While the China Import and Export Fair has emerged as the country's top trading event in the real word, a war for domination in trading in the virtual world has just begun.

"China's B2B (business to business) market is so huge that one big player alone can't dominate the whole market," said Li Jiaming, CEO of China Suppliers, China's largest government-run import and export Web platform.

Backed by China Internet Information Center, the official government Internet agency, and the State Council Information Office, China Suppliers claims to have amassed four million enterprises as users since its debut in September.

It reportedly plans to become the biggest B2B website in China in the next three years, replacing the reigning king, Alibaba.

"I think our competitive edge is the government background, which gives us an advantage when it comes to enterprise certifications and online transactions," Li said.

Race to the top

Jiang Zengwei (center), vice-minister of commerce, Cai Mingzhao (left), vice-minister of the State Council Information Office, and Shen Jianguo, vice-chairwoman of All-China Federation of Industry and Commerce, launched China.cn last September. File photo

Hu Hengzhi, general manager of 118114.net, is also optimistic about the future of his website. Established by China's largest fixed-line operator China Telecom in January, the newly founded B2B website also harbors plans to become one of the largest e-commerce websites in China.

"We plan to take advantage of China Telecom's unique database that contains information of tens of millions of Chinese enterprises, and provide them an online space full of business opportunities," Hu said, adding that the website has over 20,000 registered enterprises as users.

Li and Hu are not the only big dreamers. In China's B2B market, there are tens of different players from comprehensive websites such as Alibaba, Global Sources and HC Group to vertical websites such as Chinachemnet.com and Chinashuini.com.

Market potential

It's the huge market potential that got private and government companies alike flocking to the field.

"The e-commerce market in China has an immense potential since it could bring real value to thousands of companies by reducing their cost and increase operation efficiency," said Liu Bin, chief analyst of research house BDA China.

In the fourth quarter of last year, the turnover of China's B2B market reached 629 million yuan, an increase of 39.5 percent compared with the same quarter over 2005, according to domestic research house Analysys International.

Research house IDC predicts that in the next five years, China's B2B market will grow at an average of 120 percent.

"The competition is intensifying but I think most of the B2B websites in the country are at a very primitive stage," Liu said.

Alibaba is the biggest player in the market with a share of 68 percent, followed by Global Sources with 12 percent and HC Group with 5 percent, according to Analysys International. The rest of the market is shared by several industrial B2B websites dedicated to chemical products and cements.

But most websites, according to Liu, only act as supply-and-demand information exchange interface and have few revenue generators other than membership fees and online advertising.

Experts believe the major revenue source of a mature B2B website should be from online transactions of member enterprises.

"B2B websites that have government background may have some advantages when it comes to cooperating with banks and financial institutions," Liu said. "But at the same time, they also have lower operation efficiency than private B2B companies like Alibaba."

Alliances

Although the competition has intensified, cooperation is also in evidence.

In November, China Internet Information Center announced the signing of an exclusive five-year partnership with B2X Corporation, a global online trading company whose business covers the US, China, Asia, Africa and Europe.

"E-commerce is a very promising industry but the realization of a mature and safe market environment needs participation of e-commerce websites, governments and financial institutions," said Liu. "It also needs time before we can develop an online trading habit."

(China Daily 04/14/2007 page7)