The meaning of e-commerce
Electronic commerce (e-commerce) includes any form of economic activity conducted via
electronic connections.
34
E-commerce is the trading of goods and services that takes place
electronically, such as over the Internet.
35
E-commerce is the general term for the computer-tocomputer processing of a growing variety of transactions, whether or not they take place using the
Internet. These transactions range from electronic data interchange (‘EDI’) – the well-established
handling of business-to-business purchase orders, invoicing, remittance notices, and other routine
documents – to electronic payment systems, credit cards, and consumer sales of goods and services.
36
In a paper discussing China’s Internet market and its regulation, e-commerce is defined as the term
used for commercial transactions involving the creation, advertising, sale, and distribution of products
or services conducted by processing and transmitting digitalised data – including text, sound, and
visual images – over open (e.g., Internet) or closed (e.g., Intranet) networks. The term generally
includes transactions conducted through the Internet, Intranet, electronic data interchange, electronic
mail, and so forth.
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E-commerce is not clearly defined in Chinese legislation, but transactions using data messages
are legally recognised under the PRC Contract Law, which took effect on October 1, 1999. The data
messages cover messages in the following formats: telegrams, telexes, facsimiles, electronic data
interchanges, (EDI), and e-mails.
Development of e-commerce in China – a bright future?
China is quickly embracing information and communications technology, including the
Internet. The trend towards informatisation in China is clearly growing very rapidly. According to the
12
th
Survey Report on the Development of China’s Internet, China had about 25.7 million computer
hosts; 68.0 million Internet users and 250,651 .cn domain names as of July 2003. The year-to-year
34
Wigand, R.T., “Electronic commerce: definition, theory and context” (1997) 13 The Information Society1,
Special Issue: Theory and Practice of Electronic Commerce, pp 1-16.
35
Dolber, S., Cheema, S. and Sharrard, J., “Resizing on-line business trade”, The Forrester Report, November
1998, pp 1-13.
36
Anil, S., “Electronic Commerce in Asia: The Legal, Regulatory and Policy Issues” (2001) 9 International
journal of Law and Information Technology2, pp 93-114.
37
“An Overview of China’s Internet Market and Its Regulation”, Baker & McKenzie, 4 April 2000, updated 22
August 2000.
UNEAC Asia PapersNo. 7 2004 8
growth was 59% in computer hosts, 48% in Internet users and 98% in .cn domain names
38
. A British
official has been quoted as saying that China was turning into a “digital dragon”.
39
Internet usage is
highest in Guangdong at 10.4%, while Beijing, at 9.8%, is in second position, followed by Shanghai at
9.2%.
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China may still have a long way to go to catch up to the USA in terms of the prevalence of ecommerce. However, the ranks of Chinese Internet users swelled by 75 per cent to 59.1 million people
by the end of 2002, causing China to overtake Japan as the world's second-largest web population.
China, already the world's largest mobile telephone market, added 25.4 million Web surfers during the
year. Japan had between 50 million and 56 million Internet users in 2002, while the United States had
about 170 million. China accounted for 6.63 per cent of global Internet traffic, well behind US users,
who accounted for 42.65 per cent.
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E-commerce can be seen as a special industry in the national economy. Powerful and effective
regulations to control and regulate the market environment are necessary to ensure that the newlyemerging form of trade develops rapidly, safely, and in a healthy manner according to its own rules.
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Policies and procedures should be created to promote an understanding of the potential legal risks.
43
Profitability that the flow of investment in e-commerce will continue
Following the dot-com collapse, the sustainability of e-commerce has become a concern, and
people are questioning whether continued investments in e-commerce will yield a financial return.
However, Chinese web sites have joined their American counterparts in making profits in special
fields such as education, human resources, travel, online games, and e-commerce.
The informatisation of China is further reflected by its huge public expenditure spent in
software purchases. Statistics show that the PRC government purchased software up to an amount of
14.1% of the total software market in China in 2001, and the figure was set to be double in 2002.
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Investment in the Internet industry will continue, as the leading dot-coms in China begin making
profits in 2002.
Along with other industries, the banking industry has been active in adopting e-commerce. For
instance, an AC Nielsen Consult survey of Chinese online banks showed that 23% of Chinese net
citizens would become customers of online banks. Online bank business would become the core part
of the Chinese banking system.
45
38
China Internet Network Information Center, “12
th
Statistical Survey Report on the Internet Development in
China”,July 2003. Available at http://www.cnnic.net.cn (visited 12 December 2003).
39
“UK e-commerce minister visits southern China”, BBC Monitoring Asia Pacific – Political, 12 July 2002.
40
China Internet Network Information Center, “The 9
th
Survey Report on the Development of China’s Internet”,
January 2002. Available at http://www.cnnic.net.cn.
41
“China Web Surfers Swell to 59 Million in 2002”, Reuters, Beijing, 16 January 2003.
42
Wu, J., Li, Q. and Han, F., “The Management of E-commerce”, The United Nations Online Network in Public
Administration and Finance, 27 January 2001, p 4. Available at http://www.unpan.org.
43
Lightle, S. and Sprohge, H., “Strategic information system risk”, (Summer 1992) 8 Internal Auditing, issue 1,
pp 31-6.
44
“Software Made in China the Procurement Target of Chinese Government”, Asiainfo Daily China News, 23
July 2002.
45
“Chinese Online Banks to Boom”, Asiainfo Daily China News, 08 July 2002.
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