In 2006, China's e-Commerce industry enjoyed a fast rate of growth. In the first half of 2006, the quantity of Internet subscribers reached 132 million in China and telecommunications hardware, such as the broadband environment, were also improved. 2006 also saw the government release a series of significant policies, regulations and industrial standards, such as Electronic Signature Law, Opinions on Accelerating the e-Commerce Development in China, On-line Transaction Platform Service Standard, Electronic Authentication Service Management Method, and the Electronic Payment Guidelines to support the sustainable development of China's e-Commerce industry.
High-Speed Growth of Transactions
In 2006, SME e-Commerce became a hotspot. The transaction volume of SMEs via e-Commerce reached RMB431.2 billion in China, an increase of 55.9% over the previous year and 39.2% of the gross e-Commerce transaction volume in 2006. Third- party platform transactions were responsible for a major part of the SME e-Commerce transaction volume, and to enhance enterprise competitiveness through e-Commerce has become the only way of SMEs.
In 2007, the transaction volume of SME e-Commerce applications should reach RMB 697.5 billion, an increase of 60% over the previous year. In the next 5 years, the growth rate of the SME e-Commerce transaction volume is expected to somewhat slow down in China, but it will still maintain about 50%. SME e-Commerce transaction volume is expected to reach RMB3.5616 trillion by 2011, at a year-on-year growth rate of 44.3%.
The rapid growth of SMEs in the future will drive the high-speed development of e-Commerce. Currently, the SME e-Commerce transaction volume is about 40% of the gross e-Commerce transaction volume, while it would grow to 50% over the next 5 years. Meanwhile, it is clear that the e-Commerce application at SMEs is restricted by various factors, such as funds and available talents, etc.
Distinct Characteristics in Each Stage
1. SMEs now have a better understanding of e-Commerce applications. China has a large number of SMEs and they play an important role during its economic development. Along with the further development of information technologies, network technologies, communication technologies and all classes of IT service markets, more and more SMEs now have a better understanding of e-Commerce and its importance. SME e-Commerce is developing from information release only to integrated applications at a higher level and e-Commerce is being generalized quickly. SME e-Commerce applications demand is in dramatic growth and e-Commerce is bringing along more profits to SMEs. The SMEs should develop e-Commerce step by step, fully understand the market, analyze the competition factors in the trade, learn about the enterprise status, make clear the development program, and push ahead with e-Commerce applications through combining their own conditions, industrial characteristics and regional economic characteristics.
2. SME e-Commerce applications present distinct features at each stage and these are now mainly at the experimental and integration stages
In reference to the e-Commerce functions and the natural development of e- Commerce applications at enterprises, the enterprise e-Commerce applications can be divided into the experimental stage, integration stage and strategic stage.
The experimental stage is also called the initial stage, when there are both active applications for service expansion and passive applications result from the marketing of third-party e-Commerce organs. The similarity between both is the supply and demand information release via fee-charging platforms or free platforms. As this conceptual application has not been brought under the macro strategy and performance review of enterprises, the information released is not updated and traced in time and the functions of e-Commerce are not fully developed.
After having enjoyed the benefits in the experimental stage of e-Commerce development, enterprises begin to integrate the e-Commerce with various service links gradually, such as information excavation, information release, client resource management and marketing. In the integration stage, the lack of an integrated strategic plan for e-Commerce development often results in information-detached islands, poor cooperation, low efficiency and uncoordinated operation and management flows.
The strategic stage is the top stage and an ideal stage for e-Commerce applications. Through integrating the enterprise services with e-Commerce and adopting more scientific flows, the traditional services of enterprises can be well combined with e-Commerce and the overall competitiveness of enterprises can be enhanced.
Currently the e-Commerce applications at SMEs have distinct characteristics in each stage and most SMEs are still in the experimental stage and integration stage. Despite the emphasis laid upon e-Commerce by SMEs, the e-Commerce platforms develop slowly owing to limited capital and technologies, while the third-party e-Commerce platform services are developing fast.
Market Structure Forecast
In order to forecast e-Commerce products at SMEs in China, CCID Consulting provides a structure for reference. On the whole, the e-Commerce application products at SMEs include self-built platforms, third-party platforms and industrial and regional platforms. The self-built platforms include network yellow pages, simple solutions and integrated solutions. The third-party platforms include platform leasing, advertising, information release, business management, and off-line value added services.
In 2005, most SMEs were still in the experimental stage of e-Commerce application and it was suitable to adopt third-party platforms with sound services, full functions and easy tracking to develop e-Commerce activities. In 2006, the industrial and regional platforms rose suddenly and the growth rate was much higher than that of the other two segment markets, reaching 80.6%.
Currently, the transaction volume via self-built platforms takes 2.5%, that of third-party platforms takes 83% and that of industrial and regional platforms takes 14.5%. The industrial and regional platforms are approaching the third-party e-Commerce platforms as to the technologies and their difference in the eyes of enterprises is being reduced. But currently, the industrial platforms focus on information search and supply on the information exchange level, and service modes and products that do concern about the whole business process of enterprises are not far from being perfect.
In the next few years, the share of self-built platforms and industrial and regional platforms will not change the market structure dominated by third-party platforms at SMEs. It is forecast that by 2011, the transaction volume of self-build platforms would be 3.2% of the gross transaction volume, that of third- party platforms 75.4% and that of industrial and regional platforms 21.4%.
