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Online business in China or how to succeed in Chinese e-market?

Beijing 2008 Olympics have increased interests both to the whole country and to single business branches which are closer to people who are interested in technology, Internet and software.

In this post we’ll try to understand is it worth-while to sell software in China? Does huge population mean the huge market and huge profits? How to do business online in one of the largest and most complex economies in the world?

In its semi-annual report, CNNIC (China Internet Network Information Center) claimed that there were 253 million Internet users in China by the end of June 2008. That undoubtedly puts China to the first place in the world. Annual growth of users number is also impressive – 56.2% or 91 million users from June of last year. Big numbers, but a huge target of Internet users alone is not enough for success of e-commerce.

Barriers, which any e-tailer who wants to succeed in Chinese e-market should overcome:

Imperfect payment system. Because of the fact that the use of credit cards is not widespread in China, simple paying for software online often becomes a problem. Cash is still the main means of paying in China and it’s one of the reasons of slow growth of e-commerce in China.

Language barrier and localization. Chinese consumers prefer buying software of local vendors just because of language barrier. The process of online buying usually starts with searching for necessary product in search engines. Most of customers will use Chinese language and Chinese search engines to find what they need. Statistics shows that more than 64% of Chinese netizens use Baidu.com search engine and even the rest 35% who use Google or Yahoo will primary use Chinese queries for their search. Thus, if you software is not submitted to the Chinese search engines, you have little chance of success. Also, to be bought, software must be localized, i.e. adapted to local national-language features. And the software vendor should provide necessary support, also adapted to Chinese conditions.

Geographic limitations for deliveries. It’s obvious that no one can make profit when delivery cost is almost equal to the product price.

They are the problems you can solve. For example, you can find a reseller in China which will be responsible for localization, promotion and support, which will receive payment in local currency and will share your profits. And what about deliveries, software vendors have advantage over other e-tailers because a program can be downloaded and activated from any spot on the globe and registration info can be sent via e-mail.

Factors you can’t change in China online market, but can take them into consideration:

High level of piracy in China. The fact that software piracy rate in China is one of the highest in the world is well-known. It makes selling end-user programs difficult and unprofitable. Nevertheless, corporations still buy licenses.

Age of Internet users. Almost the half of all Internet users in China is younger than 24 years. So, if your software products target older and more solvent users, you may not find your target audience in Chinese Internet.

But, in spite of all the problems and difficulties, China is still one of the most perspective and promising markets. And if you like to take chances, try to enter China online market, the biggest and the most controversial online market in the world.

Think globally and act locally !


October 13, 2008 Posted by | Software | , , , , | Leave a comment