ESSAYS

Essay on The Future of E-Business in China

ONLINE EXAMPLE OF ONE OF OUR CUSTOM ESSAYS

ABSTRACT
With a population of 250 million people, China is seen as potentially the most important future market for e-business. Whilst the market has reached saturation point in the United States, there is still plenty or room for growth in China for both Chinese and international organisations. However, despite a rapid increase in Internet based shopping in the country, e-business is still not contributing a significant amount to the countries Gross Domestic Product (GDP). A range of reasons for this has been suggested by several writers who have researched the nature of the Chinese Internet industry and they have concluded that it was a combination of culture and lack of business infrastructure that were the cause. This piece of work sets out to examine why the Chinese have not fully embraced the concept and what actions would need to be taken by the Chinese Government to encourage use of the Internet to further grow their already buoyant economy. By using a sample population of Chinese students studying in England, it was possible to compare their e-commerce habits whilst they had been living in China with how they used the Internet since moving to England. The research concludes that whilst the future of e-business is bright for China in terms of increasing access to Internet facilities, there are several areas of the national culture and organisation that preclude the Chinese people from making full use of its facilities. This paper concludes that should the Chinese Government not take more deliberate action to overcome these barriers, the Chinese e-business market may take a long time to become internationally significant.

INTRODUCTION
China.
With a land area of 9,596,960 square kilometres, China is the fourth largest country in the World behind Russia, Canada and the United States. It is made up of twenty three provinces (amongst which it includes Taiwan), five autonomous regions and four municipalities. It has varied terrain and climate due the area it covers and is rich in natural resources such as coal, iron ore and petroleum. The estimated population in July 2004 was 1,298,846,624 over 70% of whom are aged between fifteen and sixty four. The population is growing at a rate of 0.57% and life expectancy averages nearly 72 years. There are six common languages spoken including Mandarin, Cantonese and Shanghaiese, and there are also many dialects and minority languages. The country has a high literacy rate with over 90% of those of fifteen or over being able to read and write (all data author unknown February 2005). For many years, China was seen as one of the world's leading civilizations. During the first half of the 20th Century, however, the country experienced famine, civil unrest and international war. Following the Second World War and the establishment of the People's Republic, a dictatorship was put into power by the Communist Party which exercised strict control over its citizen's lives. The picture changed in 1978, when Deng Xiaoping took over the leadership and introduced major changes to the economic processes in the country. Economic decision making was decentralised and the whole marketplace was reformed including giving villages responsibility for their local agriculture. International market were opened up and China became a major economic force. This proved very successful for China and in the following twenty years, output increased by four hundred percent (Fishman 2005). However, it is also noted that this mixture of socialism and capitalism systems has been said to have led to the worst of both types in terms of bureaucracy and a laissez faire attitude, with a rising income gap between the poor and the wealthy and increasing levels of unemployment (author unknown February 2005).

On initial inspection, the Chinese economy today seems to have remained healthy. In 2003, the Chinese economy grew by 8.5% year-on-year. This makes it second-largest economy in the world. As well as being the fourth-largest exporter, it is also the main receiver of foreign investment. It also has one of the cheapest labour forces in the world; the average wage is $1 per hour, whereas in the United States it is $13 per hour (author unknown MoneyWeek January 2004). However, it is suggested in the same article that risks exist from international sources - the possibility of trade embargos from the United States and the ever present risk of a war with Taiwan - as well as domestic ones - possible government actions to counteract excessive money supply and a high level of non-performing loans being managed by the major banks (author unknown MoneyWeek January 2004). Furthermore, the end of 2004 and beginning of 2005 and have seen increased incidents of power black outs due to supply being unable to cope with the levels of demand (author unknown February 2005). Overall, though, the economy is expected to stabilise at a moderate growth level. The objectives of the Chinese Government for 2010 are to double the Gross National Product figure of 2000 leading to a higher standard of living and a market economy of a socialist nature (Author unknown/date unknown Asianinfo).

E Business
E-business, or e-commerce as it is also known, is a broad term used to define transactions that occur through the use of the World Wide Web. Schneider et al identify three main elements: business-to-consumer (B2C) transactions whereby individuals purchase items through company websites; business-to-business (B2B) transactions where businesses transact with other businesses through web sites and thirdly, purchasing activities that are supported through business transactions and processes that occur through the web (Schneider et al 2001).

For the purpose of this piece of work, the emphasis will be on the business-to-consumer (sometimes also known as business-to-cash) aspect of e-business. The concept of e-business was unknown until the mid 1990's and its development is, by necessity, closely linked to the development of the Internet. Its history has been one of boom, bust and boom again with the well publicised bust of at the turn of the century leaving many unsure of the future health of the concept. Statistics show the rapid growth of e-business as a method of doing business from the introduction of the first sites such as Amazon.com, Dell computers and CD Now in 1996. By 1998 the United States population was spending $5 billion on the Internet to buy goods and services with the Internet service provider, AOL, claiming that a fifth of this was through their shopping channel alone. Christmas 1998 saw a 230% increase in on line sales over the previous year. By 1999, sales had reached the $9 billion per annum mark (Johnston date unknown). Worldwide Internet retail sales, increased by 24% to $35.87 billion in 2001 from $28.91 billion in 2000 and by a further 44% in 2002 to $51.48 billion (Lang 2002).

This incredible rate of growth can be explained by looking at the benefits of e- business to the sellers and the buyers. The benefit to businesses of offering their goods and services on the Internet is considered to be one of economic good sense. Schneider et al summarises it as "electronic commerce can increase sales and decrease costs" (Schneider et al pp. 12 2001). Advertising is cheaper than using traditional media and a significantly larger and international audience can be reached. Organisations can reduce or eliminate their customer facing sales staff and utilise the Internet instead. Schneider et al cite the example of the computer company, Cisco, who claimed in 1998, that by carrying out 72% of its business over the Internet rather than employ customer facing staff, they had saved $500 million (Schneider et al pp.12 2001).

The benefits to the consumer include having a wider range of choice in products and price, availability to browse twenty-four hours a day and instant access to detailed product information and comparisons. People living in remote areas have the same range of suppliers as someone living in a capital city. The tools of Internet access are also increasing with access available through mobile phones and digital television. There is an estimated 200 million users of the Internet worldwide with the largest share being in the United States - 40% (Stylianos et al 2004)

Read other essays

All of our sample essays were written by students and then submitted to us to display and help others. Thanks to all the students who have submitted their work to us.