On-line disillusionment growing
LI Xuran describes himself as a die-hard "wangchong."
He surely deserves the nickname _ which means Internet addict _ given the unusually high service fees he pays monthly and his relatively long "net age."
A computer maniac since childhood, the 27-year-old man became addicted to the Internet immediately it became available about five years ago.
"I always keep pace with the trends on-line," he brags.
Whenever a new trend in the Internet culture surfaces, he is quick to catch up, whether it is the operating system "Linux" and the latest trend of MP3, or on-line music resources.
But his enthusiasm was dampened recently when he decided to try another area on the Internet which has been catching on in China these days _ on-line shopping.
He visited several famous Chinese websites, such as Sohu and Sina, all exhibiting shopping sections that contain links to many on-line shops in China.
To his dismay, when he hit these websites, he was denied access in most cases, either by such words as "internal error", or was told the remote server could not be located.
While at the remaining few shops he finally managed to enter, the uninspirational web design and the scarcity of goods, combined with the unusually perplexing more than 10 types of payment method, stripped him of any desire to buy.
When he compared the prices of the goods _ books mainly _ sold on-line to those in conventional shops, it turned out most of them are not as cheap as he expected. "I'd expected the goods sold on-line could be a little cheaper, like the on-line selling in other countries, but I found most were sold without discounts," the discouraged Li says.
"When taking the postage of the goods into consideration, the prices could be even higher," he adds.
Li's complaints in part reveal the current situation in China's on-line shopping.
Despite the stunning growth of China's internet industry, China's web-goers, who surpassed 4 million by the end of last month, are still quite a small group compared with the number in the United States.
While more and more Chinese people begin to get familiar with such new words as Java and Information Superhighway, the distance for most Chinese from the dream of living, communicating and shopping on-line is, if closer, still much further than most optimists expected.
A couple of years ago, one of the earliest Internet Service Providers (ISP) in China, Yinghaiwei, made the still best-known Internet advertisement that heralded a seemingly rosy prospect for China's web industry.
It put a huge billboard in central Beijing that optimistically reads: "How far is the distance between China and the information highway? 1,500 metres to the north," where the company is located.
Yinghaiwei was one of the first on-line shops that opened in China, yet, symbolically, it began losing money in the ISP area a few months ago.
The other side of Li's complaints is the fact that most on-line shops, though highly hyped by the media, are suffering high costs and few orders.
With a hot wave of getting on-line sweeping across the country's enterprise communities last year, on-line shops of varied sizes boomed on many websites.
On-line bookstores and computer stores were the most popular for ordinary on-line surfers and take up quite a share of the total.
Most of them underwent similar difficult times and are now yet to find a way out.
The Shanghai Book Mall was one of the first in China which opened on-line shopping.
Yet after a couple of years of marketing, the majority of their customers are still locals and the on-line sales are still "quite minor" compared with those netted in traditional ways, according to the e-business Division of the bookstore.
The Beijing-based Capital Book Mansion opened their on-line bookstore this March, with the financial help of the municipal government.
Yet when compared with the rapid increase in hitting rates of the homepage of the website, the number of real buyers is unusually low _ no more than 1,000 for the first quarter since its initiation.
So far, the sales on-line account for only about 2 per cent of the total.
Capital Book Mansion is fortunate to have the local government exempt it from the telecommunication service fees, which average 1.5 million yuan (US$180,000) a month. "Without that help, this on-line bookstore could not have survived to date," says Chen Xingxiang, deputy general manager of the Capital Information Company, supplier and technical administrator of the platform for the on-line bookstore.
Almost all on-line shops have complained about the still exorbitant service fees they had to pay to the telecommunication bureaus and the small market they have to face.
The 4 million web-surfers, though still growing fast, are still too small a market for many companies.
Meanwhile, many on-line shops have to take pains to draw a distinction between the real orders and the fake ones simply arising out of web surfers' curiosity.
As for the complaints from customers about the too many types of payment method, the blame was put on the backward payment system characterized by transactions in cash and the varied credit cards issued by a handful of national banks with incompatible payment systems.
Doubtful of the safety of payment on-line through credit cards, many on-line buyers in China tend to choose the slower, inefficient, yet safer method of remittance.
The boring process and the lengthy waiting time discourage most potential shoppers.
While doubt and uncertainty dominate, on-line shopping got a shot in the arm when the Federal Company, the largest software retailer in China, reported a rapid increase in sales at their shopping centre at the website www.8848.net, which it launched this Spring.
The website, dubbed "Himalaya" after the highest mountains in the world of about 8,848 metres, apparently reflected Federal's ambition of blazing a trail in a market that has seen most of the adventurers retreat to lick their wounds.
"The sales for the first quarter surpassed 1 million yuan (US$120,000), which is not only beyond the expectation of many other on-line shops, but also far exceeded our expectations," says Shi Yutong, assistant general manager of the e-business Division of Federal.
"Federal's past five years were devoted to only one thing _ to lay a solid foundation for the development of e-business," he adds, "The 'Himalaya' website is our first fruit."
The "Himalaya" website is a well-designed one that consists of both on-line shops and related IT forums.
It sells software, books and information appliances such as the trendy MP3 players, at prices Shi promises do not exceed those at conventional shops.
Shi says its success lies in the fact that they have overcome three obstacles that have discouraged most of other on-line shops.
The first is the general false expectation that the magnitude of the on-line market in China is too small for on-line shops to survive.
Federal, however, decided the market, though small, is economically viable to support the fast growth of a retailing business on-line. "Four million people is not small," Shi says, referring to the number of China's net-surfers, "It equals the population of a medium-sized city in China. That's not small for an on-line shop.
"What's more, when a man is able to get on-line, it at least means he is well-educated and has a certain amount of buying power above the middle level. That would make sense to us," he adds.
Shi likens on-line shops to the supermarket, where quite a few people have no idea of what exactly they want until they encounter the goods that kindle their desire to buy.
"The buying power is not there constantly," he says. "You must produce the buying power among people. So you have to keep improving your service. That is what we are doing day after day."
As for the safety of on-line payment, Wang insists that on-line payment, usually by credit card in encoded forms, is safer than traditional methods. "People have a misunderstanding of the safety of on-line payment mainly due to ignorance," Shi says. "It is a more private and secure way because you can operate it at home through procedures identical to normal ones."
While allowing many other ways of payment, Shi admits that the lack of a unified payment system is still a big problem that could scare off some newcomers.
He also puts a high premium on what he describes as the work off-line, saying it is the key to the survival of "Himalaya."
"One of the major reasons for the failure of other on-line shops is that they concentrated too much on their on-line work, while ignoring the off-line work," Shi says.
Federal has made full use of their competitive edge: a nationwide distribution network of nearly 300 outlets, which guarantees the timely delivery of the ordered goods. "No matter how much you depend on the web in buying goods, you must finally 'have' the goods, which cannot be delivered on-line," Shi says, "Fundamentally speaking, you buy 'atoms', instead of 'bits' online."
Federal promises a delivery time of two to seven days in areas covered by its nationwide network, nearly twice the speed of other on-line shops on average.
But the process is usually delayed in the phase of payment checking, which ranges from a couple days to weeks. "We can deliver the goods only when we make sure the payment has been transferred to our account," Shi says. "Unfortunately, this process is not under our control and could last weeks."
Shi says he hopes those off-line departments can catch up, so that the "wangchong" like Li can catch up with the trend on-line.
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Date: 07/27/99
Author: He Sheng
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