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The E-commerce represents a new economic revolution, and predicts a new way of economic growth.

Since the mid-90’s, with the global generalization of network technology, the E-commerce application with the Internet as the medium has registered a vigorous growth in China. E-commerce represents the major trends of future trading methods. Using Network as a carrier, E-commerce integrates the information flow, cash flow, goods flow as well as work flow in traditional commercial activities. It can not only reduce the operating costs, speed up the working capital cycling, but also improve management efficiency and expand the market share of businesses in global context.

China represents the fastest growing market for Internet applications throughout the world. China’s business circle and consumers are also very quickly adaptive and receptive to the various applications of the Internet. For Chinese businesses, Internet is changing their conventional international trading methods. To some extent, in the digital economy era, all enterprises have transcended the conventional market and information barriers and become international businesses. Their production and marketing are oriented to global market and demands. This is no doubt a dramatic change for Chinese enterprises.

As China’s largest nation wide international trade promotion organization, China Council for Promotion of International Trade has been dedicated to promote the export of Chinese businesses and the international exchanges between Chinese and foreign businesses, since its foundation in 1952. The majority of China’s businesses are complacent with conventional trading forms, and the digitization of the international trade in China is still very low. In order to prepare Chinese enterprises for the international competition in the context of the proliferation of new technologies, advocating E-commerce-the whole new trading form will become our new direction of efforts. Meantime, CCPIT also needs to introduce E-commerce applications in its trade promotion work, so as to enhance its abilities in trade promotion and localized services in global context.

1.1 The social and technical infrastructure of the development of E-commerce in China

The increase in the usage of PC and Internet, the active support to E-commerce by Chinese government as well as the formation of the concept of network based business have contributed to the foundation of social consensus for the development of China’s E-commerce.

First of all, the usage of computers and the internet has witnessed quantum leap forward in China in the past several years. The survey of China National Internet Center indicates that in 1997, the Internet users in China has reached 620,000, internet enabled computers have reached 300,000; while by the mid of 2000, the Internet users have reached 16.9 million, and internet enabled computers have 6.5 million. (Please see Chart1). IDC forecasts that by 2004 China’s Internet users will attain 33million, which will make China the largest Internet commercial market in Asia.

Secondly, Chinese government has been consistently fostering the construction of E-commerce infrastructure and the transformation of macro-environment: China has achieved the inter-connection of its 4 major backbone networks. It is building up the 3in1 network using broadband technology as its core power: integrating computer network, cable Television network and telecommunications network into one hybrid network. As early as in 1993, Chinese government has launched "Triple Golden Engineering Projects"(golden bridge, golden card and golden custom), in the aim of accomplishing the construction of network infrastructure of nationwide public economic information network, electronic payment and transaction engineering and Electronic Date Exchange in foreign trade.

In 1999 Chinese government has initiated "Government Online" campaign, and it made year 2000 the "Year for Chinese Businesses to go Online". Meantime, Chinese government is actively drafting "Guidelines of E-commerce Development Strategies in China", aiming at providing legal protection for E-commerce development in China. These measures will foster further development of E-commerce in China.

Thirdly, with the generalization of information technology applications, Chinese businesses and consumers have gradually developed the holistic concept to network economy and e-commerce, the significance and the convenience of e-commerce have already instilled in most business minds. The corporate China has only understood the functions and value of network, but also has started to carry on information exchanges and commercial activities via the Internet. Quite a number of businesses have already set up their own web sites.

Meantime, the wide application of the most advanced network interaction technology has enabled the interchange of information and transaction events handling via the Internet. The maturing of the network security technology and electronic payment technology have supported the in depth application of E-commerce in trade and production. Various credit cards issued by commercial banks have exceeded 100million. Many card holders can pay their bills via the Internet. The payment system of E-commerce is making headway in China. Initiated by People’s Bank of China and with joint efforts from 12 commercial banks in China, China Financial Certification Center is set up in July and put into operation. This enables the inter-bank secure payment and transaction, indicating that the online payment - critical part of infrastructure construction in developing E-commerce has made a major breakthrough in China.

1.2 The status quo of E-commerce in China

Also according to the statistic report on Chinese businesses domain names by ChinaDNS, the number of international domain names has amounted to 182,800, far more than that of domestic domain names registration. By the nature of operation entities, the web sites can be classified into 3 types: public information web sites, corporate web sites and 3^rd party E-commerce web sites (Providing E-commerce information exchange platform and technology outsourcing services). The statistics of Ministry of Information Technology indicate that by the end of May, 2000, there are nearly 1100 web sites engaged in the operation of E-commerce.

The recently released report of UN forecasts that in 2000, the total value of global E-commerce transaction will reach 377 billion US dollars. And it will probably grow nearly 100% in the next year, reaching 717 billion US dollars. By 2002, it will approach 1023.4 billion US dollars, and it will account for 10% to 25% of the world trade in 2003.

China’s E-commerce is late comer. But it catches up very quickly. And it has a bright prospective. Analysis of Gartner Group demonstrates (Please see chart 2): From 1999 to 2001, China’s E-commerce will witness its taking-off to booming period. From 2002 on, China’s E-commerce market will step into fast growing period. By the end of 2000, the transaction volume of China’s E-commerce will reach 500 million US dollars. And it would attain 2.3 billion US dollars in 2002.

1.3 Problems facing China’s E-commerce Development

E-commerce is developing very fast in China. However due to the barriers of conventional trade forms, behaviors and customs, many problems still persist in the course of China’s E-commerce Development.

1.4 Future trends in China’s E-commerce Development

E-commerce in China has a bright and broad perspective, among others application specific E-commerce will be developed very quickly. Being the most populated market throughout the world, China will become the biggest market with most numerous Internet users in Asia. Mr. Barret, CEO of Intel forecasted very optimistically during his visit to China earlier this year that by 2003, China will become the largest Internet commercial market in Asia Pacific Region. IDC forecasts that by 2004, the market size of China’s E-commerce will account for 44% of Asian area.

Application specific E-commerce in China will focus on business applications. B2B E-commerce will become the mainstream form of network based economy. Traditional industries leveraging on E-commerce technologies to improve productivity and industry centered vertical network applications will become the core models of the future E-commerce in China. Obviously, E-commerce will foster the transformation of China’s traditional economic model and become the primary driving force in China’s integration with the global economy.

Chinawoodmarket.com (http://www.chinawoodmarket.com) is the largest B2B E-commerce web site engaged in wood trading in China. The founder of the web is a professional company formerly engaged in the international trading of wood products. With nearly 20 years of practice in the field, it has accumulated rich experiences in the field and numerous Chinese and international wood traders profiles They have also developed the best online trading system in China.

It sounded like nothing could prevent Chinawoodmarket.com from soaring in its online trading. The interesting thing is when the operator of the web site handed orders from foreign buyers to CEOs of those Chinese enterprises, they all approved this online trading form. However, when the orders came to the attention of actual handling staff, they obstructed the completion of the deals with various reasons. They even attempted to persuade their management to abandon this virtual trading form. This sounds unreasonable to give up handy deals, but the reality is that although the network trading reduced transaction costs for businesses, the transparent process of the trading procedures eliminate the possibility of commission for actual handling staff, which would be generated from black box operation in conventional trading. No wonder they would fight against the online trading.

This is an embarrassment that Chinawoodmarket.com has to face, because the E-commerce in China is no only an issue of technology, there is still a long way to go before we can see the transformation of the conventional trading form.

2.1 E-commerce compels Chinese enterprises to renovate conventional trading forms

China’s international trade has registered a speedy growth, which ranks China No.9 trading nation in the world. In 1999, the China’s total Import & Export volume reached 360.693Billion US Dollars, in which export trading accounts for 194.9 billion US dollars. In 2000, China’s export trade volume is expected to exceed 210 billion US dollars; the annual growth rate of China’s export trade will achieve 7%. By 2003, the total export trade volume will grow beyond 250 billion US dollars. As the dependency of China’s economy on foreign trade is becoming more important, it is critical for China’s economic development to ensure the benign increase of foreign trade in digital economy.

China will enter WTO in the near future. WTO will provide more market opportunities for Chinese enterprises. Meanwhile, they are also facing direct market competition. How to improve global competitiveness by leveraging on E-commerce technology and renovate trading forms in this digital era would be a more imperative pending issue for Chinese enterprises to resolve.

In the conventional international trading forms, because of the severe imbalance of information caused either by geographic, political or economic reasons, the foreign trade modes in China have evident limitations. First of all, the majority of Chinese enterprises do not have import and export license, and they have to rely on import/export trading companies. Secondly, due to geographic isolation and traditional trading means shortcomings, Chinese enterprises are rather weak in collecting international market information, they react slow to market trends, in turn their information cost on international trading is very high. Thirdly, a lot of traditional enterprises lack direct access to international traders, they have to rely on intermediaries in Hong Kong and Taiwan as well as Trade Fairs.

Network trading transcends the restrictions of time and location in conventional trading forms, therefore substantially lower the costs in trading. It is instrumental in improving productivity in conventional trading forms as well as increasing global competitiveness and extending market opportunities for export businesses. E-commerce is challenging conventional trading in terms of technology and trade forms. It is fostering the transformation of conventional trading forms to network trading forms. The renovation of China’s foreign trade is inevitable.

2.2 The opportunities and challenges facing China’s SMEs.

2.3 The main features of Business Applications of E-commerce in China

2.4 E-commerce models successfully promoting export of China’s SMEs

Depending on the technology and marketing advantages, the third party e-commerce platforms are built up by professional network companies. They are "E-commerce Intermediary Marketplace" dedicated to serve SMEs. To the majority of SMEs, to do business via the third party e-commerce platform is an ideal choice in terms of the price/performance ratio. Because the construction of an e-commerce transaction platform demands professional technology and high financial input, and it will cost much more money to promote the platform once it is completed, which is unaffordable to SMEs. To an SME, Leveraging on the advantages of scale and technology of public e-commerce platform, is like building up a stand in a large trade fair. All they have to do is to choose renowned "Trade Fairs (E-commerce platform)", and leave technology and publicizing solutions to the service provider. The third party e-commerce platforms are all B2B type web sites. Their solution is suitable for the current network conditions and characteristics of the businesses. And they are widely applied in network enabled trading forms among Chinese international traders.

Alibaba Inc. is the largest online community in the field of China’s international trade. It has built up a multi-language information dissemination and exchange platform. Alibaba.com is innovative in its business model. Leveraging on the information collecting ability perfectly designed and operated on its web site, it has formed substantial amount of information content. The members of Alibaba have reached 200,000, coming from 190 countries and regions. Everyday, over 1,000 business members are registered on the web site. Alibaba has over 300,000 threads of trade leads and it is increasing at the speed of over 2000 a day. Merrill Lynch and Forbes rank Alibaba.com as the best B2B web site in Asia.

Sparkice.com is among the first round of international trade related B2B web site been developed in China. During the 2000 Spring Canton Fair, METRO group from Europe, the 3^rd largest retailer in the world, and I2I group from North America have respectively signed agreements in forming strategic partnership with Sparkice E-commerce Co. Ltd. Upon the signing of these agreements, the two groups have both granted the exclusive license of their online shopping businesses to Sparkice.

The Metro Group has an annual turnover of over 42billion US dollars, each year the products it purchases from China, via GEMEX-its subsidiary, either on Canton Fair or through other conventional channels, worth billions of US dollars. According to the agreement signed by the two parties, METRO will purchase directly Chinese products worth hundreds of millions of US dollars each year via the E-commerce platform of "E-Steps" on the B2B web site of Sparkice. It will provide an important mode of operation for METRO’s cash transaction with SMEs in China and Asian area at large. Meanwhile, Chinese Small and Medium manufacturers will also benefit a lot from "E-steps" service platform by communicating directly with final clients of their products.

The North America based I2I pointed out excitedly: "Eastern suppliers and western buyers are jointly building up this B2B e-commerce, it will create a huge market with most appeal and profitability for the global e-commerce practitioners." He hopes to bring to China via Sparkice.com substantial orders from North American industries like gift, construction and auctions.

China Council for the Promotion of International Trade (CCPIT), also known as China Chamber of International Commerce (CCOIC) is the largest international trade promotion organization of national level. Since its foundation in 1952, it has been devoting its efforts in promoting the export of Chinese products and strengthening the exchanges between Chinese and international businesses. Currently CCPIT has established contacts with over 400 business associations in nearly 200 countries and regions. It has signed cooperation agreements with counterpart organizations in over 100 countries and regions. It has also set up associated chambers of commerce with several Chamber of Commerce in various countries. Meanwhile, CCPIT has set up 17 Representative offices in 15 countries and regions. In China, CCPIT/CCOIC has set up 48 regional Sub-Councils, over 600 branches and county level chambers of commerce. It also has 17 Industrial Sub-Councils with membership enterprises totaling around 70,000.

The major task of CCPIT is to promote the export of Chinese SMEs. Normally, SMEs are weak in collecting international market information and lack adequate expertise in e-commerce practice. CCPIT hopes to provide all round support to SMEs, bringing into full play the advantages of its national professional trade promotion organization.

The main businesses of CCPIT/CCOIC include: organization of international exhibitions and trade fairs, international trade workshop and business meetings, international business consulting and information services, international trade and maritime arbitration, international trademark and patent registration agency, certification of origin of export products. The e-commerce applications consist new opportunities for CCPIT’s businesses and workings, and they also form news challenges to our trade promotion mechanism.

3.1 The renovation of workings of trade promotion in e-commerce era

E-commerce technologies provide whole new working conditions for trade promotion. By leveraging on network technologies, CCPIT is improving its ability and efficiency in serving Chinese enterprises, adapting itself to the new requirements of the digital economy era.

The Economic Information Department of CCPIT is the first functional department of CCPIT to achieve networking and office automation in information collecting, transmission, processing and services. In 1997, we established an information network between the Department and all overseas Representative Offices around the world as well as all Sub-councils in China. Trade information collected by overseas offices will be directly input into our "Trade Opportunities Network" and will be delivered to Chinese enterprises via CCPIT’s Sub-councils information network. The "Trade Opportunities Network" has substantially shortened the handling time of international business information. Every week it delivers over 100 threads of business information, fostering numerous international trade deals, and enjoys a fairly good reputation among Chinese enterprises.

3.2 Supporting SMEs in meeting the challenge and the opportunity of e-commerce

In the e-commerce era, CCPIT is also readjusting its services to SMEs, in order to support them in meeting the challenge of e-commerce. In recent years, we have been focusing on the promotion of the concept and technology of e-commerce among Chinese enterprises, helping the export businesses acquiring international trade information as well as renovating trade forms via e-commerce technology.

CCPIT officially launched its English version web site in August 1996, rendering it among the first batch of national organizations creating its web presence and delivering Chinese trade and economic information in English via the Internet. The English version web site include: Chinese Economic News, China’s Foreign Economic, Trade and Investment Policies, China’s Customs Tariffs, Economic & Trade Laws and Regulations, Market Trends, Intellectual Property Protection, Exhibitions and Trade Fairs, Regional Investment Climate and Projects, Business Offers and Demands, China Travel Guide etc.

The Chinese version of CCPIT: "International Economic Trade and Economic Information Network" was launched in August 1998. In Chinese version web site: we have created topics like Country Business Profiles, International Economic Dynamics, International product and market surveys, National Economic and Trade laws and regulations around the world, international investment climate, trade and investment opportunities, links of international business associations, overseas products and businesses. These information are constantly requested by Chinese businesses in developing international markets and export trade. As a result, they are widely welcome by Chinese export businesses.

Currently, we are building up "China Project Financing Network", and we hope to recommend to the global business community projects seeking investment from various regions in China, thus fostering the introduction of international capital, advanced management techniques and technologies to Chinese businesses.

We provide complete and professional services to Chinese businesses via our E-commerce web site, in the purpose of promoting export of Chinese SMEs via our platform. These services include:

As an innovative commercial operation form, e-commerce is developing very rapidly. As a developing country, China has a wide gap with developed countries in terms of technology and concept. Especially when it comes to the importance and concrete forms of implementation of e-commerce technology, the majority of Chinese enterprises are far from being familiarized and receptive. By sponsoring a series of major events, CCPIT is improving the understanding of e-commerce among Chinese businesses, and it also recommends advanced theories and practices throughout the world to Chinese business circles in order to encourage more Chinese enterprises taking part in e-commerce. The major national events on e-commerce organized by CCPIT include: China International E-commerce Conference and E-China Forum

China International E-commerce Conference is the largest and the most prestigious event in China’s e-commerce realm. Since 1997, it has held 4 sessions. The main theme of the event is to introduce worldly advanced experience and successfully e-commerce models in order to boost the application of e-commerce among Chinese enterprises. In April, 2000, CCPIT, together with the Ministry of Information Industry, the State Economic and Trade Commission, have jointly hosted the 4^th China International E-commerce Conference. Over 300 worldly renowned multinationals in IT area have gathered in Beijing during the event, and over 300 Chinese and international media have carried out follow-up reports on the event.

E-China Forum is a largest scale workshop on e-commerce, and the main purpose is to introduce the trends of e-commerce development and representative models in the world so as to facilitate researches and explorations on e-commerce models suitable to China’s situation and conditions. It also aims to provide reference to enterprises interested in carrying out e-commerce business or converting its conventional business model into more competitive e-commerce models. It encourages enterprises to make full use of the resources on the Internet and e-commerce technology so as to explore the more attractive global e-commerce market.

In 1998, a company in Tancheng, Linyi successfully stepped into Portuguese market by using one trade opportunity from CCPIT’s Network. The deal was 1000tons of the seeds of kidney beans bringing about 80,000USD profit to the company. What’s more, the company has also found new clients in Turkey, Korea and Bangladesh. These new clients have made deals in May June, 1998 on animal feeds amounting to over 1100tons, bringing about 16,700USD to the company.

In 1998, a food processing factory in Fei County registered a loss of 2million RMB. In April 1999, they made use of CCPIT’s network distributed trade opportunities to contact with clients in Kuwait, Saudi Arabia and United Arab Emirates. In May the same year, they secured an export contract. In June, they fulfilled the contract with a 200tons of shipment. Net profit 100,000RMB. From then on, they will dispatch 15 containers of shipment on average every month. The value of the supply is 600,000USD on monthly basis. This year, the factory is expected to turn itself from a big loss maker into a model profit maker.