...Market Entry Strategies for Entering E-Commerce Business in China May 18th 2014 Table of Contents 1 Introduction 1 2 Market overview 1 3 Market analysis 2 3.1 Approach using Porter’s Five Forces 2 3.2 Approach using SWOT analysis 2 4 Failed market entrants 3 5 Successful market entrants 3 5.1 Leveraging local platforms 3 5.2 Buying stakes in local businesses 4 5.3 The case of Amazon 4 6 Key success factors 4 6.1 Understanding the market 5 6.2 Differentiation 5 6.3 Social Media 5 6.4 Payments 5 6.5 Logistics 5 7 Conclusion 5 8 Bibliography 6 Introduction This paper covers challenges and strategies in entering the e-commerce business in China from a Western point of view. The focus thereby is on companies doing classical business-to-consumer (B2C) business and that are established players in their home market. Market overview According to market analysis (ref 1-2-3) the e-commerce market in China surpassed the U.S. one in 2013, reaching almost 300bn USD in turnover while U.S. reached just little above 250bn USD. Not only the size is impressive but also the growth rate, which has been around 70% in China since 2009 compared to 13% in the U.S. (see Figure 1). The online part of the retail sector is around 7% whereas Western countries report from 2% to 6% according to (Hoffmann & Lannes, 2013). In addition, more than 50% of all transactions are carried out via mobile devices. Finally, it is important to mention...
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...E-commerce in China E-commerce has been greatly developed in both United States and European countries when we look at the success of eBay and Amazon. However, according to researchers at IDC (International Data Corporation), it is forecast the annual Asian sales outside Japan, including Taiwan, Hong Kong, South Korean and India, charged ahead at 38% a year through 2007 eBay sales (Miller, 2004). E-commerce not only creates business opportunities, but also helps enterprises save money and operate more efficiently. Therefore, the potential of the market among Asian regions in recent years has been extremely large, especially in Taiwan and Hong Kong. However, many people notice that China seems to be lagging behind this trend and e-commerce is not very suitable for the culture in China as people may prefer face-to-face business. This essay argues that China has the need and potential in developing e-commerce. E-commerce is becoming more compatible with the Chinese culture of business. Although it may be argued that E-commerce is too technological that violates the traditional Chinese business culture as in the past of Chinese society, social relationship plays an important role in Chinese business and shows appropriate respect to the customers or partners. However, all the things in e-commerce are done by the systems only. Nowadays, more and more people in China have an opportunity to receive education so that they can more easily access to internet world and also different cultures...
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...University of Nottingham Ningbo China Business School Academic Year 2015/16 Autumn Semester INTERNATIONAL BUSINESS ENVIRONMENT Lianxi Zhou EBay: China and India External Business Macro Environment Entry Report Group 2 Hugo John MASON; ID: 6513963 Boon Long Tan; ID: 6512494 Sung Jun PARK; ID: 6508247 Yasong ZHAO; ID: 6511938 Word Count: 3000 Table of Contents Introduction 2 China 3 Political Environment 3 Political and Legal System 3 Five Year Plan 3 One Belt, One Road 4 Risk 4 Economic Environment 5 Market Size 5 Currency 5 FDI 6 Socio-Cultural Environment 8 Guanxi 8 Hofstede’s Model of National Culture 9 China Recommendation 11 India 12 Political Environment 12 Political and Legal System 12 Opportunity 13 Risk 13 Economic Environment 14 Market Size 14 Currency 14 FDI 15 Regional Trade Blocs 16 Risk 16 Socio-Cultural Environment 17 Socio-Demographic 17 Trust and Uncertainty Avoidance 17 Human Resources 18 India Recommendation 19 Reference 20 Appendix 25 Introduction In recent decades a global shift has arisen and revolutionized the way businesses operate as we move into a more integrated and interdependent global economy. Known as Globalization, the e-commerce industry has been the crux of such a radical metamorphoses of nations. National economies are no longer self-contained and independent. China, having one of the fastest growing e-commerce markets at 22.6% (iResearch, 2014) has...
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...domestic airline in China they operate on a small scale compared to major competitors and so it made economical sense to offer low-cost, high-efficiency to their customers. In 2007 Lucky Air was able to more than double the amount of passengers from the year before by using a low-cost tactic. However other airlines have also caught on to offering low-cost fares for domestic routes to their passengers. With more competitors Lucky Air has decided to look at the possibility of taking a risk and to focus on e-commerce. Backed by their parent company Hainan Airlines, Luck Air has access to one of the most advanced web portals in the Chinese airline industry. But is e-commerce a good and viable option to compete with other airlines? Taking a look at what exactly e-commerce is important to grasp the understanding of how a business can operate, stay competitive and obtain a profit in a digital world. E-commerce involves digitally enabled transactions between and among organizations and individuals. Digitally enabled transactions include all those mediated by digital technology such as over the Internet, the Web and or via mobile apps. (Laudon & Traver, 2013, p. 55). Currently Airlines in China have high distribution costs which are fees paid to travel agents, the cost of staffing offices for direct offline purchases of tickets, the cost of a reservation system, offline advertising and marketing and ticketing fees to the government. The idea behind e-commerce for airlines is...
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...alibaba By snoworb | Studymode.com xecutive Summary Founded just before the turn of the millennium in Hangzhou, China, Alibaba Group has to date become the largest online retail website worldwide in the planet, its total transactions surpassing the sum of both Amazon and eBay’s (Erickson, 2013). The report explains its business and operation model and market strategy, before moving to explore the reasons for Alibaba Group’s success such as its established market share in the large market of Mainland China and its efforts to promote the perception of the reliability and security of e-commerce. Comprising of its future plans in logistics improvement, expansion into developing nations, integration with social networks, venture into mobile commerce, and also, industries beyond, the report then ends with suggestions for future possibilities that the Group could explore. Outline of Alibaba Group Set in a fast moving, highly pragmatic e-commerce sector, Alibaba Group has never been shy of its ambition which comprises to top Walmart to become the largest retail company worldwide within the next 3 years (Hong, 2013). Alibaba Group has stakes in not only e-commerce platforms but also in cloud computing, group purchasing, payment processing, cloud computing, and even instant messaging. With its strategic position in a developing China, strong presence in the e-commerce sector and far looking management strategies, Alibaba Group might just be able to achieve its ambitious goals. ...
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...E-commerce in China Abstract E-commerce, namely electronic commerce, refers to an industry where people can conduct business through electronic systems. It uses the Internet as the main mode to provide service. The development of E-commerce is greatly concerned by people. The environment of E-commerce in China keeps improving. At the same time, more and more consumers accept online shopping. At present, China’s B2C E-commerce market is booming, the fierce competition between major online trading platforms activates the rapid development and increasingly sophisticated e-commerce market. However, according to its development status, there still exists some problems for the development of e-commerce in China. Some B2C e-commerce platforms also faced severe challenges in recent years. This paper analyzes the current plight of e-commerce development in China and provides some new ideas to address these problems. Then, it makes some suggestions to the prospects of e-commerce development in China. Key words: E-commerce problems solutions development prospects In the 21st century, the world has entered a new economy era, the development of information and Internet technology create a world where all the products and services can be traded in everywhere instantly. All the government departments, public service agencies, telecommunications companies, banks and other financial services institutions all types of businesses and hundreds of millions of individual users have...
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...in the Emerging Chinese E-commerce Industry Yuexi Li1 Claremont McKenna College November 15, 2015 Abstract: Alibaba.com is one of the leading e-Commerce companies in China. It has grown admirably from its initial beginning as an e-Market connecting small suppliers and buyers to a giant emarketplace that has several operational platforms. Currently the heavy reliance on Chinese Economy, the counterfeit goods issues, and the competition from other emarketplace remain Alibaba’s greatest challenges. In this paper I evaluate Alibaba’s business model including its mission, vision, and values, revenue model, and its R&D structure. Alibaba’s strategy led to its competitive advantages in realizing network effect of scale and understanding the Chinese market. 1 yli17@cmc.edu 1. Introduction On November 11th, 2015, Alibaba Group Holding Ltd. (hereinafter, Alibaba) reported a record-breaking $14.3 billion in sales over just 24 hours during the “Singles Day”2, a shopping holiday. In recent years, Singles Day sales in China have out paced Cyber Monday sales in the US: According to the Reuters.com, on November 11th, 2014, Alibaba reported a $9.3 billion sales from 24 hours, which is $7.26 billion more than sum of US retail ecommerce on Cyber Monday 2014. The statistic shows the Chinese online shopping market’s power, as well as Alibaba’s leading position as the Chinese e-commerce giant. Reaching multiple...
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...is a Lawyer, Legal Counsel of China Merchants Sekou Industrial Zone Company Limited, Shenzhen, China. Xun Wu is based at the Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania, USA. Clement K. Wang is Associate Director (Research), NUS Enterprise Centre, National University of Singapore, Singapore. Introduction Story of Alibaba.com The development of e-commerce has been nothing short of explosive in recent years. Many believe that its growth and impact will only become more prevailing in the future. The sale of goods by US firms over the Internet, for example, is predicted to reach $1.3 trillion by 2003. By 2004, European enterprises are expected to have online sales of $1.6 trillion[1]. Companies in China, with the largest population in the world, are also probing this new source of revenue. The China Internet Network Information Center (CNNIC) issued an Annual Report in Internet Development in January 2000 that estimates that there were 22.5 million Internet users in China at the end of 2000[2]. A recent nationwide survey showed that China had more than 1,100 consumer related e-commerce Web sites by the end of the first quarter in 2000 (People’s Daily, 2000). Four Web companies, Sina.com, Sohu.com, China.com, and Netease.com have already been listed on the NASDAQ. However, the country’s e-commerce market is still in its infancy. We will begin with the story of Alibaba.com Among all the developing e-commerce businesses in China, Alibaba.com has received much...
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...in a supply chain with the professional and complete value added services and delivery of goods and services. According to a study third party logistic is a set of basically a relationship between buyers, sellers and logistic service providers in the supply chain. They provide a clear between third party logistics providers and the service providers. As per the research the term logistic service provider has been used as the interchangeable denote for the external suppliers that have been performing a part of logistic function within a company. The relationship between third party logistic companies and ecommerce has been a force which has driven the company towards constant growth and success of the various companies in the electronic commerce industry. The research study indicates that the impact or the importance of third party logistic companies has been of great support to the ecommerce industry. Along with this, many research studies have indicated that with the outsourcing of third party logistics companies as the supply chain management of the ecommerce companies have been a strong element of this industry. With a quiet and simple way, ecommerce from a communication point of view is understood as the...
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...regions (Mainland China, Hong Kong, Macau and Taiwan) and also abroad. Taobao Marketplace (formerly "Taobao") was launched in May 2003 by Alibaba after eBay acquired Eachnet, China’s online auction leader at the time, for USD 180 million and became a major player in the Chinese consumer e-commerce market. To counter eBay’s expansion, Taobao offered free listings to sellers and introduced website features designed to act in local consumers' best interests, such as instant messaging for facilitating buyer-seller communication and an escrow-based payment tool, Alipay. As a result, Taobao became mainland China's undisputed market leader within two years. Its market share surged from 8% to 59% between 2003 and 2005, while eBay China plunged from 79% to 36%. EBay shut down its China site in 2006. Asees the attractiveness of the e-commerce insdustry. In many ways, China seems suited for the rapid development of e-commerce. Driving forces that make e-commerce attractive includes the explosion of Internet use and the government's interest in developing e-commerce. Along with growth in Internet users has come increased e-commerce revenues. There were over 200 e-commerce web sites in China, employing over 5000 people. E-commerce revenues on the Chinese mainland grew from about US$8 million to US$24.2 million in 1999. It was estimated revenues could grew to US$96.7 million in 2000, and US$1.2 billion by the end of 2002. In 2000, China holded the most e-commerce potential among emerging...
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...Case study of Tencent’s E-commerce Strategy Executive Summary Tencent’s E-commerce strategy didn’t work well. The company’s core business is QQ which is an online instant messenger. All of tencent’s other business will be rolled out base upon the QQ. They want people who use QQ can also shop online easily. So they made the strategy according to that point. They developed E-commerce websites which made no difference with Taobao and Tmall but didn’t make them to success. Why does this happen? What’s Tencent’s strategy? Introduction As Tencent announced to take 15% stake of JD.com[1], which is the largest online retailer of China, in March 2014, it also implicated the failure of Tencent’s previous e-commerce strategy. In the meantime, Tencent almost sold all of its own e-commerce business to JD, including Paipai marketplace(C2C) and QQwanggou(B2C), logistic assets and personnel, as well as part interest of 51Buy.com.This combination shows that Tencent has completely given up its own e-commerce business which were created by its own team in 2005. On the one hand, Tencent is the fourth-largest Internet company in the world whose market value has reached about US$ 150 billion in 2014 which means it has sufficient cash stockpile. On the other hand, it’s a giant company which has developed diverse and abundant online business including IM, game, search engine, social network, video and portal. Without shortage of money or resources, it seems a little confused for Tencent’s choice...
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...business electronically, and bringing us into the age of electronic commerce (E-Commerce or EC). The advent of Internet-based business-to-business electronic commerce (B2B-EC) has brought about many benefits to enterprises in developed countries. It offers direct links between trading firms and their customers, which creates a new trading mechanism in a highly effective and efficient manner, thus reducing operating costs and achieving quick response time. As such, enterprises in developing countries have begun to apply B2B-EC to their businesses, in order to achieve these benefits as well. China has been developing dramatically these years, and has joined the WTO in 2001. However, B2B electronic markets are still in their early stages of development. Diverse aspects of consumer economy such as purchasing habits, payment methods and modes of exchange are different from those of the developed countries. These years, many corporate suppliers and customers in China are looking for Internet-based solutions to streamline their procurement procedures and to reduce the cost of establishing trading relationship by conducting trading transactions electronically (Martinsons, 2002). Due to the China’s specific economy environment, the development of full-scale e-commerce processes in B2B markets may encounter several obstacles. According to Hempel and Kwong (2001), the network infrastructure is less of a bottleneck in China today, but the business infrastructure presents special problems...
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...Overivew of Alibaba’s Business Alibaba is the largest e-commerce (online and mobile) company in the world based on gross merchandise volume in 2014. It is also the biggest e-commerce company in China dominating more than 80% of the country’s e-commerce market share. Alibaba operates a similar business model to eBay by providing technology infrastructure and marketing reach in the form of online marketplaces for merchants to conduct online transactions with cosumers and businesses. Unlike Amazon, Alibaba does not hold or sell any merchandise. Instead, Alibaba plays the role of a middleman to connect buyers and sellers and facilitating the transactions between them (MarketWatch: Alibaba, 2015). Thus, purchase of the physical merchandise is made directly from the 3rd party businesses (eCommerceFuel: Alibaba vs Amazon, 2014). Supporting Alibaba’s business through maintaining buyer’s confidence is its secured online payment platform, Alipay that provides escrow services. Alipay manages the bulk of the transactions that take place on Alibaba’s China marketplaces. Alibaba operates both China and global marketplaces. Its China marketplaces include Taobao, Tmall and Juhuasuan whose presence continues to dominate China’s e-commerce marketshare. At the end of 2015, Gross Merchandise Volume (GMV) transacted on these retail marketplaces was RMB964 billion (US$149 billion), an increase of 23% over 2014. Alibaba’s global marketplaces include Tmall global –an extension of Tmall, Aliexpress...
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...E-commerce in China:Taobao Group SIX The report on an E-commerce company-Taobao, researching on its web-pages, operates strategies, products and business model. Assessing its success in China on-line trading market and proposing business strategies featuring IT that help improve its performance. By Xiaochen,Li; Bingtian,Zhang; Tianshu,Lu; Hui,Niu; Yuguo,Hou; Lin,Zhu Table of Contents Introduction............................................................................................................................... .3 Taobao Information Systems Strategic Alignment .................................................................. 4 Business Strategies of Taobao’s E-commerce ........................................................................... 5 SWOT Analysis of Taobao......................................................................................................... 6 Payment security........................................................................................................................ 8 Credit Valuation ......................................................................................................................... 9 Credit Rating............................................................................................................................ 13 Decision Support Function of Taobao ..................................................................................... 16 Information Asymmetry in e-commerce...
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...Alberto Calero Part A – e-Commerce in China vs USA 1. Overall, what are some key opportunities and challenges (obstacles) that confront ecommerce in China? How are these challenges similar / different from those confronting e-commerce in the US (or other countries that you are more familiar with)? Some of the key opportunities of e-commerce in China are: The internet penetration rate in China is growing at a much faster rate as compared to other countries. 25.5% users in China have engaged in e-commerce, while in US 71% has done so. This represents an enormous opportunity for e-commerce services, given that there is room for growth in China. The market is China is still in the beginning of its growth stage. The manufacturing prowess of china provides an excellent complement to the ecommerce market. Online shopping market has grown 64.1% over last year to $1.5 Billion. Online B2B market is valued at 65.7 B 69.8% yearly growth. With these accelerated growth rates, the e-commerce market will developed very quickly, players need to be aware of the stage of e-commerce in China and address the market accordignly. Small and medium sized enterprises (SMEs) contribute to 68.8% of nation gross industrial output. Only 28% of SMEs utilised third-party B2B e-commerce platform. The government has a plan to increase it to 80% by 2012. Given this, the projected demand for e-commerce is known. In addition , players also known which type of businesses are using e-commerce. They can design strategies...
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