China SMBs extend business with e-commerce

By the end of the year, 45 percent more Chinese SMBs (small and midsize businesses) will operate e-commerce Web sites, compared with the figure last year, according to an analyst.

Daniel Sim, country head of AMI (Access Markets International) Partners China, said in a report that about 200,000 SMBs in China will activate e-commerce Web sites for their business. Last year, the figure was 135,000, and this is expected to escalate to 370,000 SMBs by 2010, Sim said.

According to him, small businesses will be "largely responsible" for the rise in e-commerce sites, as "the Internet as an information exchange medium continues to flourish and Web activities continue to increase in China". AMI defines small businesses as those employing up to 99 staff.

This rise follows a "significant" dip in e-commerce activity earlier this century since the dotcom bust, Sim added. Other factors which have contributed to the comfort level of Internet users with such sites have been the increasing availability of Internet access and the "surge in Web 2.0 sites".

A recent Mastercard study found that new markets such as China have been helping to contribute to growth in online shopping payments, thanks to the rising upper-middle income urban elite demographic, the study said.

The small businesses are employing the Internet as a marketing medium, "and have now progressed to the next level to integrate e-commerce features such as online shopping, e-payment gateways and even web-surveys for better customer relationship management (CRM)."

The sites are used to facilitate online transactions with business entities or individuals, being a mixture of customers, suppliers and channel partners. Some of the sites have taken the form of Web portals which offer catalogs and payment gateways to facilitate transactions, Sim said.

However, he said the positive forecast for e-commerce refers to e-commerce used as an extension of a company's business model. Full e-commerce-only dotcom businesses will grow more modestly to 6 percent--a growth of 4 percent over last year.

"The focus [of e-commerce sites] is no longer dotcom-driven... This is on top of their existing brick and mortar structure," Sim said.

Chinese e-commerce giant, Alibaba, had difficulties in the local market recently. However, this year, it has announced plans to expand beyond its home market to Japan, Korea and India.