DATE=4/26/2000
TYPE=BACKGROUND REPORT
TITLE=CHINA INTERNET - HURDLES
NUMBER=5-46201
BYLINE=STEPHANIE MANN
DATELINE=WASHINGTON
INTERNET=YES
CONTENT=
VOICED AT:
INTRO: In many industrialized countries, the Internet
has been an active part of the economy for a few
years. But in China, the on-line economy has taken
off just in the last six months, and new Internet
companies are starting up each week. Correspondent
Stephanie Mann recently spent time in Beijing looking
into the Internet phenomenon, and (in this second of
four reports) she reports on some of the obstacles
faced by companies trying to join the on-line frenzy.
TEXT: One of the first obstacles that new
entrepreneurs face is raising money - finding
investors willing to risk their capital in a new
venture. That is especially true for start-up
companies in a new sector of the economy, such as the
Internet, which does not have a long proven track
record.
In March last year, Tom Lasater launched Vertical Asia
- a Hong Kong based company that sets up portals -
Internet websites that help people search for specific
information or products. The company is active in
Beijing, Shanghai and Guangzhou and plans to expand to
more Chinese cities. Mr. Lasater, an American
businessman, says his first challenges in China
involved fund raising and hiring competent staff.
/// LASATER ACT ///
I think the main hurdle is raising money in the
face of unclear government regulations. But,
other than that, it's been fairly smooth.
Hiring technical talent is easy, but technical
talent that has web experience is a little bit
more difficult, so that's a factor also.
/// END ACT ///
So far, Mr. Lasater says Vertical Asia is not making a
profit. He expects the company will begin offering
its stock to the public in the next 12 to 18 months.
Another Internet entrepreneur in China, Peggy Yu,
encountered different obstacles when she decided to
start an online Chinese bookstore. Dangdang-dot-com
began selling books on the Internet in November, but
Ms. Yu says that happened only after she and her staff
spent years building a database of information on book
titles and authors.
/// YU ACT ONE ///
Western countries have been doing books-in-print
kind of database for over a century, and we
never had a database of title information in
China. So, we had to start from scratch. We
spent over two years building the database that
we are putting on line today. So the lack of
database, title information is the first
obstacle we overcame.
/// END ACT ///
Ms. Yu says another challenge to running an Internet
bookstore is the lack of nationwide express delivery
companies in China.
/// YU ACT TWO ///
We don't have the Chinese equivalent of FedEx or
U-P-S, so we have to rely on the government-run
mail postal service to serve our readers all
over the country. And we have to come up with
our own innovation, like doing bicycle delivery
in certain metropolitan areas.
/// END ACT ///
Ms. Yu says China does not have its own express
delivery companies because until now there has been no
demand for them. In the United States, she says,
there was a long tradition of mail-order sales, which
prompted the creation of delivery services. She hopes
the success of on-line e-commerce in China will
encourage the creation of such delivery companies.
The head of a publishing and consulting company in
Beijing, Anne Stevenson-Yang, says e-commerce provides
a new avenue for trade, an alternative to traditional
methods of retailing. But in China, because the
support infrastructure - such as express delivery
systems - is not yet available, Ms. Stevenson-Yang
says e-commerce is not as efficient in China as it is
elsewhere.
/// STEVENSON-YANG ACT ///
To pretend that you can set up an e-commerce
site and sell inter-provincially something, like
hotel bookings or travel packages or whatever,
that you couldn't sell from an office in Beijing
is simply, it's a trick really. It's a very
complicated structure, a layered structure that
people put together to do e-commerce that is
actually less efficient for the business,
perhaps a little more efficient for the
customer, but less efficient all taken together
than the conventional means of doing business.
/// END ACT ///
/// OPT /// And Ms. Stevenson-Yang says Chinese
Internet companies hope there will be enough demand
and momentum to prompt the creation of new products
and services that will improve the efficiency and
convenience of on-line commerce in China. So far, she
says, that has not happened. // END OPT //
Another obstacle to conducting e-commerce in China is
the banking system. Peggy Yu says the low rate of
credit card use and the lengthy bank process for
approving credit card purchases has prompted her
company to offers its customers four payment options.
/// YU ACT THREE ///
Those bicycle boys ship the books, collect the
money, and get the money back to the company.
That's one way. And another way is people go to
the post office to mail us the money for the
orders they placed on line. And the third is,
people use credit cards to pay on line, and the
clearance of that can take two weeks, sometimes.
And the fourth method is people transfer money
from their bank cards to our bank cards.
/// END ACT ///
Ms. Yu understands that with only a few Internet
companies in China last year, it was not economically
feasible for banks to launch on-line banking services.
But she hopes that with more Chinese companies selling
products on-line, the country's financial system will
improve and provide the services needed to support a
vibrant Internet economy. (Signed)
NEB/SMN/KL
26-Apr-2000 14:09 PM EDT (26-Apr-2000 1809 UTC)
NNNN
Source: Voice of America
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