Internet Auctions in China Essay Example | Topics and Well Written Essays - 4000 words

Internet Auctions in China - Essay Example Though E-commerce is thus still in infant stage in China there has been a continuous growth in the business. "Already, some 6 million people a day shop on the internet in China. The vast majority are young people living in large cities. There are now 43 million registered online shoppers, and their purchases may total US$6.4 billion in 2007, a year-on-year leap of more than 60 percent" (Daniel 2007) China Center for Information Industry Development Consulting (CCID Consulting) has presented a report which estimates the total online transactions of China at US $ 14 billion amounting to a growth of 51 percent over the 2005 year volume of business. The report also indicates that about 99 percent of the business undertakings of China belong to Small and Medium sector and out of these only 3 percent deal through internet. This is the kind of volume of business and market EBay and Taobao are contesting to share. With this background this paper envisages presenting a detailed report on the functionalities of EBay and Taobao being the major competitors in the ecommerce business in China. The paper also analyses the differences between such functions and the qualities of services being provided by both the contenders. When alternative choices exist the customers would obviously prefer one over the other. In this case also the paper analyses the reasons for the preference of Taobao than the EBay. 2.0 Evolution of Online Business in China: Although online business is in existence in China even from the year 1998, its growth was rather sluggish. This was mainly due to the lack of trust among the purchasers and sellers and the absence of an effective payment settlement system. It has been the tradition of China that the buyer before completing the online transaction would like to meet the seller, check the quality of the product, pay the money in hard cash and take delivery of the products. Ironically enough the outbreak of SARS in China had discouraged people going out of their homes and meet strangers. This has reduced the chances of the buyers meeting the sellers and thus SARS had removed the Trust barrier in the online business. Normally eBay was handling the US and European markets which were highly developed and were nearing the saturation point. EBay even persuaded corporate customers to off load their excess inventories in their website. However the situation in China when EBay entered was totally unregulated wit h the buyers and sellers consisting of individuals with lack of trust on each other. With the passage of time the online business developed very well with the sellers finding it interesting to offer their products to the foreign buyers as they see it as an opportunity to increase their profitability. The modus operandi is to buy the cheaper products from large local factories, use marketing techniques like AdWords Google or other search engines and get the products listed in the EBay to sell