Electronic Commerce Readiness in Developing Countries: The Case of the Chinese Grocery Industry

Abstract

Electronic Commerce Readiness in Developing Countries: The Case of the Chinese Grocery Industry 205US$1.68 billion and Business-to-Consumer (B2C) accounting for US$522 million (Dedrick and Kraemer 2001).As identified by the survey carried out by Tan and Wu (2004), the top 4 drivers for e-Commerce adoption in China are: market expansion for existing products, customer demand, entering new markets and cost reduction.In general, wholesale and retail firms consider "customer demand" as the most important driver.Small firms are also subject to stronger pressure from customer demand than large firms, while large corporations benefit from stronger government incentives than small firms.In addition, global firms also face heavier pressure to use e-Commerce due to increased international competition and hence the need to coordinate their operations more effectively across national borders has been recognised (Kraemer et al. 2005).E-Commerce development in China is also influenced by the unique characteristics of the state.As an authoritarian state, the Chinese government plays an extremely prominent role in influencing e-Commerce adoption.The nature of the state has both positive and negative impacts on the progress of e-Commerce development in the country.On the positive side, in order to attract foreign investment to rebuild the ravaged economy under the strict Communist rule, the Chinese government has endeavoured to build an attractive investment environment.This includes an effective IT infrastructure and an e-Commercefriendly government policy (Chen et al. 2005; Gibbs and Kraemer ; Xu et al. 2004).Government efforts to promote IT began in 1986 through the establishment of the 863 plan, a technology development scheme that includes promotion of IT production and use.The most significant projects were the series of Golden projects, including the Golden Bridge National Data Network and other projects aimed at developing IT infrastructure and applications.IT moved further to the forefront in the tenth Five-Year Plan, 2001-2005.The plan states that "information technology should be used extensively in all circles of society and use of computers and Internet should be wide-spread".In addition, the plan calls for the development of Electronic Commerce and the use of information technology in commercial sectors.The tenth Five-Year plan earmarks 1.7 trillion Yuan (US$200 billion) for spending on information and communication technologies.Of this amount, about 1.2 trillion goes into telecommunications while 400 billion goes into electronic manufacturing.In order to coordinate its efforts to improve telecommunication and promote IT, the government is allegedly setting up a new high-level telecommunications commission directly under that State Council.On the negative side, the Chinese government still seeks to control the flow of information and restricts foreign participation in telecommunication, Internet and information content provision.In fact, there are still some powerful and privileged interests in China that are resisting the transition to e-Commerce as the Internet has already undermined the Chinese Communist Party's monopoly on "public" information (Martinsons 2001).As a result, encryption regulations have been established, forbidding Chinese firms from using any foreign-made standalone encryption products.The only legitimate encryption products are the ones made in China and registered with the new State Encryption Management Commission, which consequently gives the state a means of monitoring computer traffic.Therefore, safeguarding privacy, security and encryption have become major concerns for many Chinese organisations in relation to e-Commerce adoption.Overall, the e-Commerce development in China is still at its very early stage.With strong support from the Chinese government and increasing customer demand, a significant www.intechopen.com

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