Pick up a newspaper today, and you have to realize how words and concepts that didn't even exist a decade ago-Globalisation, Internet browsers, desktop operating systems, Open Source Software, WAP delivery, now appear regularly in front page headlines. We are indeed living in a cyber-culture society now. As we know, the impact of Internet already penetrate to our life, commercial, social, political on every aspect, this has been very significant. This impact is still growing at a remarkable rate and few can predict exactly where these developments will lead.
Unlike television and radio, for example, the Internet combines remarkable changes in mass communication and in person-to-person communications in a single technology. And it does so in ways that are far less expensive than its long-standing competitors. It is now clear that modern trade and commerce must increasingly be linked into this system to compete.Over the past few years, many economists have suggested that the Internet is one of the forces driving globalization.
Because the Internet has dramatically lowered communication costs, many observers have suggested that it is one of the primary reasons for the increase in globalization. For example, (Friedman,1999)suggests:The new information technologies are able to weave the world together even tighter. These technologies mean that developing countries don't have just have to trade their raw materials to the West and get finished products in return: they mean that developing countries can become big-time producers as well. These technologies also allow companies to locate different parts of their production, research and marketing in different countries, but still tie them together through computers and teleconferencing as though they were in one place.Internet access might have the most significant impact on goods and services that can be delivered electronically, it might also increase exports of other goods.
For example, even when their goods need to be delivered physically, enterprises might use the Internet to sell their products directly to consumers, to discover potential customers, to bid online for procurement contracts, or to take part in business-to-business (B2B) Internet exchanges. Further more, enterprises can use the Internet to communicate with potential customers or distributors, since it provides a cheap and easy way to transmit and receive technical specifications, quality requirements, and other information. Finally, enterprises might be able to communicate with research institutes, universities, or government agencies over the Internet, allowing them easier access to information on exporting requirements and on ways of upgrading their production facilities to international standards.Many developing countries like India, China are realizing the potential and importance of Internet and how this technology affects business and economic growth.
I am student from China, and personally speaking I can feel the how globalisation and Internet technology affect my generation, and how these two forces drive our country economic growth to the top in the world. China is the country I am going to emphasis.Internet in ChinaThe Internet is still considered to be a young technology in China. Development of the Internet did not commence in China until a decade ago. With the development of globalisation and Information Technology, China's Internet has developed rapidly. According to recent figures, see belowTMT Category China GlobalRanking China 2002 Units (MM) China2002 GrowthMobile phones 1 207 43 %Cable TV Subscriptions 1 100 10Telephone Lines 1 214 20Internet Users 2 59 75Installed PC 4 29 21Source: Morgan Stanley Global Market Sizing of TMT Products and Services, 9/03; http://www.
morganstanley.com/techresearch.Apart from the increase in the number of users, the nature of Internet usage has widened. For example, using the Internet for advertising and exchanging commercial information has become fairly common. The importance of the Internet for commercial purposes has been underlined by the Chinese government's acceptance of the use of the Internet to conclude contracts in the draft Unified Contract Law. (Article 14, May 14, 1997).
Shopping on-line is also becoming more popular. The first electronic business in China, run by the Xinhua Bookstore, started operation in the spring of 1996.The Internet is about to take off in China, with an estimated 26.5 million Chinese now online, up from 8.9 million in 1999.
Of these users, 32% had purchased something online in the past year, although less than 1% said that shopping online was their primary reason for using the Internet. The most common purchases were books, computers, consumer electronics and appliances. (CNNIC, 2001 survey of Internet use). Internet use, like information technology (IT) use in general, is heaviest in the Beijing, Shanghai and Guangdong areas, which have benefited most from China's economic growth of the past two decades. The profile of Internet users is changing in China from the young, single, college-educated men who were early adopters (as in most countries).In CNNIC's July 2001 survey, 38% of Internet users were female, 48% were over 40 years old, 36% had a high school degree or less, and 41% were married.
These figures are all substantially higher than even a year earlier, showing how much the Internet is spreading to a broader segment of Chinese society. China is currently the second-largest market of Internet users (with 80MM in C2003) behind the US, and it could assume the leading slot in five years. The people are especially hungry for news, information, entertainment, communication and connectivity; businesses are using the Internet for global expansion efforts, in part, to capitalize on low relative labor costs; and Internet penetration levels (6% of China's population) are very low.I am enthusiastic about the outlook because of the role the Internet should play in helping the Chinese economy develop and because of the wealth-creation opportunities for the long term run.
It is going to be a fascinating decade or two.What does Internet mean to China?The most important applications today for China's Internet are e-commerce and e-business. We have seen an evolution in this area. Take American Internet companies for example, Amazon.com, Auto-by-Tel, or eBay. With only about 200 employees and 2 years' operating history, Amazon.
com achieved a total market capitalization of over US$ 30.35 billion, which is equal to 11.8% of Wal-Mart's total market capitalization of US$ 256.4 billion, 113.
6% higher than that of the second biggest retailer Sears, and 531% higher than that of the third biggest retailer Kmart. (Harrow, J., 2000). This phenomenal success presents us a strong case for the power of e-commerce. However, China's retail and wholesale industries (CRWI), have made significant progress.China's modern commercial distribution patterns such as supermarkets, retail chains, dealerships, and distribution centers have gradually matured by learning from western countries in the early 1990s.
These various forms of distribution have made major contributions to the China's economic modernization. In fact, E-commerce has become an economic phenomenon that broadly affects the production, exchange, distribution, and consumption of products and services. William M. Daley, (the secretary of Department of Commerce in the United States), has said that "While the numbers are still small, when compared to our overall economy, they are growing more rapidly and provide more evidence that electronic commerce will be the engine for economic growth in the next century".The IT industry in China has experienced significant development in recent years.
For example, the number of telephone users has grown from 1% of the country's population in 1991 to 12% in 1999. The IT industry also contributed around 20% of China's GDP growth in 1998. The IT industry not only helps China fuel the current economic growth, but also sets a solid foundation for the development of China's e-commerce in coming years. However, some scholars and experts in China are worried that the development of e-commerce will result in the elimination of traditional retailing and wholesale industries, eventually leading to higher unemployment rate in these industries.
This worry fails to recognize the opportunities brought by this emerging economy even though it gives the necessary pressure to spur the reform within the CRWI. Under the pressure of e-commerce, many inefficient distribution channels will be weakened or even eliminated, while many more efficient ones will be introduced and enhanced. Therefore, the issue facing CRWI is not to worry about this kind of "disappearance", but how to face challenges, grasp potential chances, and advance e-commerce. (Arunachalam, S., 1999)The Chinese government is paying increasing attention to the development of e-commerce. In 1998, President Jiang Zemin pointed out that e-commerce represents the future direction of business development and will bring more business opportunities into China.
In order to develop e-commerce, both industry and regulatory departments need to play important roles. The government should provide more efficient high-level guidance, and create a better environment by issuing appropriate laws and regulations. Recently, the leaders of the State Council of China have strongly encouraged the relevant departments of the government to study and push the development of e-commerce. Accordingly, the State Commission of Development and Planning, the State Commission of Economy and Trade and the State Administration of Internal Trade have done a lot of work to promote e-commerce. How the government plays its role could be critical to China's e-commerce success. (Stephen Anderson and Sjujuan Cao, 2001.
)In China another industry is closely connected with Internet is mobile phone industry. Mobile phone sales have taken off strongly in China because they have become affordable and they provide people with unprecedented connectivity and entertainment. China is now the world's largest market for mobile phones (269MM in C2003, up 30% Y/Y). One of the things I have heard time and time again is that the Internet market is different in China not only because of the volume of mobile phone and Internet users but also because of the powerful ratio of mobile phone to Internet users and how the Chinese people use the Internet to communicate with their mobile phones. No major market comes close to China's 2003 ratio of 3.5 mobile users for every one Internet user.
See the table below.
