60 People, 60 Stories

Springboard for tapping potential

By Waldemar Pfoertsch (China Daily)
Updated: 2009-09-30 08:26

Despite the global financial crisis and the economic downturn, China's e-commerce market continues to grow. Out of 1 billion Internet users worldwide, about 180 million - over one in six of the world's online population - live in China. China has outpaced the United States, where Internet usage has almost reached its saturation point.In 2010, China is expected to have more than 250 million Internet users.

E-commerce is also gaining from this boom in China.According to an International Data Corp report from the beginning of 2009, online trade volume reached 1.95 trillion yuan in 2008 and grew in spite of the economic crisis. By 2010, it is expected to reach 2.11 trillion yuan in total trade.

The Alibaba Group, China's e-commerce giant, has been one of the greatest beneficiaries of this development during the financial crisis. In July 2009, registered users surpassed 200 million and 500,000 paying users.Alibaba has about 70 percent market share and serves corporations, mainly small-and medium-sized enterprises (SMEs).

Still, SMEs in China do not play a significant enough role in e-commerce. In 1998, they produced about 95 percent of GDP, in 2008 only 60 percent, and the amount is shrinking due to the fact that large corporations are expanding rapidly and are the largest beneficiaries of the government's stimulus package.

The existing online trading platforms are currently helping SMEs in their efforts to sell overseas.They can present their products and use the established trust of Alibaba to their advantage.The biggest challenge is unique product offering.When offering products from China, it is not enough to offer the expected lower price. China must continue to innovate to meet the needs of the international market.

The next challenge for international e-commerce is the availability of Chinese who are familiar with the conditions and regulations of the target countries and also speak the local language.

The best direction Chinese SMEs can take is to recruit new personnel who already have international experience and train them to meet the challenges of the future.

Waldemar Pfoertsch is associate professor of marketing at the China Europe International Business School in Shanghai.