Business-to-business E-commerce: Are Chinese companies ready? A

Electronic commerce

Introduction: This paper analyzes the factors that may affect the development of business-to-business e-business in China and the differences between Chinese and Western social business-to-business development, and on this basis, it forecasts the development prospect of business-to-business e-business in China.  At the same time, investors and entrepreneurs interested in E-commerce offer the potential and opportunity to develop business-to-business e-business in China. China webmaster Information Network, China Webmaster First portal, please do not hotlinking, content from www.chinahtml.com, to build China Webmaster Technology Park
Business-to-business in China-a bright future and a hard start

Although the climax of the dot-com collapse was surging, but business-to-business e-business continues to thrive in all walks of life, as it does greatly reduce the cost of supply chain operations between the parties, eliminate intermediaries, cut transaction costs, facilitate easier trading and encourage price competition in the electronic trading market. Business-to-business development should have more potential in China because supply chain operations in many industries in China are less efficient than those in the west, and many companies do not have a reasonable business process and they have not experienced the business process reengineering and reengineering that Western companies have become popular in the early 90. Business-to-business Development will provide many opportunities for Chinese companies to improve efficiency and increase profitability. At the moment, however, Chinese business-to-business is still in its infancy, with trading volumes accounting for only 0.2% of the world's total.

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In the next five years, Business-to-business E-business will be greatly developed in Asia and around the world.

The pace of growth in Asia will be slower than elsewhere in the world, especially in the Asia-Pacific region, where the percentage of business-to-business transactions will decline. This is mainly because business-to-business growth in the region is constrained by the social structure and cultural factors that we are going to talk about.

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China currently has a smaller share of Asia (currently 2.2%, 2004 will be 7.3%), but will maintain the highest annual growth rate of 129% per cent for the next four years (see table 2). In 2000, China's business-to-business e-commerce turnover reached $800 million trillion.

The potential for business-to-business development is limitless, although in both the West and China, the development of the Business-to-consumer is earlier than business-to-business, but in the next few years the share of the business may account for only the 20-30% of the total amount of e-commerce transactions in China, while the profit-making business-to-business will account for 70-80% in the same period.

However, business-to-business after all is a new thing, in the West is just emerging, its mode of operation really adapt to the Chinese social structure and culture situation? Next, we will discuss various factors that hinder or promote the development of business-to-business e-business in China.

The social structural differences of business-to-business development in China

Business-to-business was first developed in the United States, only started in China, but due to the differences in social structure, the way of development will be different.

First, China's development of E-COMMERCE infrastructure (information technology, online payments, communications, information communication, etc.) are lagging behind the West, but improved very quickly. The infrastructure of information technology is lagging behind in China, but it is slowly improving. As of July 2001, China has 26.5 million registered Internet users, accounting for 1.6% of the population. There is only one computer per 100 inhabitants. Although the development is fast, the existing base is too small. Many factories do not even have computers, not to mention the implementation of ERP, supply chain management.

Second, the telecommunications channel is a bottleneck. At present, the Internet non-high-speed connection hinders the information transmission in the process of e-commerce transaction. In some ways, however, this is not necessarily a bad thing. China can use the latest technology to build its telecoms infrastructure without being bogged down in the need to reinvent its existing facilities. Long-distance optical networks have been established between major cities in China in the 90 's.

Third, the online payment system is not perfect. China lacks a unified online payment system, and each bank introduces its own online payment scheme, which makes it difficult to interconnect the Internet. At present, this situation will change. Under the coordination of the Unified China Financial Certification Center (CFCA), at the end of this year, 12 domestic banks will achieve cross-border transactions. Merchants in BOC, ICBC large online payment business with the support of the use of financial CA certificate, successful business-to-business electronic transactions. This means that payment will no longer be a bottleneck in China's business-to-business e-commerce development, and that China's domestic payment and settlement measures have made a new breakthrough, but also eased many Chinese companies hoping to achieve online transactions. However, at present, many companies are not conscious enough, still accustomed to the traditional way of payment. At the same time, China's control over foreign exchange payments limits the integration of Chinese companies in international business-to-business E-commerce networks.

Iv. in China, the lack of information is a common problem. China lacks institutions like Western nexis-lexis or dun&bradstreet that can provide third-party credit information. This often prevents the parties from engaging in transactions anonymously in the Business-to-business trading field. Payments also have to be made using a safe, but time-consuming and complex payment tool, such as a letter of credit.

China's industry structure has had a mixed profit and loss on its online trading.

1. Most of China's companies are manufactured, and their trading products are mostly direct commodities (raw materials), which are not easily characterized, and are often the intermediate product of a business process. In this way, it is more difficult to transfer these products to the Internet for trading. As a result, China's best products for online trading may be chemicals, rubber, textiles, shoes, leather and other products that are easy to qualify in online trading catalogs.

2. The underdeveloped tertiary industry in China means that the development potential of tertiary enterprises, such as airlines and bank-led business-to-business E-commerce sites, is not significant. It is difficult for them to benefit individually from the development of E-commerce. Therefore, in these industries, it is very urgent for the third party to set up the industry website or unite to carry out electronic commerce to raise the industry productivity and increase the income together.

3. In many industries in China, there are problems such as low trade barriers and excessive competition. This will in some way stimulate the development of e-commerce. For example in the home appliance industry, the competition is very intense. The brands and prices of the major companies have been playing a very happy battle. In order to gain further operational advantages, they will take all means to improve efficiency, including e-commerce. At present, China's main home appliance manufacturers have been net, the launch of business-to-business transactions, is a good example. With the WTO approaching, China's domestic market competition in many industries is expected to be internationalized, more enterprises will be actively engaged in business-to-business E-commerce.

4. In many industries in China, the market intensity is not high, the intermediate links are many, the supply chain is inefficient, the consumption is large, and the performance is extensive. The biggest characteristic of electronic commerce is that it can intensify the extensive process. Because the electronic commerce benefits the quot, the internet far and near cost "such technical characteristic, causes the economical process the middle cost to expend, does not increase with the socialization degree (near to the change) but correspondingly enhances, is the socialization scope is bigger in the region, the cost is relatively lower." Research by Goldman Sachs shows that business-to-business E-commerce generates 5%-30% savings in transaction costs.

The prominent problem of China's current economic development is that the traditional industry is too extensive and the transaction cost in the industry is high. The implementation of Business-to-business E-commerce through electronic orders, automated transactions, cooperative management of inventory, collaborative planning and other ways to eliminate duplication of work, reduce ineffective middlemen, improve the operational efficiency of the supply chain. But the problem is that business-to-business implementations need to be optimized for the traditional irrational business processes in order to achieve further success, inevitably encountering obstacles. By reducing the number of past unreasonable processes, this may touch on the vested interests of some people, thus slowing the development of business-to-business. In short, there are a number of specific social structural factors that hinder China's development of Business-to-business E-commerce, the company's information technology architecture is probably the most important reason. But the Chinese government has actively taken various measures to encourage the construction of the Internet infrastructure. 1999, the Chinese government announced that the internet year. 2000, the launch of "Chinese Enterprise Internet Project", the year will be achieved 1 million small enterprises, 10,000 medium-sized enterprises, as well as 100 large enterprises of the Internet. In addition, the Government is also actively developing relevant legal and regulatory mechanisms for electronic commerce to create a good e-commerce operating environment. Recently, the government has been aggressively trying to buy online, in an effort to encourage business-to-business online transactions. At the end of May 2001, Hubei Jingmen Government Procurement Center opened a warehouse-type procurement E-commerce platform. Prior to this, there have been Nanjing, Hefei, Nanning and other cities to implement online procurement. In the future, government e-procurement will become one of the most powerful driving force in the business-to-business market.