Synopsis:

In China, as in other parts of the world, Business to Business (B2B) is the buzzword in Internet and trade circles. Jiang Zemin himself said of e-Commerce "it is the future of Trade in China." However, due to insufficient infrastructure, high cost and in particular lack of technical know-how, high hurdles still need to be overcome to bring Chinese enterprises online and for B2B to have a large impact on, not only trade figures but also on, how trade is done.

The world and China definitely have high hopes for B2B on line trade. It is estimated (Meryll Lynch, Feb 2000) worldwide B2B electronic commerce will grow from $158 billion in 1999 to $2.5 trillion by 2003.

In China, as of yet it is difficult to get a clear understanding or specific figures about Internet usage amongst Chinese enterprises. Having said that there are some statistics that may help us understand the current environment and the trends of B2B in China. According to China National_Internet Information Center, the government-funded Internet monitor in China, there are 15 million users currently on line, and they predict that there will be 20 million by the year end. A sizeable portion of this so-called "Internet population" are students surfing for fun or for e-mail and news. Business usage, for the most part is still an emerging concern and more attractive to a mature set of net users or younger business entrepreneurs.

In contrast to this rather gloomy picture, B2B is making headway in sectors where competition is fierce and decision-makers are more accepting of new ideas, methods and tools to improve efficiency and sales within their organizations. The Chinese government has also attached great importance to companies going on line. Last year it was declared that all Chinese government offices were to go on line and in the year 2000, the government has pronounced the same goals for all Chinese companies.

Chinese traders, especially exporters have seemingly embraced the B2B movement, with the support of The Ministry of Foreign Trade and Economic Co-operation (MOFTEC) who was in fact, one of the first government departments to launch a website in 1998. MOFTEC now plans to move all its administrative functions online, including on-line quota, data collection and foreign exchange management systems. As a result, exporters have also taken MOFTEC's lead and many have begun to use the Internet as a complimentary source of generating business information and sourcing product. E-commerce has been identified both at the policy level and executive level as a must to expand exports.

At Alibaba, where we help over 300 000 buyers and sellers to find partners on line daily, we hear stories like the one reported by the New York Times in June, where one of our users, a 28-year-old Chinese trader, successfully sold about 15,000USD-worth of sleeping bags and tents to Turkey, through trade leads posted on Alibaba.com. This young man has since been assigned by his employer, a subsidiary of the powerful China Technology Import & Export Group, to evaluate the use of Internet in imports and exports. Although most of his colleagues do business in a traditional way, he surfs the world’s major trade sites daily, looking for potential partners.

This example largely tells us about the role that B2B sites can play for exporters. Internet and B2B currently remains a source of trade information rather than a trading platform on its own. We believe that the online trade platform is the ultimate goal, but we and our users first need to pass through a series of hurdles and natural stages of growth before it can become a reality. In the meantime, we believe users want to define B2B as an electronic market place, where they can source buyers and sellers all over the world more quickly, cheaply and efficiently than their traditional methods.

With on-line banking and other services still undeveloped, the absence of relevant legislation and the die-hard concern about security, it is too early to urge enterprises to complete deals online. Sourcing seems to be the only mature, efficient and widely acceptable use of the B2B electronic marketplaces in China to date.

In reality we believe, information and solid trade support services are the most needed and pragmatic products that a B2B website can offer at the moment. We believe if we can offer our users these things consistently and maintain quality we are providing them with the tools they need and are willing to use at this stage. Slowly as we create a loyal group of users we can introduce online trading transaction platform and slowly traditional methods will be changed. Throughout the years, with or without government support and protection, import and export companies, mostly state-owned, have already established a set model of doing business from sourcing the suppliers and buyers to finally shipping the goods.

Another interesting trend to watch for is the majority of Alibaba.com’s members in China are between the ages of 22 to 35. To them Internet is a help and a fashion, which "my friends are all using." To people younger than them, students in college and also the coming generation of traders, Internet is an essential part of life. The Internet Café of China University of Foreign Trade and Economics, a university sponsored by MOFTEC and an important supplier of talents to state import and export companies, are always full at night. It will not take decades for e-business to become a popular tool in import and export companies of China. It will only take the time for them to graduate before they will use Internet in their new work environments for e-business to become an essential business tool. I have said repeatedly in China that in the e-era, those middle-aged people with comfortable customer base and who do not care about e-commerce will first be kicked out of the trade game.

Having examined these aspects about B2B in China, it is easy to understand why Alibaba.com is the Alibaba.com you see on your computers.

We have set out from nowhere and traveled a long way to this prestigious place. Alibaba.com was started in March 1999, when B2C was the hottest topic in the Internet world, with only a rough idea and a small amount of pocket money. However we have been growing at an exceptional speed thanks to our good product and good customer service. To date, Alibaba.com is a trade community of more than 300,000 registered members, who contribute over 2,000 trade leads to our four sites everyday.

Our most cherished principle is the www principle, or win-win-win principle, which brings us members and high member satisfaction. The first win is our members win. The second is our investors, which include such respected names as Softbank, Goldman Sachs and Investor AB. The third win is Alibaba wins. Only when our members and investors benefit from our services, can Alibaba.com be a successful company. Customer service is always our priority. Once a member visits our site, we will try our best to make him/her come again and again by providing them valuable information, individualized services (addressing him or her in name, answering enquiries with true name, etc.) and constantly develop new value-added services. Service is what matters to many business people.

Unlike many other business sites, we do not charge members or ask for commissions. I am a strong believer of the Internet philosophy that information should be free and shared. There are a lot of people worrying about our revenue model, especially after the NASDAQ dropped. People also worry that if we charge members, a lot of them will leave. Our revenue model will be different from the existing models, which are far from mature themselves. Our revenue will come from several channels when we think the market is ready.

We are now preparing to launch our online trading platform in months given that the outside factors are increasingly favorable.

As the Chinese leader Deng Xiaoping once said: no matter black or white, the cat that catches the mouse is good. B2B in China should have its own characteristics that help Chinese users to catch the mouse, exporting opportunities.