On E-Commerce Development in Mainland China WANG Guo An (Andrew) Prof. of International Trade Vice Director of International Affairs Office Zhejiang Gongshang University, Hangzhou, P. R. China Voice: (cell) Fax: Skype:wangguoan

PART I Introduction  China Internet Information Center (CNNIC) has conducted biannual statistical survey reports since 1998 on the internet development in Mainland Chinahttp://  The 18 Statistical Survey Reports on the Internet Development in China  The Latest Statistical Survey Report on the Internet Development in China was released on July,20, 2006  The statistics of host computers, Internet users, the distribution of users and information traffics, the situation of domain name registration and the likes covered by the surveys are very important for the Chinese government and enterprises to make decisions accordingly and for overseas scholars and businessmen to understand the e-commerce situation in Mainland China. These survey reports have been well accepted and widely cited by organizations and individuals both in China and overseas countries.

Part II Review of Internet-based E-Commerce Development in Mainland China  2.1 Mainland China’s recognition as one of the Internet members in the world in April 1994 On September 20, 1987, Professor QIAN Tian-bai sent the first message from Mainland China to KARLSRUHE University in Germany. On April 20, 1994 China was officially recognized as one of the Internet members in the world  2.2 Launch of Golden Engineering Project On March 12, 1993, Former Vice Premier ZHU Rong-ji put forward the plan to undertake Golden Engineering Project

Part II Review of Internet-based E-Commerce Development in Mainland China  2.3 Rapid Development in the period of enlightenment From the spring of 1995,Internet services began to be available to the general public in China. In January 1995, a group of young pioneers headed by Mr. HE Yi-bing and Mr. Jack MA, the boss of Alibaba.com crashed into this brand-new field. The characteristics of the e-business environment for the pioneers Few knew the Internet Business leaders were very reluctant to spend money on Internet ventures No laws or rules at all available regarding e-business in China Internet infrastructure was very poor and undeveloped

Part II Review of Internet-based E-Commerce Development in Mainland China  2.4 Wide Internet applications in all sectors after 11 years of development S earch engine, online education, online banking, online auction, Internet Ads, online news, online VOD services, free and charged services, SMS, online recruitment, online information and online gaming. Foreign trade firms, security companies, financial institutions, airline ticket booking, hotel reservations, banking services, colleges and universities are computerized and they conduct much of their day-to-day business online.

PART III Characteristics of Current Internet-based E-Commerce Development in Mainland China Rapid development  Total number of internet users: 123. million, ranking No. 1 in the world.

PART III Characteristics of Current Internet-based E-Commerce Development in Mainland China 1. Rapid development  Total number of computers with access to the Internet: 54.5 million  3.1`.3 Total number of domain names million, among which those registered under “CN” have reached 1,190,617.  Total number of “www” websites: 626,600  The total quantity of IPv4 addresses: 49,421,824  The number of e-business enterprises: over 4000  The e-business volume: US$60 billion in 2003

PART III Characteristics of Current Internet-based E-Commerce Development in Mainland China 3.2 Uneven development  In different geographical locations 79.1% of “CN” domain names and 84.0% of the www websites are in the economically developed areas along the coastal regions in the north, the east, the south  In different age group: Those under the age of 35 account for 82.0% while those over 35 account for only 18%.

PART III Characteristics of Current Internet-based E-Commerce Development in Mainland China 3.2 Uneven development  Among people with different incomes: Those with no income and with a monthly salary of less than RMB ￥ 500 account for 39.0% and those with a monthly salary of over RMB ￥ 2000 account for only 21.9%. A lot of high income, middle-aged and elderly business leaders, high-ranking decision makers do not use the Internet In different professions or industries: Public administrations: 13.1% Social Communities: 12.5% Education: 11.0% Manufacturing: 10% IT, wholesale and retail: 8.1%

PART III Characteristics of Current Internet-based E-Commerce Development in Mainland China 3.3 Active international cooperation  On September 27, 2003, Asia-Pacific Internet Research Alliance was formed in Beijing. The initial member organization included Korea Network Information Center (KRNIC), City University of Hong Kong, University of Macao and Taiwan Network Information Center (TWNIC).  The China-US-Russia project “Global Ring Network for Advanced Applications Development” (GLORIAD) was accomplished on January 12, 2004,  The bandwidth of internet connection reached 53.9 G by the end of June, Countries directly interconnected to China's Internet include the United States, Canada, Australia, Britain, Germany, France, Japan, South Korea, etc.  International conferences on e-business have been held in Beijing, Shanghai, Hangzhou and other parts of Mainland China.

PART IV Barriers to Internet-based e-commerce development and their solutions  4.1 Lack of the skills and infrastructure: 38.4% of non-Internet users do not know how to use the computer and the Internet. 20.1% of non-Internet users do not have the infrastructure or equipment  4.2 Spam and pornography: Each week each Internet user receives twice as much unwanted spam as wanted messages. About 700,000 pornography websites exist in the world, the figure increases at the rate of every day. There was an anti-spam, anti-porno campaign in the summer of  4.3 Poor Commercial Credit: The issues of the greatest concerns for the Internet users are poor quality of online products, poor after-sales services, poor credit of the producer, unreliable online information, inconvenient payment methods and delayed delivery. Nation-wide credit assessment system has to be set up.

PART IV Barriers to Internet-based e-commerce development and their solutions  4.4 Lack of security of online transactions 28.9% of internet users worried about the security of online transactions. Main security threats include computer viruses interception of online data hacking and cracking  4.5 Insufficient legal protection Legal problems include false advertisements intellectual property rights violations the stealing or altering of business information and data There have been 37 rules and regulations regarding Internet development and e-business, but there has been no law, except the Digital Signature Law of Mainland China passed on August 28, 2004.

PART IV Barriers to Internet-based e-commerce development and their solutions Other issues for Chinese Leaders and Scholars to address  Establishment of a reliable and efficient logistic system  Establishment of a unified national technology standard to guarantee interoperability  Strengthening the protection of intellectual property rights online and consumers’ rights and interests  Narrowing the economic differences between the developed regions and the under-developed regions  Training more information technology and e-business professionals to meet the demand from the rapid e-commerce development  Improving Chinese people’s English proficiency

PART V Conclusion Internet users and e-business volume will continue to increase in Mainland China. However, in the near future people will be inclined to get business information online and conclude transactions off line. Though more people will effect payment online with credit cards, yet many people will still cling to the traditional mode of payment, cash on delivery for domestic e- transactions. Internet-based e-business is and will be one of the most influential, rapid-developing and promising industries in Mainland China, but not a very profitable industry in the near future because the construction and the improvement of the credit system in Mainland China will be a long and slow process and the e-business development is closely related not only to the economic development, but also to the perfection of the legal system and the change of Chinese people’s traditions.

Thank you for your attention! If you have any questions, please contact WANG Guo An (Andrew) Prof. of International Trade Vice Director of International Affairs Office Zhejiang Gongshang University, Hangzhou, P. R. China