The following is a summary of a description of the state e-commerce in China and e-commerce related services of China Post which was given to us by the Chinese delegation to the Universal Postal Union. Much of the document was an unfortunately very tortured translation from the Chinese by a Chinese translator who did his or her best. We were unable to track them down to get some better comprehension.  However, it is clear from the document that e-commerce in China is heavily B2B and the Post is exploring e-commerce in many ways, including some creative uses of the mobile phone.

The report is also a very good description of many other aspects of e-commerce, including developments in other countries, and the legal treatment of various aspects of online commerce in other countries. It is noteworthy how frequently discussions and research on nearly any topic in China, Korea, or Japan begins with a discussion of developments in that subject in the rest of the world, something one rarely sees in such papers in the US.

The paper concludes like a strategy development document with an outline of very carefully articulated and focused initiatives to be undertaken by the Post to promote e-commerce:

1. 1. Publicizing e-commerce concepts and promoting the industry
2. 2. Accelerating infrastructure development of information networks
3. 3. Encouraging and supporting digitalization of business activities.  In this latter category the Post specifically mentions improving credibility of merchants and consumer trust, increasing Internet security, protecting intellectual property rights, and establishing a separate e-commerce taxation system.

Interesting study document for a Post, but it underscores the much different, and wider, role of China Post in the country than is common in other nations.  We will try to get permission to share this document with our readers. [Editor]

Overview:  Ecommerce in China

According to China Post statistics for the second quarter of 2009 China’s ecommerce market has maintained rapid growth with B2B being by far the largest part of the market. China’s B2B sector accounts for 89.5% of all e-commerce transactions in the market, or RMB2158 billion ($316 billion).  Sales to consumers account for 7.4% of total transactions, or RMB 178,6 billion ($28.6 billion).  Surprisingly, C2C accounts for 3.1% or RMB 75.4 billion ($11.4 billion).

China Post attributes the development of China’s B2B ecommerce from the growing consumption by SME’s.  The room for growth is huge, given that only some 2% of all SME’s in China use e-commerce tools.

In China Alibaba and Taobao are the most influential companies. At present Alibaba is one of the most active online markets/portals in the world.  It owns the following businesses: Alibaba.com, a B2B portal, Taobao, a C2C portal, AliPay, an electronic payments service, and Yahoo China, search.  Taobao is the core C2C brand within the group.  In 2008, Alibaba accounted for 80% of total transactions in China’s on-line shopping market. .

The success of Alibaba has been due to the vigorous development of SME’s. Most of these companies don’t have the financial ability to invest in domestic or overseas markets, nor the financial and technical skills to develop online capabilities.  While the Internet gives them reach, the market, outside Alibaba, has not yet given them the tools and skills to reach the market on their own.

E-commerce services of China Post

China Post offers a number of e-commerce services, including SMS, Agent and Agency Services, Ticket Agency Services and “The Freedom of Self-mailing”.

Short-message services are an integral part of the electronic, financial and logistics services of China Post.  There are several kinds of SMS services such as Savings Messages, Exchange Messages, Express Messages, Philatelic messages, and other.  Each of these different services provide customers with ways to interact remotely with the Post’s various business lines, such as the Post Bank, Express Mail, Philatelics (stamp collecting) and other departments.  Total revenues are expected to exceed RMB 800 million ($117 million) in 2009, the first full year of operation, with an active community of 40 million users.  Stamp collecting remains a much more popular hobby in China than in many countries in the West.

Agent and Agency Services relate to fee collection, license issuance and other services on behalf of telecommunications companies, utility companies (gas, water, electric), payment of traffic fines and other fee collection services where account and individual identification processes are critical to efficient and accurate collection and service.  One of the important roles of postal system in many parts of the world, as in China, is identity confirmation, which is critical to account crediting in many aspects of business and government.   These services along accounted for some 60% of China Post’s e-commerce revenue.  This is a highly competitive market and tickets are sold through some 8,266 outlets and some 40,000 other outlets, probably  small shops who act as licensees of the Post

Ticket Agency Services includes consignment airline tickets, various kinds of  lottery ticket sales and conference/exposition tickets.  This would appear to be a new business.

“The Freedom of Self-mailing” is a new business developed by Guangdong Province Post. This business appears to be a membership-based customer service for more affluent customers relating apparently to motor vehicle ownership. We regret that the English description of this business line was difficult to unpack.