[photopress:itebaytaobao.jpg,full,alignright]Online shopping has long been the slow coach of the Chinese Web. Search companies and portals soar ahead but China’s e-tailers have not had it as easy. One big reason is credit cards which are far less used than in Western countries.
Matters are changing.
According to the Internet Society of China, a trade group, consumer e-commerce will top $1billion in 2007 and grow at an average of 34% annually over the next three years.
As few Chinese pay with plastic, e-tailers are working with dozens of online-payment systems offered by banks and outfits similar to the popular U.S. service PayPal which is owned by eBay.
Market watcher iResearch says Online payments by both companies and consumers are expected to triple over the next two years to $24 billion.
Hanhua Wang, head of Amazon.com’s operation in China, Joyo Amazon said, ‘There has been a lot of progress.’ About 15% of Joyo’s sales are now paid for online, double the level of two years ago.
Alibaba, which nearly tripled in value on its Hong Kong debut, is an exchange where small and midsize businesses buy and sell everything from semiconductors to shark fins. Its parent company, 39% owned by Yahoo!, also runs China’s top consumer auction site, Taobao, and is likely to use some of the $1.5 billion it raised to fund growth there.
A key part of Taobao’s success has been AliPay, the country’s No. 1 online payment service, with half the market. The system, free when used for purchases on Taobao, has helped increase the confidence of many online shoppers. It has more than 47 million users, and every day it processes some 780,000 payments worth a total of $20 million.
AliPay faces plenty of challengers. Joyo, for instance, has its own payment system and doesn’t allow customers to use other services. Hong Kong-listed Tencent, China’s top instant-messaging system, also has a payment service, as do many banks.
All told, China has about 50 such services.
One thing yet to take off is credit cards. Liu Bin, an analyst with Beijing consulting firm BDA said Chinese consumers, remain ‘afraid of online fraud, so they don’t use them.’
Source: Business Week
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