept will exert much more influence on the society, no matter in depth or in scope.

The significance of e-concept lies in that it makes people grasp not only radical changes of new things but also the root of all changes brought by e-concept in e-times so as to promote greater social changes.

The Origin and Development of E-commerce

E-commerce is the necessity of international business, vice verse, international business boosts e-commerce. The development of computer science and communications sciences has laid a solid foundation for e-commerce. The development of information security makes e-commerce proceed in a secure way; the laws concerning this field also provide legal guarantees for e-commerce. The origin and development of e-commerce is illustrated in Fig. 1.1. It has been through three phases.





Figure 1.1 The development of e-commerce

Phase One: E-commerce based on EDI (Electronic Data Interchange)

EDI (Electronic Data Interchange): The EDI originated in the 60s of the 20th century. The large-scaled business enterprise in the developed countries carried out the EDI basically in the 80s. The EDI of our country began from the 80s in 20 centuries. EDI is a kind of teleportation method to transmit business documents from one computer to another. Because EDI reduces the paper note greatly, people vividly call it as “trade without paper” or “bargain without paper”. From the perspective of technology, the EDI includes both hardware (mainly the network) and software (mainly software and standard of EDI). For the sake of safety, most EDI were not transmitted by network until the 90s of 20c, but by VAN (the value-Added Network) of exclusive use. What EDI needs is a standard software to translate information in the customer databases into the EDI-standard so as to deliver. Because the business enterprise of different professions adopt different format on the basis of their own business characteristics, therefore when transmitting documents, they must be translated into the EDI standard format. Before EDI, the primary stage of e-commerce, becomes universal in China, electronic commerce has developed quickly to the second stage.

Phase Two: E-commerce based on Internet

EDI enjoys advantages and tremendous strength in decreasing enormously the intensity, mistakes and cost to make and handle documents on the one hand, and in improving efficiency to a large extent on the other hand. Therefore, it speeds up the development of international business. However, the high cost of VAN and EDI communication system hinder the expansion of e-commerce based on EDI. Moreover, EDI is only suitable for large-scaled transnational corporation rather than medium and small-sized ones, for it does not take information share into account. Since both the increasing large-scaled transnational corporations and many a medium and small-sized enterprise thirst for information sharing, the establishment of a new electronic information exchange system of low cost is on the agenda to realize the information sharing.

In the middle and late 90s of the 20th Century, owing to the prompt popularity of Internet, from universities to enterprises, and then even to common people’s families, Internet functions from the information sharing to a popular mass media. After 1991, business that has always been outside of Internet came into the realm and made e-commerce a big hit in Internet, which gives impetus to the rapid development of Internet. Many enterprises made a big success by online direct marketing such as Dell Company, distinguished for direct online selling, online book store Amazon, Yahoo Internet search engine, Baidu Internet search engine, Sina, Sohu, and Ebay. Such websites are up to 424,000 in 1998, comparatively only 2,000 in 1995. By 2001, Internet has become the largest network in the world and covered up to 150 areas and countries, linking more than 25,000 networks and 520,000 mainframe computers. Vint Cerf, “Father of Intel” predicted in 1996 that there would be a hundred million Internet users by 2003. However, he was shocked by the flourisher of Internet, with 150,000,000 Internet users by the end of 1999, trice than that of 1997. According to the latest statistic reports released by CNNIC in July, 2007, there has been over 10,000,000 Internet users, 622,000 registered domain names and 677,000 websites in China. The flourishing of Internet makes flood of enterprises unable to resist the temptation to start e-commerce. The reason why e-commerce based on Internet is so attractive to enterprises is that e-commerce enjoys several evident advantages over e-commerce based on EDI:

1) low in cost. The expense of Internet is low, no more than 1/10 of VAN in general.
2) wide in overlaying. Internet spreads all over the world, by which trade partners can conveniently send commercial information and documents with common telephone wires.
3) complete in function. Internet can help different users to carry out their targets of different levels, such as issuing electronic commercial information negotiating on line and setting up virtual department stores and online banks etc.
4) flexible in use. E-commerce based on Internet is not confined to agreement of special data exchange. Any commercial document can be formed by filing the screen documents that are identical with the current paper documents. Such documents can be understood and used directly by anyone without any translation.

Internet meets the demands of medium and small-sized enterprises to exchange electronic data by overcoming the shortage of EDI. Internet, lower in cost, wider in coverage and better in service, will certainly replace VAN as the hardware carrier of EDI. Electronic information exchange system with the characteristics of being both lower in cost and able to share information makes itself popular among all enterprises. EDI based on Internet enjoys the advantages of both EDI and Internet, therefore, EDI realized by means of Internet is directly called as “Internet EDI”.

In e-commerce based on Internet, at first, people mainly make daily “business correspondences” by e-mails, and then release information by Internet. Since 1995, enterprises have gradually turned to Internet to release information. Therefore, the public can directly access to the enterprise information, goods and services by Internet, which leads to the exploration of information issuing system represented by the technology of Web and becomes the principal application of Internet. E-commerce Demonstration Law, passed by United Nations Commission on International Trade Law on June 14, 1996, symbolized the beginning of real e-commerce. And the sonorous advertisement of IBM in 1998 Are You Ready for e-commerce set up the upsurge of e-commerce all over the world.

Phase Three: E-concept e-commerce

Since early 2000, people’s understanding has developed from e-commerce to higher e-concept e-commerce, and it is realized that e-commerce is in fact the combination of information technology and commerce applications. Apart from business, electronic information technology can be applied in many other fields, such as medical treatment, education, hygiene, military, administration and so on, to form e-concept in the fields. For instance, electronic education—remote education, the combination of electronic information technology and education; electronic treatment—remote treatment, the combination of technology and treatment; electronic administration, the combination of technology and administration; electronic command, the combination of technology and command; online banks, the combination of technology and finance; virtual enterprises, the combination of technology and business organizations and so forth. Various patterns of e-commerce such as E-B, E-C, E-G etc., have come into being by applying e-conept. With the development of electronic information technology and the increasing need of the society, more and more e-concepts will emerge and the genuine e-times will advene.

The Origin and Development of E-commerce

Internet has created a new world beyond the real world—a “virtual network world” or “The sixth continent” called by Lu Yongxiang, the academician of Chinese Academy of Science. E-commerce brought about by Internet is one of the most significant scientific accomplishments. In business, the prosperous e-commerce technology gives rise to a revolution in the circulation system. It breaks the boundary of time and space, alters the trade pattern, improves the circulation of merchandize, capital and information, and makes enterprises have an edge over others as well by reducing the cost of production effectively. In short, e-commerce has enabled the traditional business to achieve greater, faster, better and more economical results. The influence of the e-commerce will go beyond the business activity. It will make a profound impact on each aspect of human society, such as production and employment, government function, working talent, law systems and education etc. It permeates into every profile: industries, logistics, finance, media, governments, enterprises, research organizations and even traditional agricultures. With the development of the e-commerce, it will influence and impact to a larger extent every aspect of our society with each passing day. A new economic revolution on the basis of digitalization and Internet has set in. We can say without exaggeration that the electronic commerce is the most significant industrial revolution since Industrial Revolution, with deeper influence on mankind than the former two industrial revolutions, because it not only can raise greatly productivity, efficiency of economic operations, lower the economy operation cost, and make many originally impossible things possible, but also influence people’s life styles and every social aspect and therefore change their world outlook and methodology. In the new century, participation of the third revolution exerts the influence, to a large degree, on economy in China, especially in shortening the gap between the western developed countries and catching up with and surpassing them. Therefore, it is inevitable for us to develop e-commerce, to join the world market, participate in the globalization competition and rejuvenate China. So the book will cover the following aspects of e-commerce: its coming into being development, its composition, its nature, the guidelines for e-commerce system design, difficulties and respective solutions in e-commerce, methods of designing a good website, the relation between e-commerce and international trade, the legal problems brought by e-commerce, the methods of dealing with and analyzing how to deal with and analyze e-commerce cases. In conclusion, all the above will be touched upon in this book, relevant philosophy problems about social overall influence on mankind are beyond the scope of this book.