Potentials and Perils of E-Business in China

Potentials and Perils of E-Business in China

James G. S. Yang (Montclair State University, USA)
DOI: 10.4018/978-1-4666-9787-4.ch090
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E-Business Volume In The Past

In the U.S., the E-business started to emerge in 2001. At that time, the E-business volume was a meager $35 billion a year according to the data from the U.S. Department of Commerce (U.S. Department of Commerce, 2013). However, it immediately took off at a growth rate of 25% a year. In 2008, the nation was hit by a financial crisis. The E-business was a victim too. In 2010, the E-business market resumed its growth. In 2012, the E-business volume had reached $225 billion (U.S. Department of Commerce, 2013). In 2013, the E-business volume is expected to reach $252 billion (Evans, 2013). The growth rate was maintained at a steady 16% a year. Evidently, growth of the E-business market has been slowing down considerably. This fact may indicate that the E-business market in the U.S. is now matured and stabilized in the near future. This observation is quite interesting in planning the E-business strategies for the future.

Another point of investigation is whether the E-business plays an important role in the whole retail market. The yard stick can be measured by its market share. In 2001, the market share was only 1.1% in the U.S. (U.S. Department of Commerce, 2013). In 2008, the market share was 3.6%. By 2012, the market share had reached 5.2%. In 2013, the market share is expected to grow to 5.6% (Evans, 2013). This fact shows that the E-business market share was never slowing down in history. Instead, it grows rather steadily, though slowly. This observation is also interesting in planning the E-business strategies too. The growth rate provides a clue as to what volume of E-business can be expected as long as the whole retail sales size can be estimated.

As compared to the U.S. side, the Chinese E-business market was not started until 2008. At that time, the E-business sales volume was as little as $17 billion (China E-commerce Research Center, 2013). By 2012, the sales volume had exploded to $202 billion. This volume has almost caught up with the U.S. side. The growth rate is as high as 55% a year. This level has far surpassed the U.S. side. In the year of 2013, the E-business volume on the Chinese side was expected to reach $285 billion. This level will undoubtedly surpass the U.S. side. The growth rate in 2013 will slow down to 41%, but it is still much higher than the U.S. side. This fact clearly shows that the E-business market on the Chinese side has much greater potential than the U.S. side. This aspect certainly serves as guidance in planning the future E-business strategies.

With respect to the aspect of degree of importance of the E-business relative to the whole retail sales, the market share in China has also been steadily increasing from 1.3% in 2008 to 6.3% in 2012 (China E-commerce Research Center, 2013). The market share is even expected to rise up to 7.2% in 2013. In any viewpoint, the Chinese side is higher than the U.S. side. This fact clearly demonstrates again that the volume of the Chinese E-business will, beyond any reasonable doubt, surpass the U.S. side in the immediate future. This observation serves again to formulate E-business planning strategies in China. The data are summarized in Table 1.

Key Terms in this Chapter

Intellectual Property Rights: Lawful rights to a product that is produced by using an author’s intellectual capability, such as a book or software.

Counterfeited Products: A product that is faked by using the original true brand name.

Internet Commerce: A business transaction executed through Internet connection.

Purchase Tax Amount: The amount of sales tax paid at the first stage when the merchandise was purchased.

Sales Tax Amount: The amount of sales tax collected at the second stage when the merchandise was sold.

Value-Added Tax: Sales tax collected by the seller from the buyer at each succeeding stage of sales.

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