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In March 6, 1998, the Beijing Century Intercom Technology Company sold its first item over the Internet. It was also the first online sale in China's business history. In the early 1990s, China began to adopt EDI, and then pushed a series of "Golden Bridge" and "Golden Card" projects using electronic technology. Especially in the security trading and aviation ticketing sectors, computers and Internet technologies have already been in widespread use (He, 2005).
To develop e-commerce in China, there are two major aspects to be considered. First, it is necessary for all industrial sectors to avoid the overly aggressive investment (He, 2005). Otherwise, it may lead to a new round of investment mistakes in the early 90s. Second, it is also necessary for each sector to be prepared to follow the wave into the path of all future business. The essential characteristic of the Internet economy is the lack of boundaries no matter whether the business is involved in domestic or foreign trading, or is located in the United States or China (He, 2005). It is necessary to further reform and open our economy in order to break down the boundaries between the domestic trade and foreign trade, and between the trading of production materials and consumer goods.
The IT industry in China has experienced significant development in recent years. For example, the number of telephone users has grown from 1% of the country's population in 1991 to 12% in 1999. The IT industry also contributed around 20% of China's GDP growth in 1998. The IT industry not only helps China fuel the current economic growth, but also sets a solid foundation for the development of China's e-commerce in coming years (Thanasankit, 2003:212). Nevertheless, some scholars and experts in China are worried that the development of e-commerce will result in the elimination of traditional retailing and wholesale industries, eventually leading to higher unemployment rate in these industries. This worry fails to recognize the opportunities brought by this emerging economy even though it gives the necessary pressure to spur the reform. Under the pressure of e-commerce, many inefficient distribution channels will be weakened or even eliminated, while many more efficient ones will be introduced and enhanced (He, 2005).
A trading activity mainly contains four key transactions, which are quoting, ordering, payment, and delivery. If any of these four transactions is conducted over the Internet, then the entire business transaction should be called e-commerce. If one buys a music clip or e-book from Amazon.com, all transactions, from quoting, ordering, payment, to delivery, are conducted online. If one buys computers from Dell, quoting, ordering and payment transactions are completed over the Internet, but the delivery involves different offline approaches. If one buys meat and vegetable from Homeruns.com, both quoting and ordering are completed over the Internet, but payment and delivery are off the Internet. Similarly, if one buys steel from the online metal trading company E-Steel or an automobile from Auto-by-Tel, only quoting the price occurs over the Internet, and all other transactions are completed using offline approaches. These activities are all e-commerce (He, 2005).
Many people in China now have a new belief: "making money by brains and becoming rich by intelligence." China already made a lot of progress in its economic reform. With proper guidance, this passion can become the driving force for economic development (Thanasankit, 2003:234). In facing the rapid development of Internet economy, it is the time for China to fundamentally reform the income and wealth distribution system, especially for the state owned companies.
1. Thanasankit, T. (2003) E-Commerce and Cultural Values, United States: Idea Group Inc, ISBN 1591400562.
2. JiangCheng, H. (2005), State Internal Trade Administration and Director of e-Commerce Development, Perspective, retrieved 25 October, 2005 from http://www.oycf.org/Perspectives/8_103100/ecommerce.htm
Yipshinyi 12:00, 28 Oct 2005 (EST)
