1.

0 SUMMARIZE OF CHINESE CULTURE AND E-COMMERCE:

AN EXPLORATORY STUDY.

These study cases explain about how technological especially in internet change the Chinese
culture and how they adapt that situation to manage their business in e-commerce that
changes the consumer behaviour. This case states of the impact of technology and the socio
economy factors on e-commerce development. The role of culture in e-commerce factor also
makes an issue in Chinese culture.

As a technology merge in a round of the world, china also get a benefit because they found
the number of internet users around the world has been steadily growing and this growth
giving some impact and opportunities. Chinese culture is something that growth since before
century that the people very close with the culture and always brings the culture wherever
they had been because they respect what that the grandparent had been before.

They also identify three primary infrastructure related element that impact consumer
participation in e-commerce. One of the big impacts was access to the technology such as
internet and computer. Second issues were the infrastructures that also may change if need a
technology development. The third issues that we noticed were the unique social and cultural
characteristic of china.

The three characteristic that command in this issues was transaction trust. For the Chinese,
contracts are expected to change and promises may be broken. Next is bargaining that
Chinese are formidable negotiators. The last one is socialization effect of on-site commerce
that to success of doing business in china also depends heavily on the quality and sometimes
the quantity of personal relationship.

The research study has some unique characteristic when compared with similar study done in
china. They had to follow the style of Chinese people that English is not the first language
and they might respect the people that use the Chinese language. So, to make sure that the
misunderstanding and incorrect interpretation they must do with different style that related
with their culture.

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The findings that the find, internet user in China that to state how many participating on the
technology. The internet in China also uses dual language that more the Chinese prefer the
Chinese language. Second is e-commerce activity that the ability of the payment in internet
banking. The highest using a credit card and it was use globally. Sociological and cultural
impediments to e-commerce, that show how development of e-commerce and technological
development in China.

In the back years ago, the Chinese people more prefer to catalogue sales and extensive
acceptance of internet and e-commerce and availability of infrastructure that is functional and
reliable. The security issues that they questioned and the style to buying the product to feel,
touch and check the product. This is hard to change because the consumer had a right before
to buy products. Trust also may be issues that sometimes internet not fully to trust. It depends
to the brand that the top brands maybe not cheat the consumer. This is not in china but all the
people in the world that used in e-commerce had some issues with trust. The last perception
was debt is not good that in e-commerce, the payment methods was credit card and
sometimes use e-banking. Chinese people think that debt is not good and they worried to buy
goods on the internet.

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2.0 ISSUES/FACTOR

A few issues that we find after we summarize this case that in our opinion it was clearly state
in the research is:

I. TECHNOLOGICAL DEVELOPMENT

Technology was used widely. It is not state in the United States but it used globally.
Even the technology that the country used maybe not an advanced technology but it
was helped a lot to country development. In this case, the issues are how the
technology brings some impact to Chinese people, the culture and the country itself.
As we know, China has their own strong culture that it was respect and use every day.
So, Chinese people also use the technology and it not limited to the big city but spread
to all the nation and state. But the issue is how the infrastructure was change if the
technology is developed? Maybe the cost to structure the internet and technology in
china might use some high cost because the location and some other reason. Many
analysts argue that Chinese consumers are conservative spenders and not willing to
buy on credit or engage in e-commerce.

II. E-COMMERCE DEVELOPMENT

E-commerce in China is something new to some people who not familiar with internet
and technological advance. Because of geographic, the total of people in China and
cost, the e-commerce development in China might increase slowly but in the city, this
type of business has increase rapidly. To make this type of business become a major,
the government should have some planning to organise the e-commerce. It is need one
step closer than West Country and European. Online services like e-mail, search
engines, e-commerce, blogs, online news and games saw rapid development, while
new technologies brought new opportunities for the development of the Internet.

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III. THE CHINESE CULTURE

The Chinese culture is different than other country in the world. We can say that it
was something unique because the people still inside the own culture that it is from in
generation to next generation. They still believe in traditional method while some
young people more prefer with the credit card to buy something or use internet as a
method to get something. The outsider should respect the people in china because
they also leader in electrical industry that it was used an advance technology. How
they try to get a market to make their product was accepted.

IV. ADAPTATION BUSINESS TO CHINESE STYLE

To adaptation business to Chinese style, we must know the style of business in china.
They more prefer ‘Guanxi’ that’s means relationship among their business partner.
The relationship make the organization minimizes the risks, frustrations, and
disappointments when doing business in China. In China is very demanding on time
and resources, the time and money necessary to establish a strong network is well
worth the investment. The Chinese culture is distinguished from the Western culture
in many ways, including how business is conducted. For example, the Chinese prefer
to deal with people they know and trust. On the surface, this does not seem to be
much different from doing business in the Western world. But in reality, the heavy
reliance on relationship means that western companies have to make themselves
known to the Chinese before any business can take place. Furthermore, this
relationship is not simply between companies but also between individuals at a
personal level. The relationship is not just before sales take place but it is an ongoing
process. The company has to maintain the relationship if it wants to do more business
with the Chinese.

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3.0 OPINION

E-commerce is defined as the process of buying, selling, or exchanging products, services, or

information via computer networks. Consumer to consumer (C2C) e-commerce is the
business that the consumers transact directly with other consumers. Powered by the world's
most rapidly changing large economy, China is an ever increasing presence and influence in
our lives, connected to us by the world's shipping lanes, financial markets,
telecommunications, and above all, by the globalization of appetites. China sews more
clothes and stitches more shoes and assembles more toys than any other nation. It has become
the world's largest maker of consumer electronics, pumping out more TVs, DVD players, and
cell phones than any other country. And more recently, it has ascended the economic
development ladder higher still, moving quickly and expertly into biotech and computer
manufacturing. It is building cars (there are more than 120 automakers in China), making
parts for Boeing 757s, and exploring space with its own domestically built rockets.

I. TECHNOLOGY DEVELOPMENT
E-commerce is also growing in developing countries, but more slowly than the
number of Internet users. The Internet infrastructure in China is developed, Internet
linkage connecting speed is slow and the costs are expensive. Currently, Internet
access remains a relatively urban luxury, because 80 percent of all Chinese Internet
users are located in large cities while more than 80 percent of China’s population
resides in rural areas where infrastructure is not so developed and per capita income is
much lower than that of the urban area. Undeveloped rural infrastructure largely
contributes to the problem. Internet application development is the basis for e-
commerce development. Therefore internet technology application and infrastructure

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 construction should be reinforced. For historical reasons, there has been severe
monopoly in telecomm industry which is the foundation of internet technology. Thus
our internet technology development lags far behind，and bandwidth for connection
to international backbone has become a bottleneck, causing slow transmission speed,
small capacity, crowdedness, and high cost of internet access.

The Chinese government attempts to develop telecommunications in the rural area have
achieved some promising results. However, generally speaking, rural
telecommunications are still undeveloped and lag far behind the urban areas. For
instance, in many remote areas, the whole village may have only one telephone line.
The Chinese government has experimented with eliminating installation fees in some
rural areas. However, in areas where infrastructure is undeveloped, this policy is
virtually of no effect, because marginal costs there are much higher and telecom
operators can barely make profits under the current scale. This problem is unlikely to be
fundamentally solved without major investment in infrastructure in their areas.
Improvement of macro policy environment and infrastructure will help promote
national information level and build good atmosphere for e-commerce.

II. E-COMMERCE DEVELOPMENT

In my opinion China is known as the world leading producer of electronic equipment
and high tech goods. But when it comes to the buying and selling products over the
internet, the country is still in its infancy. It is because China’s e-commerce is lagging
behind most developed markets because it is hindered by a lack of policies, a proper
credit system, poor logistics, imperfect legal system, and lack of large scale
telecommunication transmission capability (broadband).

China’s e-commerce is still at the initial stage, so it needs a comprehensive legal

framework as discipline. The problem is that not only there are no clear uniform
policies, but also there is no strong enforcement system of the policy. How to regulate
website-based business is a new project for the entire world. In fact, it is a difficult task
paced by the Chinese government. This is not just because there is a strong tradition of
regulating market (or economic activities) in China, but the some attributes of e-
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commerce (virtual space, borderless, etc.) make it more difficult to enforce any
regulations.

E-commerce platform vendor Art Technology Group (ATG) said that only 24% of
China’s internet users currently shop online. Although the Chinese government is eager
to increase B2C e-commerce, it largely depends on credit card purchases, and it is very
difficult for the average Chinese citizen to get hold of a credit card. Countrywide, it
generally takes more than a month to obtain a credit card in China as the banking
system remains highly inefficient. Individuals had spent a long time to get a credit card.
This resulted in lack of use e-commerce in China. Payment system is a bottleneck for e-
commerce development in China. The China inter-bank and intra-bank infrastructures
are lack of relevant laws to support e-commerce. In order to assure financial stability,
some enterprises revoke its credit to customers, or audit or check customers by means
of association system, so that they can set up their own credit management system.
Some large enterprises have to set up special line or network by themselves to solve the
weak infrastructure problem.

Trust online of Chinese is low. According to a survey produced by US-based research

and advisory company in August 2006, even in the US, nearly half of online adults said
that concerns about theft of information, data breaches or internet-based attacks affected
their purchasing payment, online transaction or e-mail behaviour. In 2006, US$913
million e-commerce sales were lost because of security concerns among online
shoppers. China’s problem is that it lacks an online payment system for handling credit
card transactions in a safe and efficient manner, meaning that only about one in three
online purchases are made using a credit card. The remainder are paid with cash on
delivery or post office transfers. Another issue linked to online trust are the products
themselves. Home-grown internet retailers offer a limited product selection, of which
the quality is often suspected. For example, online book store Dangdang.com was
forced to apologise to a publishing house for selling pirated books online. Incidences
like these lower consumer confidence, thus hindering e-commerce growth.

Also hampering China’s e-commerce growth are its poor logistics and distribution
networks, which restrict how far apart sellers and buyers can be, thus making sending
purchased items difficult.

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III. THE CHINESE CULTURE
Studies shows that e-commerce industry needs time to realize its potential in China.
Three distinct cultural impediments: attitudes towards off-site/online transaction
systems, trust, and the belief that “debt is not good” considered to be the foundation of
this delayed acceptance.

The idea of buying goods towards off-site/online transaction system that one cannot see
and touch, and from sellers thousands of kilometres away may take some times for an
ancient Chinese culture to adapt since they are used to face to face transaction known as
“Guanxi”. Socialization effect of on-site commerce (friendly conversations between the
vendor and the customer): The success of doing business in China also depends heavily
on the quality and sometimes the quantity of personal relationships. For the Chinese, a
strong individual relationship and long term association between the parties provide a
sense of community and enhances social bonding. Most of the business is conducted
through small enterprises and it is local. A typical Chinese company is a socio-
economic entity and not just a pure economic one. These long standing cultural traits
are undermined by and are contrary to the depersonalization associated with e-
commerce and business systems designed to sell products online.

Transactional trust is not only major concerns for Chinese consumers conducting online
transactions but they are also amplified as a result of Chinese cultural characteristics
and prevailing legal system. It is found that Chinese consumers are as wary of
counterfeit products as western consumers are. Transaction trust (ordered goods will
arrive, payment will be made): Confucianism may have left a strong mark on much of
the Chinese social life but it also left a business system more in tune with rule by an
unpredictable authority rather than by dependence on a system of laws and obligations.
For the Chinese, contracts are expected to change and promises may be broken. A
strong individual relationship is often the only indispensable ingredient that is required
for the implementation of a contract. Counterfeiting and distribution of below par
products is a major problem and further aggravate this lack of transactional trust

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 between parties who do not know each other personally and separated by distance and
technology.

The Chinese still exhibits the characteristics of a cash society and the value system that
preaches “debt is not good”. Chinese rarely used credit cards for purchases including
some very expensive entertainment events hosted by high level managers at locations
where credit card payment systems were in place and hosts that had significant
economic means. Generally Chinese have some mistrust towards their government and
organization and as a result they prefer to keep their personal savings in their own
premises and not in the bank. The Chinese have their attitude of purchasing goods only
when they have cash to pay.

IV. THE ADAPTATION BUSINESS TO CHINESE STYLE

Traditional consumption behaviour is deeply rooted, so it takes time for people to
accept e-commerce. Firstly, Chinese people have formed rooted consuming habits, and
they tend to carefully select and try before they buy. The idea of buying something is
that they would like to have a chance to sample or even touch a product before buying
it. Secondly, customers do not trust an unknown faceless seller, paperless transactions,
and electronic money. By switching from physical to virtual stores may be difficult.
Thirdly, Chinese people are accustomed to living in a savings environment, not living
on credit. According to the survey by CNNIC, only 0.86% of the people’s primary goal
of accessing Internet is online shopping. This has created a culture of mistrust in
consumers about online merchants and the concept of secure electronic payment.

The lack of security and privacy embarrasses e-commerce. There are security issues.
Many people do not trust online transactions: likewise, the policies and regulations for
encryption software and security products are unclear. The insufficient experience of
most Chinese network system administrators, and vulnerable hardware and illegal copy
of software make customers sensitive to online business. There are no specific laws
made to govern the legal use of personal information and transaction records of
consumers as well as the safety and the authorization of the use, and effectively protect
customer’s such legal rights as privacy. The e-commerce industry in China has a very

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 long and difficult task of convincing customers that online transactions and privacy are,
in fact, very secure.

3.1 CHALLENGES AND OPPORTUNITIES OF THE DEVELOPMENT OF E-

COMMERCE IN CHINA.

I. THE SOCIAL ENVIRONMENT

China’s present social environment is unsuitable for the fast development of

information. It lacks deep understanding of the relation and interaction between
industrialization and information, fails to know deeply the importance and urgency of
information in social and economic development in China, and fail to put social and
economic information in an important position. The quality of the people needs
enhancing. On the average, a Chinese only receives 6 years of education, while
development of information needs a large number of information workers. In
addition, the environment of social policy and law is still imperfect. Chinese social
service structure, investment and funding-raising environment, credit and
qualification appraisal system and information security environment all need to be
improved urgently.

II. THE BARRIER OF INFORMATION

High Internet fee limits the application of Internet by government, enterprises and
individuals, and restricts severely the speed and efficiency of social and economic
information. It is estimated by some experts that, if speed of information flow is taken
into consideration, Chinese relative Internet fee to its national income is 250 times
higher than that of developed countries, which is far behind to meet the requirement
of Chinese government information, enterprises information, science & technology
information and household information.

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 3.2 MAJOR BARRIERS IN E-COMMERCE DEVELOPMENT.

I. LAW AND REGULATION ARE IMPERFECT

E-commerce gives a full impetus to social and economic development; in the
meantime, it induces some new problems. So we must review the inadequacy of
traditional policy and laws in the new circumstance, and establish new and effective
law and regulation system. E-commerce causes multi-facet problems, such as
legitimacy and authentication of e-currency, e-contract, and e-bill, how to collect
business tax and custom, whether new tax and collecting method are needed for some
intangible products (software, electrical audio and video), how to guarantee market
order and prevent monopoly, especially telecommunication monopoly, how to protect
privacy and IP, how to manage and control export and import of intangible products,
and so on.

II. LACK E-COMMERCE STANDARD

Standardization is the difficult and important task to spread e-commerce. China hasn’t
established corresponding e-commerce standard yet to normalize the behaviours on
Internet, therefore, it can’t form a standard business environment compatible with
international standards, which has a negative impact on integration of Chinese e-
commerce and global economy.

INTERNET SECURITY PROTECTION IS INADEQUATE.

In Internet age, information will become an important resource. Development and
utilization of information can influence state’s sovereignty and interests, and the
control of information will broaden the gap between developed countries and
developing countries. Internet security is a major obstacle for e-commerce
development. Technically speaking, e-commerce security needs to guarantee the
security of e-signature, e-authentication and e-code. In this respect, China should ask
for help from foreign experts and make strenuous efforts to work out reliable and
comprehensive solutions.
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THE DELIVERY SYSTEM IS POOR
China hasn’t formed its complete delivery system, and the delivery of products has
yet to be separated from manufacturing and commercial enterprises. Our incomplete
delivery system still responds passively to production and sales departments, with
different processing links such as warehousing, transporting and loading as
independent entities. This backward opinion, combined with poor facilities and
traditional management without information support, makes China’s delivery system
half a century behind developed countries and unable to meet the requirements of e-
commerce development.

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4.0 CONCLUSION

Faced with the fast development of global e-commerce, we must emphasize regional
characteristics and take corresponding measures. We need to select some projects that have
strong feasibility and distinct potential results and then implement e-commerce steadily and
actively under the direction of policy.
Do researches on e-commerce environment and developing solutions, provide policy
suggestions on e-commerce law and regulation, stipulate e-commerce technology standards
and other related standards in cooperation with ministries and industry managing authorities
concerned, formulate strategy, target and general framework of Chinese e-commerce
development, and propose tactics and application modes suitable for Chinese e-commerce.
The Chinese people had known about the technology and e-commerce business with the
developing new technology. The culture of business or the culture of Chinese’s people life
can adapt the new type of technology. It shows that China also want to get competitive
advantages on their manufacturing, electrical or other type of industry and to get a good of
segmentation marketing.
Everyone should know how to use internet and get the benefit from that methods in this era
when many people compete with other with new technology come out but not forget about
their culture that we should keep and respect especially in young generation.

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