E-business Role in China

With Chinese network stocks being weak on the NASDAQ market, the newly-born network industry in China is becoming stagnant. Just like the expansion of the network, the decline of Chinese network economy has become the focus of media attention. It is reported from Proquest (www.proquest.com), the largest news data network in the USA, that there have been almost 90 reports and articles on China s network development and e-business from 1998 to 2000.

More and more American media outlets are paying attention to China s IT industry, including the Wall Street Journal, New York Times and Business Weekly etc. Most of them think that China s E-business is a market where "market opportunity coexists with risk".

The climax of Chinese network economy was in 2000 when several network companies went public on the NASDAQ. In a couple of days their share prices multiplied. Then lots of domestic followers arrived, and large quantities of dot.com websites came forth, then large amount of capital from international risk investment organization was introduced. Immediately, Internet became the hot point of economy, which played an important role in boosting local economies at that time.

Information technology is also changing traditional trade. E-business is unarguably changing the means of our trade. Although most of us are complaining about how infantile some e-business is, nobody denies it will have brilliant future, for it is an innovative way for future economy. E-business is pushing Chinese society into new modes: transmitting it from the industry economy (machine-led productivity) to the knowledge economy (information-led productivity).

All enterprises will break the limitation of regions, and increased competition will be carried out on the international platform.

The Internet is clearly globalised, and China is eager to be connected to the world. Although there are few current applications of E-business in China, I am sure that it will develop very quickly in a few years. Overall Chinese economic development is leaping ahead, so it can be deduced that e-business will develop as leapfrogging.

Telecom equipment manufacturers, like China s leading telecom manufacturer and network solutions provider, were touched by the fast development of networks. Shall we devote in the upsurge of network economy immediately, or change the operation mode gradually by making use of e-commerce? We made the choice to recognise the developing trend first.

Seen from the operating environment of China, e-business will not change the core management mode of enterprises radically at present, but it will bring lots of reforms to enterprises in the future. Enterprises reliance on e-business will be deepened, especially in the field of reducing management cost. As early as 1999, we adopted ORACLE ERP system, then systemized and programmed internal management date. This has been realised, which has laid a foundation for future development of e-business.

Seen from the point of mass economy, e-business is helpful to reduce dealing cost between individuals and enterprises by a big margin and to quicken the dealing speed. In enterprises, e-business can facilitate the co-operation and account settlement among different divisions, and customers requirements can be fed back to design and production departments as soon as possible; thus supply link and products turnover efficiency have been improved.

Besides this, strengthening internal information sharing will change current management and organization modes step by step. We are now paying close attention to the development of e-business and research into products applied to e-business

There are two points about B2B that we must affirm: firstly, it cannot solve all your business problems; secondly, it is fatal to ignore it. The advantages and disadvantages of B2B are as follows:

Advantages:

• Cuts the cost: Correct B2B mode is helpful to save on expenses, lower the price and operation cost.
• Develops the market: B2B develops new customers and suppliers quickly and easily in global and network business.
• Speed: At network market, business units can acquire information and products as soon as possible.
• Deepens traditional services: Strengthens the relationship with strategic cooperators, suppliers and customers through private networks.

Disadvantages:

• Occasional reaction.
• Higher risk: For buyers, it will be risky if buying on-line through strange channel.
• Reduce profits: If you are a supplier, your profit margin drops due to fierce on-line competition.
• The stronger will be much stronger, and the weaker will be much weaker.
• Inapplicable: For some international markets and customized products, e-business is not suitable.

As for e-business, we are not willing to follow blindly, but we will not overlook B2B due to the recession of network economy. The so-called "network economy" exaggerated the effect of Internet and e-business, and under the compulsion of capital markets, most of the people thought e-business was omnipotent. But things went contrary to wishes. Currently, the bubble has burst, and a lot of people deny it. Objectivity is hard to achieve. At present, we should pay more attention to reducing the cost of supply links and quickening the reaction of manufacturers to the economy.

As an international group with worldwide activities, our products reach as far as 70 countries and regions in the world. And we have established almost 50 business offices around the world. The increase in foreign trade is very important for our internationalization.

In global trade, many international groups purchase raw materials and components from developing countries. And with abundant resources, low-cost labor forces and the accumulation of economic development, China is becoming the focal point of international trade.

At present, China ranks 9th in the world s top exporters and lots of Chinese enterprises have a strong desire to expand exports. If comparing current Chinese foreign trade website by the standard of international network trade, most of them are only a window offering information. It does not matter yet if it is professional websites or the simpler platforms constructed by enterprises: the real deal has not yet started.

But we can see there are differences between traditional international trade and international e-business. Currently, Chinese e-business only focuses on large cities, such as Beijing, Shanghai and Guangzhou; thus a regional market is formed. But the differentials among regions are obstacles to the development of Chinese e-business.

	Traditional international trade	International E-business
Operation location	Different venues	On network
Main Body of trade	Middleman is one side of main body.	Buyer and seller can make a deal directly
Operation system	Restricted by time and regions	Information network is the connecting ligament at world market.
Marketing means	Traditional marketing means	Network marketing
Management efficiency	Traditional supervision means of national trade	Network provides convenience for macroscopically management of national trade.

Besides this, in China, e-business is still restricted by transmission bandwidth, Internet access speed, and the popularization of individual Internet and banking systems. But the future potential is huge. We are now supplying these equipment to telecom operators, in order to speed up the popularization of Internet and e-business in China. B2B and Intranet will be implemented in advance. Also, the complete e-business infrastructure is the basis for enterprises to implement e-business.
E-business infrastructure should be "port to port". It means the connection around the world. Different equipment is connected via a common network, and information exchange can be done at any time any place. On the basis of "port to port", a unified standard is needed. These infrastructures must be based on real-life world. Current infrastructure technology is not enough.

And there are still some new requirements on E-business infrastructure.

• Higher security
• Open and easy integration
• Development of new applications
• Higher expandability
• Effective cost and risk management

In a few months, China will enter WTO, and e-business will bring great influence upon domestic enterprises. As a famous IT manufacturer and international telecom equipment supplier in China, we will adjust strategy, establish commercial mode of new economy and welcome the coming of e-business era.

By Mr. Shi Lirong, Senior Vice-President, ZTE, China