[photopress:it_alibaba.com.gi.jpg,full,alignright]According to the China Internet Research Centre in Beijing fifty-five million of China’s Internet users shopped online last year for a total turnover of RMB59.4 billion ($8.25 billion).
That is up from 43 million online shoppers in 2006, when the value of transactions stood at $4.3 billion dollars and from the $62 million spent online in 2000.
By 2011, the centre projects that online spending will hit RMB406 billion as more of China’s Internet users turn to online shopping.
Yet the level of online spending remains modest: lasy year it was about RMB1,000 last year per consumer, or 0.64% of total retail spending in China.
Growth in its e-commerce has lagged due to consumer concerns about reliable online payment methods and counterfeit goods.
Nevertheless improvements in technology have meant that online payment systems are now safer and the challenge for Internet firms is to win over consumers’ confidence.
Another challenge that Internet companies in China face is the small number of credit card users, with 75 million credit cards in circulation by the end of 2007, according to state media reports.
Although credit cards are becoming more populartheir still low penetration rates along with quality controls and infrastructure issues explain why online sales in China last year made up little more than 6% of that in the United States.
To overcome this difficulty, online business-to-business portal Alibaba has been relatively successful with Alipay, a system which allows users to pay in escrow only once the product has been received.
Currently, Taobao.com, a subsidiary of online portal Alibaba.com, in which Yahoo! invested one billion dollars in 2005, is China’s dominant Internet retailer, accounting for 80% of the country’s e-commerce turnover.
The site had sales of RMB43.3 billion in 2007; most of it in consumer-to-consumer transactions, but its profitability remains in question as it does not charge buyer or seller a transaction fee.
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