China predicts e-commerce boom

Chinese e-business is expected to top $1bn by 2002

E-commerce in China is forecast to grow more than ten-fold during the next two years, according to government estimates.

This year, business on the web is expected to reach a volume of 800m yuan ($96.7m), and the country's internet regulator, the Ministry of Information Industry, says that by 2002 it will top 10bn yuan ($1.2bn).

Despite the bold predictions, the Chinese government is still moving carefully.

This week, the first 27 out of 15,000 registered web sites were chosen to pilot online advertising.

Spot the advert: Etang.com can now carry banner ads with government permission

The State Administration of Industry and Commerce selected "well-established" websites based in commercial centre like Beijing, Shanghai and Guangzhou.

Many Chinese web sites already do carry advertising, but they do so without government approval.

They now face a crackdown. Officials plan to introduce a nationwide licensing system, designed to "protect the rights and interests of consumers and standardise the e-advertising market".

Among the licensed sites are web portals www.sohu.com and etang.com.

Sohu.com, for example, says it has more than three million registered users and tops 18 million page views a day.

E-commerce problems

While web ventures struggle to comply with government regulations, Chinese online customers face the same dilemma as everybody else on the web: they want to shop, but are not sure whether it is safe to do so.

Internet portal Sohu.com says it has more than 3 million users and records 18 million page views per day

Cheng Guanghui, a spokesman for the Ministry of Information Industry, said the government needed to solve the problems of "identification, authorisation, credit and delivery ... if we want to do e-commerce".

According to the ministry, China had more than 10 million internet users by the end of May. But only a minority of them holds a credit or debit card to buy online.

To pay for web purchases, most internet shoppers have to use the postal system.

Discovering b2b

So far, 34,000 companies have registered their domain names on the web.

But only 1,000 companies actually run e-commerce web sites, and the majority of them are online retailers, the very sector that has recently become very unfashionable with Western investors.

The Beijing government now tries to boost so-called b2b ventures, web sites that specialise in business-to-business e-commerce.

A recently-launched website that helps local electronics manufacturers buy components online from abroad was sponsored by the government.

Beijing officials are much more ambitious, though. Within one year they hope to help one million companies to go online.

A number of US companies have already invested in Chinese websites based in Hong Kong, like China.com, which are separately regulated.