E-Commerce in China

1. E-Commerce in China Dr. Kaiquan Chen TDV Inc. Board chairman 20/09/01

2. No.1 Agenda • Internet market develops rapidly in China • The enterprises demand on EC intensively in China • Enterprises’ investment in EC changes to maturity and application • Market structure of E-commerce in China • Mobile EC market developes rapidly • The development of EC in China

3. No.2 Basic Establishment of Communication Develops Rapidly Amounts of telephone develops rapidly in China, it will be 156 mil. by year 2000. Mobile telephone amount will be 72 mil. Source: MII, 2000

4. No.3 Internet Customers Market Develops Rapidly Internet customers will exceed 100 mil. by 2005,include mobile internet customers. Internet Uesr Million Source: CNNIC, 2001

5. No.4 Internet Customers Market turn to maturity The lastest data of IDC indicated normalInternet customers has reached 61.9% in China,but it was 36% in 1999. Source: CNNIC, 2001

6. Notebook • PDA • MP3 Player • (with download function) • Wirlless PIM • Home stakeout and control(with system movement and report function) • Digital Camera(with data exchange function) No.5 Abundant,convenientand protean Mobile Terminal • Mobile Mobile Secretary World will be changed by Mobile Internet Carry-home Game Player(with network play and select function) Car (with data information and entertainment system) Icebox(with information board controled by mobil phone)

7. No.6 Basic conditions of E-Commerce have been built • The Chinese government promote EC-market actively • Byelaw of Internet and security of communication network comes on conjointly • Constitute the laws of EC actively • Commercial banks found bank-online and China Finance Center of Authentication (CFCA) • Commerce dept. of government and large scale state-owned enterprise connect the Internet actively • Little enterprise’s local IT basic construction level raise quickly • Appeared new mode of EC like eMarktplace etc.

8. No.7 The level rises promptly that the enterprises cognize electronic commerce In condition of the in-depth market education and intense market competition,there are 92% enterprises which need EC in China,that can raise competition ability.But there are only 34% that enterprises need EC in the same research in 1999. Source: CNNIC, 2000

9. No.8 It raised intensely that the enterprises demand EC There are 41% enterprises that have started the market propagandistic campaign online who have their owned net-site, and there are 38% that have started the application of EC Source: CNNIC, 2000

10. No.9 Investment in IT of enterprise has been changed Investment in IT of enterprise has been changed in 2000 in China,it increased in software and service,which indicated the mature of IT construction of the Chinese enterprises Source: CNNIC, 2000

11. No.10 The change of investment for electronic commerce of the enterprises For meet the development of EC in China,the emphases of investment have been changed that changed from solicitude enterprise outside to perfect the enterprise chain of supply & demand, build enterprise electronic commerce platform step by step . Source: CNNIC, 2000

12. No.11 Development process of E-commerce in China There will be $133G in B2B market of EC in China by 2005,which will be implemented with eMarketplace mainly. • Revenue • US$B • 150 • 100 • eMP • eInfo • 50 • 25 • eP/eD • Year • 10 • 90 • 95 • 00 • 05 Source: CNNIC, 2001

13. No.12 The revenue of EC in China will enlarge rapidly The revenue of EC in China will be $150G,CAGR will be 134% by 2005 Source: CNNIC, 2000

14. No.13 The construction of E-Commerce in China Source: CNNIC, 2001

15. US • PRC No.14 China VS U.S. in composing of B2C market The income of more than 53%Chinese Internet subscribers is between 1500－2500 US$ • Internet Uesr M • 25 • 15 • 10 • 5 • Income/Y • >$24,000 • $3,000 • $6,000 • $12,000 • $1,500 Source: CNNIC, 2001

16. No.15 The forecast of Mobile EC in China 2000-2005

17. No.16 Development process of EC in China • 2000 – 2005 • integration • additional characteristic • SCM • CRM • industry • function • Customization • individuation • 1998 - 2003 • transaction processing • additional characteristic • B to C • B to B • EDI • SCP • ERP • Self-help service • 1997-2000 • interactive • additional characteristic • Intranet • interactive • individuation • Basic Engine • Point connect • 1996-1999 • Info express • Market info • Product info 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: CNNIC, 2001

18. Supply Chain Management Enterprise Resource Planning Customer Relationship Management Distribution &Order Management Sales Force Automation Customer Contact Center Manufacturing Organization Logistic& Transportation Customer Marketing Management eBusiness No.17 Developing EC in China CUSTOMERS SUPPLIERS

19. No.18 The development tendency of the electronic commerce market in China • Develop EC internally and externally • Enterprises should improve their internal management across-the-board for development of electronic commerce and establish adaptive operation platform for electronic commerce environment • Lighthouse’s effect • The large scale enterprise will bring along medium or small enterprises to apply electronic commerce,there will come into being a new chain of supply and demand based on electronic commercial platform between the enterprises • Success will come when conditions are ripe • The improvement of external environment will be a good channel for electronic commerce • Electronic commerce companies build “cargo ship” for electronic commerce • Electronic commerce will start by enterprises’s in-house requirement which like water

20. Q & A Thank you! http://www.tdv-tech.com Kaiquan Chen TDV Inc. Board chairman Tel: 86755 6551282 Fax: 86755 6551283 E-mail: info@tdv-tech.com