Dotcom's demise chokes consumer confidence
( 2001-11-22 11:10) (1)
Still licking their wounds from the recent demise of my8848.net -- the former top icon of China's e-commerce industry -- online retailers are bracing themselves for another body blow: an erosion of consumer confidence.
"The closure will strengthen public scepticism on the viability of the business, and it will be the biggest setback for the dotcoms, already suffering financial deficits and the capital squeeze," said Duncan Clark, an online business analyst in Beijing.
Clark, managing director of BDA China Limited -- a leading consultant on China's Internet business -- said on Wednesday the online commerce market in China is steering into negative territory and will take time to recover.
This does not bode well for a bleeding industry still finding its feet after a global Internet slump since late last year. Venture capitalists are still tightening their money belts, while the B2C (business to consumers) model -- online commerce -- has, to date, not delivered a dime of business profit.
The Chinese Government has been blamed as it has not embraced a fully-fledged payment and delivery system to run alongside the online commerce culture, while lack of business credit still puts consumers on edge.
According to the latest annual survey on China's Internet usage in July by the China Internet Network Information Centre, 31.9 per cent of the 26.5 million netizens purchased goods online in the past 12 months.
Most of the surveyed netizens think B2C will not have a significant development in the coming two years.
Yang Yanhua, a computer engineer in Beijing, remained sceptical of online shopping, after being duped five months ago by a Beijing-based website retailing books, VCDs and perfumes.
Yang ordered six books and picked up the payment option of delivery-and-pay. The books should have been delivered within 24 hours. However, they never came.
"I was lucky though," she said. "Some of my friends have been cheated out of money by some websites who promised to deliver goods but they never show up. Some websites could not even be traced via the Internet."
However, Liu Hong, a local news media employee, argues Yang's case, as he is a frequent online shopper on dangdang.com, the largest online book retailer in China.
"The books are always delivered on time and I can even be updated about the latest book on sale, getting free coupons and handsome discounts," he said. "It is not just convenient; it is also fun."
However, the star-like incentives are losing their twinkle as off-line retailers in China are improving their promotional techniques and services, built up by growing competition home and abroad.
William Shi, an analyst on e-business in China, said: "Chinese consumers are more ready to shop in hectic, glossy stores, as they do not take shopping as a toil."
However, some websites are bucking the downturn.
Dangdang, the online book retailer, claimed up to a 30 per cent monthly growth in online sales.
This example of success has convinced analysts like Shi that online commerce is down but not out in China.
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