1. Lecture 11. e-Commerce and Strategies in China

2. Development of Internet in China 1987: 1 st email 1994: allowed to enter Internet 1995: Chinese people began to use Internet 2007: Internet users: 137 million Computers: 59.4 million Chinese websites: 849 thousand

3. ©2009 Pearson Education, Inc. Publishing as Prentice Hall Top Ten Internet Usage Countries 3 4-9

4. Growing Number of Internet Users in China 253 million comparing to 230 mil in US

5. Internet Penetration Rate across the Globe Internet users in China will reach 953 million with similar pen. rate of USA

6. People’s Republic of China Internet access and use has been growing rapidly + projected to continue: –China has the biggest Internet population in Asia. A few years ago, Internet users = younger (18-35), better-educated males. Now: –The Internet becomes mainstream, especially among urban residents, –Female Internet users = 40% of the overall Internet population, –Internet users with college degrees = only 30% of total users.

7. Age Distribution of China Internet Users

8. Education level

9. People’s Republic of China Internet access from: –Home (61%), –Net café (15%), –Work-related access (25%). The top 2 objectives for using the Internet: –“Information” (46%), –“Entertainment” (31%).

10. Web-Culture in China Top internet applications: 1.Online Music (84.5%) 2.Online News (81.5%) 3.Instant Message (77.2%) 4.Online Video (71.0%) 5.Search Engine (69.2%) 6.E-mail (62.6%) 7.Online Game (58.3%) 8.Blog (42.3%) 9.Forum (38.8%) 10.Shopping (25%)

11. Basic Internet Application in China Email –6 th in China, 1 st in USA –Popular instant message in China has effect on email usage Instant message –3 rd in China with usage rate of 77.2% –39% in USA, 47.8% in Korea –Integrated services including online streaming video, blog, and file sharing

12. Some Unique Trends China Internet Network Information Center (CNNIC), found out that China had 298 million Internet users by 2008, 25 percent of which were online shoppers. For comparison it should be stated that 71 percent of Internet users in the US are online shoppers. China e-commerce sales up 22% in 2010: There were 25,000 e-commerce websites at the end of 2010, compared with 20,700 at the end of June -- no figure for 2009 was provided. Highlighting the growing appeal of the country's Internet market, which has more than 450 million users, foreign companies such as Adidas, Gap and Wal-Mart have been opening online stores in China.Internet marketChina

13. Some Unique Trends and Concerns ARPU (Average Revenue Per User) of China's C2C market had raised from 520 yuan in 2007 to 760 yuan in 2008. Internet sales in the country hit 4.5 trillion yuan ($684 billion) in 2010, Cheaper prices and growing confidence in online payment security attracted more people to the Internet, with the number of shoppers reaching 158 million last year compared with 121 million in 2009 Internet shopping offers users lower prices and convenience amid high inflation. Users' confidence in and reliance on online shopping have strengthened as companies improved their services and product quality

14. Payment & Transport Methods -Common Payment Methods: Cash on delivery Remittance from post office Bank payment Visa card -Transport Methods Rely on official agencies Home delivery is typical Back

15. Types of EC Products & Services Products: –books, music and video products, gifts and toys, telecom products, sporting goods, office supplies, apparel, & cosmetics. –consumer electronics, food & health products.

16. Types of EC Products & Services Services: -Online traveling services -Employment placement & job market -Real estate, insurance & stock trading online -Banking & personal finance online -Online delivery of digital products, entertainment, & media -E-knowledge -Online intermediary agency -E-government Back

17. Mobile EC -Cell phones development - 455 million people own at least one cell phone -97.8% of people live in cities have at least one cell phone -Cell phones EC - Download digital products - Order useful messages - Charged from cell phone fees

18. Basic Internet Application in China Search engine –5 th in China with usage rate of 69.2% –2 nd in USA, with usage rate of 91% –Baidu.com –Google.com

19. Internet Media Internet News –2 nd in China with a rate of 81.5% –Higher than 71% in USA, 67.1% in Korea Online Music, Video, and Game –Usage rate 84%, 71%, and 58.3% –Important form of entertainment –Internet popularity poses serious challenges for government

20. China Internet Online Marketing E-commerce websites Pop-up advertising Search Engine Marketing Email Product reviews and ratings Recommendation agents Shopbots: aggregators by price –Airfare: 51766.com

21. Popular Web Sites in China 4-21

22. Top 10 Sites in China 1.Baidu.com (Search engine) 2.QQ.COM (Portal / network) 3.sina.com.cn (Portal) 4.Google.cn 5.Taobao.com (Auction / shopping) 6.163.com (Web-mail) 7.Google.com 8.Yahoo.com 9.Sohu.com (Search / portal) 10.Youku.com (Video)

23. Baidu.com World ’ s largest Chinese website China ’ s largest search engine 63% market share (Google has 26%) Revenue $239M USD in 2007 (NASDAQ: BIDU)

24. Baidu.com

25. QQ.com

26. Tencent: stock market value of $15B First Chinese version instant message Penguin trademark was a big hit Value-added services targeting high school students (QQ Show, QQ currency)

27. QQ.com 2008 1 st Half-Year Revenue: $444M USD

28. QQ.com Chat room window with applications QQ Show

29. Taobao （淘宝 )

30. Dangdang ( 当当）

31. ctrip

32. Alibaba.com B2B e-Commerce Website 36 million registered users (28.7M in China) From over 240 countries and regions Q3 2008 revenue: $114.2M USD — $70.9M Intl., $43.3M China

33. Alibaba.com

34. Eguo.com (online supermarket to groupon)

35. Bally’s Chinese digital flagship, launched in collaboration with Yoox in May 2011

36. Conclusion China is the biggest internet market in terms of number of users with no doubt Future growth will concentrate on several underdeveloped areas –E-Commerce: only popular in big cities now –Online education –Online banking Other developing infrastructure and business activities will foster internet growth Government regulations and incumbent players continue to play important roles

37. China: A View of the Future 4-37 China is expected to be the largest economy in the world by 2015, and already the largest internet user population. China represents both the promise and challenge of e-marketing in emerging market economies. –70% of all Chinese internet users are under the age of 30. –China’s vibrant, growing online market requires adaption to success.

40. Ethics and Regulatory Issues Internet has a become a powerful for consumers: bad news travel fast, Guo Meimei and the Red Cross Privacy and political sensitivity –The trouble of Google in China Censorship and filtering is common. Restrictions in certain areas after political unrest