The Culture of China (simplified Chinese: ; traditional Chinese: ; pinyin: Zhnggu wnhu) is

one of the world's oldest and most complex cultures[1][2]. The area in which the culture is dominant covers a large
geographical region in eastern Asia with customs and traditions varying greatly between towns, cities
and provinces.

People in the culture

People in imperial China during silk production - Qing dynasty

[edit]Identity
Today there are 56 distinct recognized ethnic groups in China.[3] In terms of numbers, however, the pre-eminent
ethnic group is the Han Chinese. Throughout history, many groups have been assimilated into neighboring
ethnicities or disappeared without a trace. At the same time, many within the Han identity have maintained
distinct linguistic and regional cultural traditions. The term Zhonghua Minzu has been used to describe the notion
of Chinese nationalism in general. Much of the traditional cultural identity within the community has to do with
distinguishing the family name.
[edit]Regional
Main article: Three ancestral treasures
Traditional Chinese Culture covers large geographical territories, where each region is usually divided into
distinct sub-cultures. Each region is often represented by three ancestral items. For example Guangdong is
represented by chenpi, aged ginger and hay.[4][5] Others include ancient cities like Lin'an (Hangzhou), which
include tea leaf, bamboo shoot trunk and hickory nut.[6]. Such distinctions give rise to the old Chinese proverb: "
,/," (Sh l btng fng, bi l btng s), literally "the wind varies within
ten li, customs vary within a hundred li."
[edit]Society

Gold detailing on a throne used by theQianlong Emperor. The Chinese dragon was a symbol reserved for the Emperor of Chinaor high
level imperial families during the Qing Dynasty

[edit]Structure
Main article: Social structure of China
Since the Three Sovereigns and Five Emperors period, some form of Chinese monarch has been the main ruler
above all. Different periods of history have different names for the various positions within society. Conceptually
each imperial or feudal period is similar, with the government and military officials ranking high in the hierarchy,
and the rest of the population under regular Chinese law.[7] From the late Zhou Dynasty(1046256 BCE)
onwards, traditional Chinese society was organized into a hierarchic system of socio-economic classes known as
the four occupations. However, this system did not cover all social groups while the distinctions between all
groups became blurred ever since thecommercialization of Chinese culture in the Song Dynasty (9601279
CE). Ancient Chinese education also has a long history; ever since theSui Dynasty (581618 CE) educated
candidates prepared for the Imperial examinations which and made people get drafted exam graduates into
government as scholar-bureaucrats. Trades and crafts were usually taught by a shifu. The female historian Ban
Zhao wrote the Lessons for Women in the Han Dynasty and outlined the four virtues women must abide to, while
scholars such as Zhu Xi and Cheng Yi would expand upon this. Chinese marriage and Taoist sexual
practices are some of the customs and rituals found in society.
[edit]Values
Main articles: Chinese philosophy and Religion in China
Most social values are derived from Confucianism and Taoism. The subject of which school was the most
influential is always debated as many concepts such as Neo-Confucianism,Buddhism and many others have
come about. Reincarnation and other rebirth concept is a reminder of the connection between real-life and the
after-life. In Chinese business culture, the concept of guanxi, indicating the primacy of relations over rules, has
been well documented.[8]
[edit]Language

Chinese calligraphy written by Song Dynasty (1051-1108 CE) poet Mi Fu

Main articles: Chinese language and History of Standard Mandarin

The first 4,000 years of Spoken Chinese encompassed both Old Chinese and Middle Chinese, after which it
began to split into various dialects and languages about 1,000 years ago. In the Ming Dynasty standard
Mandarin was nationalized. Even so, it wasn't until the Republic of Chinaera in the 1900s when there was any
noticeable result in promoting a common unified language in China.

The ancient written standard was Classical Chinese. It was used for thousands of years, but was mostly reserved
for scholars and intellectuals. By the 20th century, millions of citizens, especially those outside of the imperial
court were illiterate[7]. Only after the May 4th Movement did the push for Vernacular Chinese begin. This allowed
common citizens to read since it was modeled after the linguistics and phonology of a spoken language.
[edit]Mythology

and spirituality

A Luohan, one of the spiritual figures shared between Chinese and Indian cultureacross different types of Buddhism.

Sn Wkng in Journey to the West

Main articles: Chinese spiritual world concepts, Chinese mythology, and Chinese folk religion
Chinese religion was originally oriented to worshipping the supreme god Shang Di during the Xia and Shang
dynasties, with the king and diviners acting as priests and using oracle bones. The Zhou dynasty oriented it to
worshipping the broader concept of heaven. A large part of Chinese culture is based on the notion that a spiritual
world exists. Countless methods of divination have helped answer questions, even serving as an alternate to
medicine. Folklores have helped fill the gap for things that cannot be explained. There is often a blurred line
between myth, religion and unexplained phenomenon. While many deities are part of the tradition, some of the
most recognized holy figures includeGuan Yin, Jade Emperor and Buddha. Many of the stories have since
evolved into traditional Chinese holidays. Other concepts have extended to outside of mythology into spiritual
symbols such as Door god and the Imperial guardian lions. Along with the belief of the holy, there is also the evil.
Practices such as Taoist exorcism fighting mogwai and jiang shi with peachwood swords are just some of the

concepts passed down from generations. A few Chinese fortune telling rituals are still in use today after
thousands of years of refinement.
[edit]Literature
Main article: Chinese literature
Chinese literature began with record keeping and divination on Oracle Bones. The extensive collection of books
that have been preserved since the Zhou Dynasty demonstrate just how advanced the intellectuals were at one
time. Indeed, the era of the Zhou Dynasty is often looked to as the touchstone of Chinese cultural development.
The Five Cardinal Points are the foundation for almost all major studies. Concepts covered within the Chinese
classic texts present a wide range of subjects
including poetry, astrology, astronomy, calendar, constellations and many others. Some of the most important
early texts include I Ching and Shujing within the Four Books and Five Classics. Many Chinese concepts such
as Yin and Yang, Qi, Four Pillars of Destiny in relation to heaven and earth were all theorized in the dynastic
periods.
Notable confucianists, taoists and scholars of all classes have made significant contributions to and from
documenting history to authoring saintly concepts that seem hundred of years ahead of time. Many novels such
as Four Great Classical Novels spawned countless fictional stories. By the end of the Qing Dynasty, Chinese
culture would embark on a new era with Vernacular Chinese for the common citizens. Hu Shih and Lu Xun would
be pioneers in modern literature.
[edit]Music

A performer of Chinese opera

Main article: Music of China

The music of China dates back to the dawn of Chinese civilization with documents and artifacts providing
evidence of a well-developed musical culture as early as the Zhou Dynasty (1122 BCE - 256 BCE). Some of the
oldest written music dates back to Confucius's time. The first major well-documented flowering of Chinese music
was for the qin during the Tang Dynasty, though it is known to have played a major part before the Han Dynasty.
[edit]Arts

A Tang Dynasty tri-color Chinese glazedhorse circa 700 CE

For all major visual, performance or artistic categories, see Chinese art.
Different forms of art have swayed under the influence of great philosophers, teachers, religious figures and even
political figures. Chinese art encompasses all facets of fine art, folk art andperformance art. Porcelain pottery was
one of the first forms of art in the Palaeolithic period. Early Chinese music and poetry was influenced by the Book
of Songs, and the Chinese poet and statesman Qu Yuan. Chinese painting became a highly appreciated art in
court circles encompassing a wide variety of Shan shui with specialized styles such as Ming Dynasty painting.
Early Chinese music was based on percussion instruments, which later gave away to string and reed
instruments. By the Han dynasty papercutting became a new art form after the invention of paper. Chinese
opera would also be introduced and branched regionally in additional to other performance formats such
as variety arts.
[edit]Martial

arts

Demonstrating Kung Fu at Daxiangguo Monastery, Kaifeng, Henan.

Main articles: Chinese martial arts and List of Chinese martial arts

China is one of the main birth places of Eastern martial arts. The names of martial arts were called Kung Fu or its
first name Wushu. China also includes the home to the well-respected Shaolin Monastery and Wudang
Mountains. The first generation of art started more for the purpose of survival and warfare than art. Over time,
some art forms have branched off, while others have retained a distinct Chinese flavor. Regardless, China has
produced some of the most renowned martial artists including Wong Fei Hung and many others. The arts have
also co-existed with a variety of weapons including the more standard 18 arms. Legendary and controversial
moves like Dim Mak are also praised and talked about within the culture.
[edit]Fashion

Men and women in xuanduan formal wear at a Confucian ceremony in China

A north corner of Forbidden City, featuring classic construction style

Main article: Clothing of China

Different social classes in different eras boast different fashion trends, the color yellow is usually reserved for the
emperor. China's fashion history covers hundreds of years with some of the most colorful and diverse
arrangements. During theQing Dynasty, China's last imperial dynasty dramatic shift of clothing occurred, the
clothing of the era before the Qing Dynasty is referred to asHanfu or traditional Han Chinese clothing. Many
symbols such as phoenix have been used for decorative as well as economic purposes.
[edit]Architecture
Main article: Chinese architecture
Chinese architecture, examples of which can be found from over 2,000 years ago, has long been a hallmark of
the culture. There are certain features common to Chinese architecture, regardless of specific region or use. The

most important is its emphasis on width, as the wide halls of the Forbidden City serve as an example. In contrast,
Western architecture emphasize on height, though there are exceptions such aspagodas.
Another important feature is symmetry, which connotes a sense of grandeur as it applies to everything from
palaces to farmhouses. One notable exception is in the design of gardens, which tends to be as asymmetrical as
possible. Like Chinese scroll paintings, the principle underlying the garden's composition is to create enduring
flow, to let the patron wander and enjoy the garden without prescription, as in nature herself. Feng shui has
played an important part in structural development.
[edit]Cuisine

Chinese meal in Suzhou with rice, shrimp,eggplant, fermented tofu, vegetable stir-fry,vegetarian duck with meat and bamboo

Wikiquote has a collection of

quotations related
to: Chinese proverbs

Main article: Chinese cuisine

The overwhelmingly large variety mainly comes from the emperors hosting a banquet of 100 dishes each meal[9].
A countless number of imperial kitchen staff and concubines were involved in the food preparation process. Over
time, many dishes became part of the everyday-citizen culture. Some of the highest quality restaurants with
recipes close to the dynastic periods include Fangshan restaurant in Beihai ParkBeijing and the Oriole Pavilion[9].
Arguably all branches of Hong Kong eastern style or even American Chinese food are in some ways rooted from
the original dynastic cuisines.
[edit]Leisure
A number of games and pastimes are popular within Chinese culture. The most common game is Mah Jong. The
same pieces are used for other styled games such as Shanghai Solitaire. Others include Pai Gow, Pai gow
poker and other bone domino games. Weiqi and Xiangqi are also popular. Ethnic games like Chinese yo-yo are
also part of the culture.

http://www.chinese-culture.net/html/chinese_business_culture.html

Understanding Chinese business culture and etiquette

The Chinese business practice is vastly different from the Western method that most of us may be
used to. Of course, with the Chinese economy opening up, China's joining of WTO and the Olympics

in 2008, many Chinese business practice are now beginning to align with more conventional
methods.
However, China will always have their own unique business culture and etiquette, given their
unique history and background.
"I was recently involved in a business meeting that went sour and threatened to scuttle a good deal.
What happened was that the Chinese party recieving the American purchaser was late in reaching his
hotel. The American was furious as he had a tight schedule and that they were late and threatened to
withdraw his purchase.
The Chinese party was late because they were given a vague address of a lake-side hotel. You see,
what happened was that the American gave his hotel as Lakeside hotel. Unfortunately, there were
numerous hotels along the lake but the Chinese were too shy to enquire which lakeside hotel earlier
because they were afraid the American would 'lose face' for having given a vague address. Instead,
they spent the morning hopping from one lakeside hotel to another looking for this American
gentleman."
A simple cultural difference threatened to scuttle a perfectly good working relationship. To avoid
similar cultural disasters, here are some tips on how you can conduct a more successful business in
China.
The initial approach
Chinese business contacts are mostly referrals; essentially a business relationship is struck based
on another business associate recommendation. The best prices and deals often comes from a strong
recommendation.
However, it is common today for cold calls and direct contacts, given the availability of the internet and
the competitive nature of Chinese businesses. You may source from the internet, trade fairs,
catalogues and brochures, advertisements and approach the Chinese companies directly through a
call or email.
Alternatively, if you are seeking to invest in a factory in China, you can approach a investment
committee or a business advisory directly. They will be able to advise you on your best location
based on your industry, raw material and manpower needs. Please contact us directly if you have
such a need and we'll be glad to advise accordingly.
Business Relationship in China
Chinese business relationship inevitably becomes a social relationship after a while. Unlike Western
business relationship which remains professional and perhaps, aloof, even after a long time, Chinese
business relationship becomes a social one.
The more you share your personal life, including family, hobbies, political views, aspirations, the
closer you are in your business relationship. Sometimes, a lot of time is spent discussing matters
outside of business, but then a lot of time, the other party is also making up his mind about your deal
based on how much he sees your personal relationship with him.
Seniority is important in China
Seniority is very important to the Chinese especially if you are dealing with a State owned or
government body. Instead of addressing the other party as Mr or Mrs so and so, it is always
appropriate to address the other party by his designationie Chairman So and So, Director So and
So or Manager So and So.

When giving out namecards or brochures, make sure you start with the most senior person before
moving down the line. When giving out a namecard or recieving one, ensure that you are stretching
out with both hands with the card. Remember to face the card you are giving out in a manner such
that the recieving party gets it facing him correctly.
Giving Face or Gei MianZi
Giving face (aka giving due respect) is a very important concept in China. You must give the
appropriate respect according to rank and seniority. For example, if you are buying gifts for an initial
contact, make sure you buy better gifts for the senior managers instead of buying similar gifts across
the board.
Similarly, sitting positions in a meeting room or a dining table is accorded accordingly to rank,
importance and seniority. It is good to seek advice before embarking on your first meeting with
Chinese business contacts to avoid making the wrong move.
Gifts and Presents
Unlike earlier days when China was very poor, gifts, especially of Western origin was especially
appreciated. Today, China produces and imports almost anything imaginable and gifts are no longer a
novelty.
However, gifts are always appreciated and especially in the smaller cities or towns, will continue to
play an important part in your business relationship. Do note that if you are indeed giving gifts, make
sure the senior people get a better gift or at least gifts perceived to have a higher value than their
junior staff.
Similarly, expect to recieve gifts from the Chinese, especially Chinese art products. It is polite not to
refuse, especially if it is not of too high a monetary value.
Lunch/Dinner in China
There is no business talk in China without at least one trip to a restaurant. Sometimes, a trip is made
to the restaurant even before any business discussion take place! Inevitably, the restaurant will
always be a grand one and you are likely to be hosted in a private room.
There is an elaborate seating arrangement for a Chinese business meal. There are fixed seating
positions for the host and the guest and then they are seated again according to seniority. This is a
very important aspect of a formal dinner and it is important that you follow the rules accordingly.
However, it seems that the Northern Chinese are very particular to this formal seating
arrangement while the Southern Chinese has loosen the formalities somewhat.
Drinking with the Chinese
The Chinese are big drinkers especially in Northern and Western China. It does not matter if it is lunch
or dinner; as long as a meal is being hosted, there will be alcohol.
Chinese wine is the favourite, followed by red wine and beer. Chinese wine is more like fuel than
liquor, having a alcohol concentration as high as 60%! No matter how good a drinker you may think of
yourself, never, ever challenge a Chinese into a drinking contest. They will win, hands down!
It is often seen as rude not to drink with the Chinese in a formal dinner. To maintain your sanity,
either claim to be a non alcoholic or plead medical grounds as an excuse. This will let you off the hook
with little or minimal drinks. Better yet, bring a partner who can drink on your behalf!

After Dinner Entertainment in China

Formal business dinner normally drags for quite sometime as there will be much social talk, some
karoake, and drinking contests. Most of the time, everyone is too drunk to indulge in further
entertainment after a dinner. In addition, if you are just new to this partnership, you are unlikely to be
invited to further after dinner entertainment.
However, once you are familiar with them, you may be invited to a Karaoke, or a Night Club, or a
Suana. Do note that if they are the host for the night, all bills will be picked up by them for the night,
including all entertainment. It is impolite to fight for the bill or worst, split the bills.
Similarly, if you are the host for the night, you are expected to pick up all bills for the night.
Controversial Issues in China
There are some taboo areas in social conversations with the Chinese. Try to avoid these
conversational topics as much as possible. I have seen many nasty arguements as a result of these
topics:
1. You must not mention that Taiwan is an independent state or a country.
2. You must NEVER praise the Japanese or be seen to be good buddies with them
3. You can condemn Mao Tse Tung but avoid critising Deng Hsiao Ping
4. You must not praise Shanghai in front of natives of Beijing and similarly vice versa
Other than that, you are pretty safe to converse with the Chinese anything under the sun!

E-commerce with Chinese characteristics

Author: Admin
Jack Ma | HANGZHOU, From Economist: The World in 2008 print edition

A million internet entrepreneurs will bloom, predicts the boss of china's biggest
internet company
In 2008 it will become clear that e-commerce will have a much larger impact in China
than in the West. China will generate new models of internet business which will spill
over to the West. And e-commerce will lead China's economy into a new era in which
innovation, customer focus and responsible business practicesrather than relationships
with people in powerbecome the main determinants of success.
When Western e-commerce was born in 1995, could only watch with admiration. The
thought of clicking a mouse to buy products onlineoften from complete strangers
seemed an impossibility in China. If you were lucky enough to have a phone line,
internet connection was slow and expensive. Banks were inefficient, making payment
difficult and time-consuming. Sending a package meant waiting in long lines at the post
office. And consumer culture had not yet taken off, hindered by low disposable incomes
and an inefficient, state-run retail system.
It was businessesnot consumerswhich drove e-commerce's early years in China. The
most agile enterprises began to take notice of the internet as a channel for finding
buyers and suppliers. As China entered the World Trade Organisation in 2001, a new
"widget economy" was developing along the east coast of China, fertile ground for a
multitude of small and medium-sized companies which made a living from trade. The
internet proved to be the best way to connect these otherwise fragmented buyers and
sellers, replacing trade shows and magazines as the medium of choice for sourcing
products.

By 2003 two trends were converging to bring consumer e-commerce out of its long
slumber. China's first generation of internet users had graduated from universities and
turned their attention from online games to online shopping. With ever-increasing
disposable income and more products than ever to choose from, a healthy consumer
culture had developed, and the physical retail infrastructure was unable to keep pace.
Second, international e-commerce companies began major investments in. The ensuing
competition between foreign and local companies helped educate the market, attracting
more online shoppers.
New modes of business arose to meet the unique needs of China's consumers. Rating
systems and escrow payment services developed to resolve the issue of trust between
buyers and sellers. The integration of real-time chat into marketplaces allowed people to
get to know each other before making transactions, a necessary function in a society in
which relationships are still one of the most important channels through which trust
flows.
In 2007 the leading consumer marketplaces counted 50m users and, for the first time,
the value of daily online transactions surpassed the cash taken
by major physical retailers in, such as Wal-Mart. Moreover,
users of online-payment systems exceeded the number of
credit-card holders, showing that's e-commerce is taking a
The most
very different path from the West's, which relied heavily on
significant trend
credit cards.
Whereas C2C and B2C models have remained largely distinct
in the West, in they will continue to blend together, with
consumers visiting single marketplaces to buy from
individuals, small retailers and large retailers alike. Credit
systems will take new forms as individuals and companies
develop track records, giving banks reliable information to
make loans to businesses and consumers.

in 2008 will be
the emergence of
a new class of
entrepreneurs

The most significant trend in 2008 will be the emergence of a new class of
entrepreneurs. Niche manufacturers will link up with niche retailers, cutting out
middlemen and out-competing larger, less specialised firms. A growing number of
entrepreneurs will buy in volume from on sites like Alibaba and sell to consumers on
Western sites such as eBay.s e-commerce is creating economic opportunities in and
around the world. A new class of businesspeople is emerging and the transparent nature
of e-commerce means businesses are becoming more responsible as they further
integrate into the world economy. This new generation of entrepreneur provides the best
chance we have to encourage economic development at a grassroots level in china, and
around the world.

http://resources.alibaba.com/article/228142/E_commerce_with_Chinese_characte
ristics.htm

New E-commerce Rules: China Will Implement Real-name

Registration For Internet Stores
June 3, 2010 |

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Comments | Category: Business, Internet, Law & Policy

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The State Administration for Industry & Commerce of China has formally published the "Interim
Measures for Management of Network Commodity Trade and Related Services", effective from July
1, 2010.
According to the measures, individual online sellers in China who wish to sell goods via the
Internet should submit applications to the operators of e-commerce platforms with their true
identity information, including names and addresses. By doing this, anonymous sellers of goods
will hopefully be eradicated. Considering the nuances of various online shopping websites, SAIC
will establish a unified nationwide supervision and management platform in three years after this
initial test phase.
The measures state that for registered enterprises and small private businesses who want to open
online stores, they should provide their business licenses and related information; while for
individuals who wish to do the same, they should provide their true identity information, including
names and addresses, for verification, then the related websites will issue certifications to them,
mark on their web pages, and establish registration files for regular checks and updates. This will
affect sites like Taobao.com, which encourage users to create their own online retails stores.
The measures also asked Internet platform providers to enhance management of online stores in
various ways. Apart from the examination of main bodies, websites and their online stores should

not infringe registered trademarks or company names. If the legal rights' owners can prove the
infringement of online stores, the related websites should take necessary measures, including
passing the information of the websites to local authorities and shutting down the e-commerce
stores.
In addition, websites and online stores should sign contracts or agreements, clarifying their rights
and obligations in quality of products and services, and protection of consumer rights. Websites
should set up a system to check and monitor product information of online stores. Once irregular
activities are found, the websites should report to the local industry and commerce departments
and can stop providing services to these online stores

E-Commerce and the Chinese Language

E-Commerce and the Chinese language: developing new technologies
Since its establishment in 2000, CityU's Institute of Chinese Linguistics (ICL) has undertaken a number of
research projects utilizing the collective expertise of the staff associated with the institute. One of these
projects involves research in the specific context of Chinese language mediated e-commerce. Dr Matthew
Lee, Head of the Department of Information Systems (IS), is working with colleagues from the ICL on this
groundbreaking
project.
"E-commerce is starting to transform the business world in a fundamental way, notwithstanding the current
setback in dotcoms," Dr Lee explained. "Our department is particularly concerned with the use and
management of IT in business, and in the last few years it has become increasingly obvious that the single
most important use for IT in business is e-commerce." In fact, Dr Lee believes "in a few years time, when
you talk about IT and business organizations, you may be talking about e-commerce, as they may be
synonymous."
Demand
for
greater
use
of
Chinese
With around 200 million people worldwide already connected to the Internet, it is, of course, axiomatic that
the potential for the growth of e-commerce in the one billion plus Chinese language speaking community in
Asia is enormous. Whilst English is presently the predominant language of e-commerce, there is already a
huge demand from this community for greater use of Chinese in such business transactions, Dr Lee said.
"It is expected that demand can only grow as the Internet makes further inroads to this community and
encounters users to whom English is unfamiliar, or who would prefer, particularly when dealing with other
Chinese speakers, to use Chinese."
However, it is not good enough, Dr Lee believes, to simply adopt or transfer technologies used in Englishmediated e-commerce for the purposes of Chinese-mediated e-commerce. This is because of the
fundamental differences between the English and Chinese languages, and the fact that these differences
are being exacerbated by what consumers want when entering the world of e-commerce.
They do not just want textual translations but usability, or intelligence, in terms of transactions. In specific
terms, this means finding the right product at the right price, or looking at and comparing different offers; in
general terms, this means understanding and sifting the information available in the e-commerce world in a
systematic and user-friendly way to meet consumers' needs.
"For the English language, there are technologies starting to appear that can do a fairly good job of this
because they are based on a good understanding of English," Dr Lee said. Thus, when a computer uses
such technology on the e-commerce text, it can extract information, or make summaries of the information,
in a predetermined manner to meet the consumer's needs. "But, unfortunately, there are not sufficient
technologies around to enable this to be done through the Chinese language in an exact way."
The reason for this, Dr Lee explained, is because to date there has been insufficient study of the Chinese
language as a medium of e-commerce to assist the development of software tools that could provide users
with the same intelligent information gathering which is becoming increasingly available to users in the ecommerce world.

Researching Chinese consumer psychology

This, coupled with the inadequate interplay between technological developments and the needs of users of
Chinese e-commerce, leads Dr Lee to believe that there has been inadequate research into the consumer
psychology of such users, in web-shopping as well as other business transactions. "One of the reasons
why consumers are reluctant to use Chinese e-commerce is because they don't find the tools particularly

easy to use, or, if they can use them, find them incompatible with the way they want to do things, given
their behaviours and lifestyle."
Dr Lee said he is working with the ICL because the advancements the members have made in
understanding the intricacies of the Chinese language strongly assist in developing devices and
programmes that will enable participants in the Greater China area to engage in Chinese e-commerce in a
more intelligent and effective way. While there is a number of groups of scholars in China's mainland
working on Chinese language e-commerce tools, they are more technocentric in that they largely try to
harness technology alone to solve problems, Dr Lee and his colleagues believe that understanding the
Chinese language, and developing technologies in light of that understanding, is likely to be the more
productive approach.

Understanding the Chinese language

"To conceptualize this approach, the differences between the translation of Chinese and the understanding
of Chinese needs to be appreciated. Translation of Chinese is relatively simple, but to understand and
extract knowledge from a Chinese language text requires understanding of the probability of what words
are used, their meaning, how they are usually used, and even when they are used in certain patterns,"
explained Dr Lee.
When this understanding has been achieved, a set of parameters can be established to configure software
tools which can be applied effectively to deal with Chinese text in a specific way. It is not possible to do this
in a general way, Dr Lee warned, because Chinese, like most languages, is too full of irregularities to
enable a machine to deal with it in a comprehensive manner. What is done instead is that texts in particular
domains are studied to understand the use of Chinese language in those domains and to develop
technologies applicable to those domains. Thus a Chinese press database gives a good understanding of
the vocabulary, patterns of usage, and the recurrent themes of Chinese language in various domains-for
example, wining and dining, films and sport. "It is possible to build an intelligent Chinese language web
browser for wine merchants in the Greater China market, for instance on a cellular phone, because you
know exactly what to put in there," Dr Lee said.
In relation to the research he and his colleagues are carrying out into consumer psychology, Dr Lee said
one of their goals is to understand how Chinese Internet consumers use the web for shopping and other
business transactions. Such research, Dr Lee believes, could be drawn upon in the design of tools that
allow for the easy and natural integration of users into the world of Chinese language e-commerce.
Dr Lee is also of the view that such research will not only result in tools to make Chinese language ecommerce increasingly attractive to a wider range of consumers, but that these consumers will add impetus
to further similar research as the business community seeks to take advantage of this expanding market.

Synergy of research and Chinese business

"The research being undertaken is highly interesting because it combines pure research-the scholarly field
of Chinese linguistics-with the hard-headed business world-the burgeoning Chinese language e-commerce
market." Dr Lee said. He expects this synergy to continue to grow because the research provides economic
benefits to both business and consumers. Business will have direct access to consumers without
intermediaries. Consumers will benefit by having a wider range of choices on the Internet, by not being
limited by physical boundaries, and, in most cases, by being offered a competitive range of prices. And, of
course, B2B transactions will also gain by having the same benefits as consumers."
To ensure that this two-way flow of economic benefits continues," said Dr Lee, "The ICL will continue to
carry out research projects that guarantee the continued development of related technology."

The Prospects of B2B E-Commerce in China's

Internet Industry.
By Cina Ho & Jason C.H. Chen | Business Forum - Summer-Fall, 1999

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Electronic Commerce (EC) is the exchange of business-related information using electronic formats, and it
can replace traditional paper-based workflows with a better means of communication among consumers
and businesses. With the explosion of the Internet, Business to Consumer (B2C)applications are
flourishing, and the same concepts and technology are being used to advance Business to Business (B2B)
applications to reduce costs and increase revenues. This article studies the EC environment in China
including the constraints and prospects that B2B EC may encounter.
Technology is having a tremendous impact on today's workplace in creating new ways of doing business.
The expanding capabilities of networks, the extensive use of the Internet, and the radical improvements in
personalcomputers are all contributing to creating a foundation for conducting business electronically, and
bringing us into the age of electronic commerce (E-Commerce or EC). EC is the exchange of businessrelated information using electronic formats, including electronic data interchange (EDI), e-mail, electronic
bulletin boards, faxes, and electronic funds transfer. (1) EC technologies are designed to replace traditional
paper-based workflows with faster, more efficient, secure, and reliable communications among users.
EC provides a direct link to customers, allowing companies to bypass middlemen and advance the delivery
of new products and services to customers. To many people, the term EC means shopping on the Internet.
Although consumer spending on the Web is expected to exceed $800 billion by 2003, (2) EC's scope
encompasses a much wider spectrum of business activities. The term Electronic Business (EB) is usually
used interchangeably with EC.
With the explosion of the Internet, EC has quickly become one of the primary ways that corporations move
products to customers. (3) A recent survey (4) found that, as companies move their business to the Web,
EC deployments are driving an increase in the purchase of technology infrastructure. The implementation
of EC is up sharply from 45 percent of respondents in 1998 to 57 percent in 1999. EC applications are also
a big driver for storage. More and more businesses are embracing EC as their core business strategy
because of the ability to increase productivity and profit.
E-Commerce Environment in China
The Chinese government's management and regulation of EC and the Internet industry development in
China attracts immense interest from domestic industry, foreign investors, IT entrepreneurs, venture
capitalists, and China's growing number of sophisticated "netizens." However, this interest is accompanied
by severe apprehension.
A newly-released report (Figure One) from the China Internet Network Information Center (CNNIC) paints a
picture of dramatic growth. In 1996, Chinese Internet users number about one million. This figure has
mushroomed to almost 12 million today. Internet usage in China is increasing exponentially. Industry
analysts predict that Internet users will reach 33 million by 2003. China's Ministry of Information predicts
that there will be greater than 70 million users by 2005. This growth will propel China from a minor market
to a tier one market within the next five years as indicated in the chart below.
Other information revealed from CNNIC shows that more than 75 percent of Chinese users are under age
30, 32 percent have a college degree, 45 percent have a university degree, 8.97 percent have made online
purchases, and that the average use is 17 hours per week. Of these users, 58 percent use the Internet as
an information resource, 12 percent use it as an educational tool, and just under 10 percent use it for
entertainment. The most widely used service is e-mail, at 72 percent. The majority of users are in major
population centers, including Beijing (21 percent), Shanghai (11 percent) and Guangdong (13 percent).
With the support of public networks and exclusive networks, China's Internet is still developing. As of 2000,
there are 15,153 Web sites registered under the .cn domain.
Over 1.46 million computers have been connected to the Internet. There are already four million Internet
accounts. Of these users, 47 percent access the Internet at work and 44 percent access it from home.

Moreover, 41 percent of all users spend more than ten hours surfing the Internet every week. The
distribution of Internet accounts varies by region. For instance, the Beijing area represents 20 percent of all
Internet users in China, but there are nine provinces and territories with less than one percent of Internet
users. The uneven distribution is simply the result of different information demand and insufficient Internet
resources in certain areas, as well as expensive use rates.
National Information Infrastructure
During the 1990s, China made remarkable achievement in speeding up construction of its national
information infrastructure. Accompanied with the improvement in databases and information transfer
systems, the information technology industries, related human resources, and related policies, laws and
regulations are undergoing a corresponding change. (5)
Progress has been particularly rapid in the development of information equipment manufacturing
and software and telecommunication services. Within the recent few years, the manufacturing industry
grew over 27 percent annually, while the software industry grew 37 percent, and the computer industry
grew 47 percent.
In the past five years, the telecommunication services market expanded seven times. As of 1999, there
were 120 million telephone exchange lines in China's public network and over 100 million telephone
accounts of which 20 percent are cellular phone accounts. Two-thirds of all urban households have
telephones at home. There are 200,000-km (321,854 miles) of long-distance optical cables across the
country. Including the local optical cable networks, the total length is about one million-km (621,400 miles).
Along the coastline in prosperous regions, China has installed extensive optical cable networks. The public
digital network covers 90 percent of China's municipalities. There are one million digital communications
and visual communication accounts. China has established a large-capacity and high-speed transfer
network covering the entire country, with optical cables being the first priority and satellite and digital
microwaves the second. The trunk lines of this transfer network use the 8x2.5Gb/S system.
Five networks have been established based on this infrastructure: the telephone communication network,
the mobile communication network, the digital communication network, the visual communication network,
and the multimedia communication network. Thus, the network transition from manual to automatic, from
analog to digital, and from single application to a variety of applications has been achieved. With the
growing popularity of the Internet and reductions in Internet operating costs and service fees, those
provinces and territories with few Internet users will become potential markets for Internet hardware,
software and services.
It was estimated that by the end of year 2000, China's telephone capacity will have reached 170 million
lines and 40 million cellular phone users. There will be, on average, one telephone per urban household. In
rural areas, telephone service will be available in every village. Various types of digital communication
users will increase to more than three million. Broadband multimedia communication will also improve. The
government has made the promotion of EC for product distribution and financial transactions the next
target for China's national information infrastructure. As a result, China is ready to develop its own EC.
Government's Attitude
The government's attitude toward this technological revolution is clearly mixed. The Chinese government
wishes to propel the nation to the forefront of technological innovation. It welcomes the potential economic
gains which EC and the Internet can bring to the Chinese economy. However, Chinese officials believe that
these gains will ultimately erode their control over sensitive information, as well as national interest. The
Chinese officials see the need for a restrictive regulatory environment and yet are closely following
developments with the Internet, the media and the marketplace. Meanwhile, the regulatory framework for
control is under construction.

During this early stage many influential persons seek foreign technology and participation, but they stress
Chinese dominance (in technology and application) as the key to growth of EC and the Internet in China.
Business-To-Business (B2B)
B2B is defined as business-to-business commerce conducted over the Internet and is also known as an "e
marketplace," "e-market maker", or "EC community." The B2B marketplace has two components: (1) efrastructure, the essential architecture of B2B marketplace, and (2) e-markets. (6) The e-frastructure
consists of auction solutions software, content management software, and Web-based commerce enablers.
On the other hand, e-markets are Web sites where buyers and sellers come together to communicate,
exchange ideas, advertise, bid in auctions, conduct transactions, and coordinate inventory and fulfillment.
B2B harnesses the power of networking to create a virtuous cycle of business communication. In addition
to cost savings, B2B may open up new revenue opportunities. The major business thrust currently is in the
e-market.
The B2B market in the United States was estimated to be $114 billion (1999) and projected to grow to $1.5
trillion by 2004. (7) Globally, similar figures are $145 billion and $7.29 trillion, respectively. (8) Although B2C
market would also see significant growth, it dwarfs in comparison.

The Prospects of B2B E-Commerce in China's

Internet Industry.
By Cina Ho & Jason C.H. Chen | Business Forum - Summer-Fall, 1999

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The Business Model

B2B covers a broad spectrum of applications that enable an enterprise or business to form electronic
relationships with their distributors, resellers, suppliers, and business partners. Three models depict B2B.
(9) The first model, and the most commonly known, describes B2B as a supplier-oriented marketplace; that
is, consumers and business buyers all use the same supplier-provided marketplace. Most of the
manufacturer-driven electronic stores belong to this category. The second model describes the B2B to be a
buyer-oriented marketplace. Instead of searching all e-stores and e-malls, big buyers, such as GE, may
open an electronic market on their own servers and invite potential suppliers to bid on orders. The third
model is the intermediary-oriented marketplace. In this platform, business buyers and sellers are matched
to conduct their daily businesses. Boeing's PART, ProcureNet, and Manufacturing.net belong to this
category.
Even with many successful B2C examples, acquiring customers and integrating technologies is still difficult,
regardless of market size. It is very important to look for signs of natural growth, also known as "traction."
Traction may be in the form of registered users, customer growth, page views, or transactions. [10] Most
important, a B2B company must have a business model that helps raise barriers of entry to the market.
Without such, competition will ultimately drive down the profit.
A B2B model used by many EC companies is illustrated in Figure Two. In this framework, multiple buyers
and suppliers are brought together to create a larger and more efficient entity. Additional services can be
delivered through the e-market format in areas of finance, procurement, transportation, logistics, or
customer services.

Aggregated purchasing power, dynamic trading mechanisms such as B2B auctions, streamlined EC
processes, and open, Internet-based access to larger markets provide business buyers and suppliers with
new efficiencies, new market opportunities, greater choice and competitive advantage. Therefore, the B2B
economy presents several opportunities for creating new revenue streams and reducing cost.
The B2B E-commerce in China
All current B2B models used in China are copies of American prototypes. Internet entrepreneur Jack Ma
Yun, CEO of Alibaba.com Corp., is working to create a workable B2B model for the China market. He
agrees that the future is bright for B2B in his country. He emphasized that Chinese companies must
develop their own models based on their specific needs. Microsoft's Regional Director in greater China,
Michael Rawding, claims B2B EC will become increasingly popular as individual enterprises concentrate on
speeding time to market, eliminating costs from their systems, and increasing operational efficiency. Using
his company as an example, Rawding told participants that Microsoft now conducts all of its interaction with
distributors and resellers via the Internet and that he's now seeing some Chinese firms embarking on the
same path.
When E-Das.com was in the process of launching its domestic B2B business, CEO Song Xinyu advocated
the benefits of B2B. However, Song warned not all B2B businesses in China will be successful. Those that
operate in a highly competitive and fragmented industry and focus on a specific link in the value chain are
the companies that he believes will be most prosperous. When asked to identify the biggest obstacles to
the development of B2B in China, CEOs agreed that execution was the toughest challenge.
The Constraints of B2B in China
The strength and importance of B2B business models have been well recognized in developed countries.
However, for this business model to work effectively in China, we have to realize the following constraints
and issues that become obstacles of the B2B EC development in China. (11)
Security and Confidentiality
Online security and confidentiality is the key issue for the development of the EC. Online price inquiries,
transactions, and contract signing would have impacts on trade secrets and privacy. In early 1998,
someone using simple technology obtained $80,000 in personal credit account numbers and passwords
from different commercial Web sites. Therefore, a secure and confidential EC environment is a prerequiste
for the implementation of EC.
When industry dependence on the Internet increases, any irregularities or attacks from hackers would
cripple the whole commercial system, causing a chaotic situation and losses. According to media reports,
there are 1500 ways that hackers can get into the Internet to commit a crime. In China, there are no
established regulations that guard database infringement or the resale of database contents. This problem
could be amplified significantly as Chinese companies compete for consumer profiles. Individuals and
companies demand secure and private transmissions as an assurance that confidential information will not
fall into the wrong hands. The Chinese government is accustomed to exercising an effective monopoly on
information, but will have to find other methods of reasonable information control to allow companies and
organizations greater access to individuals' information for research and marketing purposes.
Both parties of a commercial transaction seek security as an assurance that both the goods and the
payment are real. True security requires technical and legislative measures to ensure transaction safety
and consumer protection. Recent attempts by Chinese government agencies to enact retroactive
regulations on products that contain encryption (from super-computers to mobile phones) show that China
has national security concerns, as well as a desire to protect its fledgling industries.

Reliability of Contract -- Compared to traditional "black and white" contracts, the confirmation of the
contract and arbitration is more difficult. If the breach of contract was caused by the transmission data
process, the responsibilities issue would become complex. The in security of the Internetenvironment
directly affects the confidence on the B2B commerce application and its development in China.
Internet Infrastructure -- The main technological obstacles to promoting EC are slow transmission speed
and unreliability. The slowness of Internet transmission speed causes congestion or interruption in Internet
traffic. A well-developed Internet network is the necessary infrastructure for B2B commerce. To implement a
practical B2B environment, the commercial activities on the Internet such as promotion and marketing
requires speedy transmission and wider bandwidth. These conditions heavily rely on hardware support.
Although China had sped up the development of the Internet network infrastructure, rapid user growth has
outgrown the effort and the transmission speed is still unsatisfactory.
Level of Information Technology -- The participation of the enterprises is the main power of the B2B
commerce model. The enterprises' levels of information technology directly affect their ability to participate
and succeed. Most the IT departments have limited budgets, and it is difficult for them to implement high
levels of information technology. According to statistics, among the 150,000 middle to large size StateOwned Enterprises, only 10 percent implement or use information technology applications, 70 percent had
infrastructure and would like to have further development, 20 percent had nothing on the track so far.
Among the 10,000 middle to small enterprises registered with the Industrial and Commercial Department,
there are fewer than 10 percent that own contemporary information technology tools. The percentage of
these enterprises that are connected to the Internet is low; out of 1000 State-Owned Enterprises, fewer
than 10 percent are connected to the Internet. Although it is a difficult task for these State Own Enterprises
to change and adopt information technology, this is the only way to implement B2B EC which will soon be
adopted by most developed countries and become the dominant way of conducting business worldwide.
Government Control -- The Chinese government is in a strong position to dictate local EC and Internet
policy development because of its control over access to China's telecommunications infrastructure,
opaque regulatory mechanisms, and strict system of controls. Nevertheless, government barriers to EC
and Internet development have thus far proved permeable in some places; industry persuasion has
successfully led to balanced solutions on issues of mutual interest. Certain influential individuals within
China's government and industry are aware that adopting a prohibitive regulatory stance retards China's
technological and economic progress. Chinese companies, financial institutions, and government
departments are increasingly using the Internet for information, and commercial and promotional purposes.
These market and functional realities are generating substantial momentum for an EC regulatory
environment that fills in the legal void while not attempting to impede business operations.
These circumstances will produce an Internet E-Commerce environment that is both dynamic and highly
vulnerable to regulatory change.
Financial Infrastructure
The fundamental goal of EC is to create an electronic commercial and financial environment. At present,
there is no nationwide financial network in China, and the financial industry has not become fully electronic.
Furthermore, commerce lags behind the financial industry in becoming electronic. (12) This restricts the
development of EC.
Online Payment Issues -- Credit card use in China remains low. One recent survey found that, in four major
cities, only 20 percent of respondents in the 18-30-age range own a credit card. The majority of the credit
cards issued in China cannot be used for EC transactions. Interoperability between various e-payment
centers and servers differs from region to region and city to city. The penetration of universal point-of-sale
sites, regardless of card or bank, is still at a premature stage in China. Furthermore, the preference for

cash-based transactions remains strong. Banks are employing debit cards as an alternative system of
payment to both cash and credit. In addition, cities such as Shanghai and Beijing are beginning to usher in
credit systems and their corresponding agencies to increase consumer lending, but regulations to arbitrate
disputes remain lacking. China's national financial controls also greatly diminish the possibility for easy and
efficient international transactions.

The Prospects of B2B E-Commerce in China's

Internet Industry.
By Cina Ho & Jason C.H. Chen | Business Forum - Summer-Fall, 1999

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A survey of a few major Web sites in China and the U.S. is demonstrated in Table One. The majority of the
Web sites in China are adopting a relatively traditional payment method; the dependence on technology is
low. This is one of the reasons why the B2C EC environment is at a primitive stage, not to mention that the
B2B transactions, which involve high payment amounts.
The Website www.8848.com is one of the few that achieves relatively effective results. It is able to accept
bank cards from Bank of China, China Merchant Bank, China Construction Bank, and the Shanghai
Pudong Development Bank. However the bank cards are operated under the limit of RMB 5,000 dollars
(about U.S. $610) which limits their use for commercial purposes. The above comparison reflects the
significant difference of the EC payment system in the two countries.
Access to Capital -- As U.S. technology firms have relied heavily on venture capitalists for their
development, China has no such system in place. The Chinese government, unwilling to loosen restrictions
on foreign ownership of the media, has banned foreign investment in Internet content providers. Some
foreign investors, however, have ignored the ban, hoping that China will be forced to change under the
pressure of worldwide economic development trends. Without foreign investment in Chinese
technologycompanies, the country must rely on domestic capital for startups. That situation will likely limit
the development pace of the Internet culture in China.
Access to capital in China will perhaps pose an even greater bottleneck to EC development than access to
technology or networks. Several obstacles to achieving a better investment climate include: regulatory
issues involving wholly foreign-owned enterprises, restricted areas of investment, and a lack of exit strategy
and regulations to protect investors' interests, as well as a lack of means to repatriate funds to overseas
accounts. It is easy to putmoney in, but hard to take it out. The Chinese government is more in favor of
developing the local equity market through the imminent opening of China's Hi-Tech Second Board than
relying on foreign investors and listings. However, some core problems that the government faces include:
a shortage of experience in this area, an unfamiliarity with key issues, and a insufficiant knowledge of how
to promote such markets.
There are some signs, in any case, that government's attitudes may be changing, as understanding of the
potential of the Internet develops.
Distribution -- China's relatively primitive and unreliable distribution capabilities present additional difficulties
to the development of EC in China for large-scale business-to-business and small-scale business-toconsumer transactions. Many companies embarking on B2B and B2C EC are forced to build distribution
pickup centers, contract delivery through the post office, or use couriers on a piecemeal basis. Just-in-time
supply chain management, for manufacturing enterprises or major retail outlets, is rendered almost
impossible by China's limited distribution capabilities

Regulations -- The regulatory framework appears to be a joint effort by both government officials and senior
industry executives to address the issues surrounding the industry while it is relatively small and
manageable.
For instance, the Center of Computer and Microelectronics Industry Development (CCID), run by the
Ministry of Information, is reportedly involved with drawing up the new regulatory framework. The
organization owns an Internet content provider that plans to enter the EC field and is seeking a listing on
NASDAQ in the near future. Meanwhile, the Information Ministry is also involved in regulating content
on Web sites situated in the country.
The Internet Information Management Bureau is also created to regulate news content and is said to be
helping liven up state-owned agencies' Web sites to help them compete in an increasingly competitive field.
The Prospect of B2B in China Industry analysts estimate that Internet users in China could grow from
approximate 10 million now to 70 million by 2005. (13) Although the B2B EC in China is hindered by the
factors mentioned, none of the obstacles can't be surmounted. Multinational companies have a great deal
of cumulative experience in dealing with these various difficulties on a global basis, while Chinese
companies have the advantage of understanding how the Chinese government works. Both sides have a
strong, shared interest in working with Chinese government agencies to overcome these obstacles. The
EC China Forum, as the leading body representing international and Chinese firms associated with EC in
China, is both a policy partner and resource base, bridging the divide between government and industry in
China.
The Chinese government plays an important and irreplaceable role in the promotion of EC. Experts urge
the government to guide the development of EC, and discourage rigid uniformity. They recommend that
prosperous regions take the lead while less prosperous regions follow when the time is appropriate. They
note that it is also important to focus on actual effectiveness and maintaining stability to prevent the wasting
of resources. The Chinese Government should adopt the tactics outlined in the next discussion. (14)
E-Commerce Technology Strategy -- New ideas, technologies, equipment, and proposals for EC are
continually emerging. With limited technological and financial resources, China should identify certain
targets, focus on her unique advantages, and coordinate technology strategies based on sufficient
evidence and reasonable forecasts. Following the establishment of the strategies, objectives, plans, and
milestones, regulatory policies should be laid out for implementation throughout the countries.
Good E-commerce Support System -- At the macro level, both the Ministry of Information Industry and the
State Information Office should promote a rational legal environment for EC including policies, laws,
regulations, standards and specifications. With the support of the State Economic Planning Commission
and the People's Bank of China, professional banks should improve their internal support systems. In
particular, it is essential to ensure the security and reliability of online transactions.
Security Authentication System -- The security authentication system should include basic functions such
as authentication, authorization, identification, and automatic cancellation. The system should aim to
ensure that all parties involved in the transaction receive equal security protection. This authentication role
should be played by a government-authorized organization, to promote the legal operation of EC in a safe
and orderly environment.
E-Commerce Trial Cities -- It has been the prevailing methodology of the Chinese government to establish
certain districts or cities as trial regions for something new or advanced. The experience learned by the trial
cities can be studied, modified and copied to other cities to avoid failure and huge financial losses. At
present, many prosperous regions in China are actively promoting EC. Shenzhen, Guangdong, Shanghai,
Tianjin, and Beijing have progressed beyond the first stage of promoting EC. Their experiences and
lessons should become valuable references for the cities that follow. However, the government of the trial

cities should jointly organize a committee with the industrial and commercial enterprises, financial sectors,
and telecommunication sectors to lead the EC projects. This committee would form the advisory group to
provide a framework for constructing regulatory policies as well as provide support and problem-solving on
the implementation of the EC projects.
E-Commerce Promotion -- Establishment of an "E-Commerce Promotion" committee is recommended. This
committee will lead the society toward healthy and orderly EC development. A representative and
authoritative coordinating team is required. This committee would be more successful if it is under the
direct leadership of China's vice premier. The committee and its operating organizations are to include
government, foreign-funded and local commercial enterprises, and consumer groups. The committee is to
be responsible for coordinating and regulating the business, technology, policy, legal, and international
cooperation aspects of EC.
Learning From International Cooperation -- Developed countries such as the United States and European
countries have already achieved successes in business-to-business e-commerce activities. These success
stories are excellent references for China. While China's e-commerce is still in its infancy, the government
should encourage Chinese companies to work with trustworthy international organizations or other
multinational companies to develop bilateral or multilateral mutually beneficial cooperation.
Training for E-Commerce Expertise -- E-Commerce is an entirely new technological advancement. It is
hard to anticipate how EC will develop. It is essential to start educating the public about EC, so that at least
30 to 40 percent of the educated public can master the relevant technology and knowledge. Providing the
younger generation with training in EC technology, as well as financial and business knowledge is
particularly important.
Next Steps
With the reduced cost of transporting information, B2C and B2B EC has changed the cost and revenue
structure of the profit equation and thus changed our business models. The challenge, then, is to
understand the benefits and costs of these new mediums to determine their proper application. It is easy to
assume that EC already has widespread acceptance in the business world, and therefore an EC strategy is
a must. EC technology is powerful and exciting to most organizations, but to fully benefit from adopting
B2C and/or B2B, businesses should realize that EC is not about the technology but about business.
Companies should adopt a strategy of "business first, technology second" to use the right tools in the right
places at the right time, and build an effective EC solution that reflects the best of business and IT.

The Prospects of B2B E-Commerce in China's

Internet Industry.
By Cina Ho & Jason C.H. Chen | Business Forum - Summer-Fall, 1999

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Despite the obstacles mentioned, China is still viewed as one of the greatest untapped Internet territories.
The research firm IDG predicts that EC revenues in the country will grow from $43 million last year to $12
billion by 2004. (15) The Chinese government, investors, venture capitalists and entrepreneurs will strive to
make improvements for the B2B EC in China. In reality, global competition in EC has already begun, and
China should respond to this competition.

CINA HO was born and raised in Hong Kong. Ms. Ho earned her Bachelor's degree with honors in Science
and Management Studies at the University of London in 1981. She earned her MBA degree at Beijing
University in 2000. She has had 19 years of experience in human resources and administration in Hong
Kong, Canada and China. Ms. Ho has been living and working in Beijing for more than seven years. She is
actively involved in human resources recruitment activities, especially in hi-tech and e-commerce
development in China.
JASON C.H.CHEN, Ph.D., is a professor and the coordinator of MIS program in the School of Business
Administration at Gonzaga University in Spokane, WA. He designed and implemented an MIS system for a
Chinese government agency to a World Bank project in 1994. He is also consultant to a B2B firm in Taipei.
Taiwan. His research interests include building and applying e-Commerce models to business applications,
the Pareto principle to business, and object-oriented modeling and development.
(1.) Turban, E., Rainer, K., and Potter, R., Introduction to Information Technology, John & Wiley, 2000.
Turban, E., Lee, J., King, D., and Chung, M.H., Electronic Commerce: A Managerial Perspective, Prentice
Hall, 2000.
(2.) Schneider, G.P. and Perry, J.T., Electronic Commerce, Course Technology, 2000.
(3.) Turban, E., et. al., loc. cit.
(4.) Cowen, "The SG Cowen/Datamation Networked Computing Survey," Datamation September 1999,
available at: http://www.datamation.com/staff/9909cowen5.html
(5.) Edelman, Charles, "Connectivity For Internet & Telecommunication in China."
(6.) Sood, R., Friedman, J., Parekh, M., Sherlund, R.G., Bahramipour, L., Meisner, A., Berquist, T., Kahl, S.,
Lamming, G., Elliott, C., Gupta, R., "B2B: 2B or Not 2B? Version 1.1," Goldman Sachs Investment
Research, November 12, 1999, available at: http://www.gs.com/hightech/research/b2b/
(7.) Sood, et. al., loc. cit.
(8.) McCall, T., "E-Market Makers to be Key Driver of Business-to-Business Segment," GartnerGroup Press
Release, January 26, 2000, available at http://gartner5.gartnerweb.com/public/static/
aboutgg/pressrel/pr012600c.html
(9.) Turban, et. al., loc. cit.
(10.) Burnaham, B., "Burham's Beat: B2B, investor's promised land or giant quagmire?," ZDII Inter@active
Investor, January 31, 2000, available at http://www.zdii.com/industry_list.asp?mode-news&doc_idZE502911
(11.) Wang, Guo Xinxi, "Opportunities, Obstacles, And Measure for E-Commerce in China,"
PRCNet.com.cn, October, 15, 1999.
(12.) Allen, John, "Is Business to Business E-commerce Realistic in China," from the Press Release - World
Economic Forum.
(13.) Greenberg, P.A., "Jump in Chinese Internet Users To Spark E-Commerce," E-commerce Times,
January 24, 2000.

(14.) Allen, John, loc. cit.

(15.) IDG News, "IDG Gambles On China Despite Uncertainty," October 11, 1999.
Related References:
* Cohn L. and Welch, D., "The Internet Economy, B2B: The Best Hottest Net Bet Yet?," Business Week;
January 17, 2000.
* Farmer, M.A., "Commerce One Snags E-Commerce Software Firm," CNET News.com, January 5, 2000,
available at http://news.enet.com/news//0.1008-200-1513447.html
* Griffin, J., "Information Strategy: E-Business and Data Warehousing," DM Review, January 2000 available
at http://www.dmreview.com/master.cfm?NavID-55&EdID-l754
* Grimes, J., "How Intelligent E-Services will Change Life as We Know It," January 2000; available at
* Kalakota, R., and Whinston, A.B., Electronic Commerce: A Manager's Guide, Addison Wesley Longman,
Inc., 1997.
* Kounadis, T. (2000), "B2B Marketplaces Rapidly Transforming World," DM Review, February 2000,
available at: http://www.dmreview.com/editorial/dmreview/print_action.cfm?EdID=1851
* Pickering, C., "E-Business is Still Business," Datamation, October 1999, available at
http://www.datamation.com/ecomm/9910comnt2.html
* Pickering, C., "Back-Office Bang From e-Business," Datamation. February 2000, available at
http://www.datamation.com/ecomm/0002cmnt.html
* Rampel, P., "Electronic Commerce Fuels Need for Distributed Transactions," October, DM Review,
October 1999, available at: http://www.dmreview.com/editorial/dmreview/print_action.cfm?EdID=1499
* Smith, B., "E-Business Edge: Internet Systems Must be Developed in Internet Time," DM Review Online,
January 2000, available at http://www.dmreview.com/master.cfm?NavID=l98&EdID=l837

Chinese Traditions and Culture

Chinese traditions and culture are unique. The Chinese have a rich tradition and culture that gives importance to health,
spirituality, food and eating habits. The Chinese traditional clothes show that Chinese were well versed in the art of embroidery
and stitching even during the prehistoric era. To know more about the Chinese traditions and culture read on

Chinese culture is one of the oldest cultures of the world. The Chinese traditions and culture vary between the
different towns, and provinces. A topic on Chinese traditions and culture would be incomplete without mentioning
their food, clothes, education and architecture and transport. The historians claim that Chinese culture was very
civilized and they had some unique and wonderful traditions.
Chinese Food
Chinese food is known for its aroma, color and flavor. The Chinese food, culture and traditions can be traced
back to the 16th century B.C. Yi Yin, a scholar who lived during the Shang Dynasty was of the opinion that food
should include flavors such as sweet, sour, bitter, piquant and salty. The reason is, the five major organs of the
human body - heart, liver, spleen, lungs and kidneys, require nutritional diet. He formulated the theory of
harmonization of food, which stresses on good nutritional diet to maintain good health. The traditional belief that
food and medicine share the same origin is a part of Chinese tradition. This could be the reason that Chinese use
scallions, garlic, dried lily buds, fresh ginger root, bamboo shoots and tree fungus in their cooking. The Chinese
believe that these herbal plants have properties that prevent as well as cure various illnesses.
The dining rules are a part of theChinese tradition and culture. There are rules like how many people should be
seated on a table and how the main courses are to be served. As a part of the Chinese culture, you have to sit
down to have a meal. There are also rules like who should be seated first among old and young and also among
men and women.
Chinese Traditional Clothes
Traditional clothing is a part of the Chinese culture. There are evidences that show that a Chinese culture,
Shantingtung, which flourished 18,000 years ago, used sewing needles made of bones. There are also
evidences that prove the existence of the concept of sewing and ornamentation in the early Chinese culture.
However, importance of designing the clothes was recognized during the era of the Yellow Emperor and also
during the reign of the Emperors Yao and Shaun. It was during the Shang dynasty, 16th to 11th century BC, that
refined and sophisticated clothes were worn. The evidences show that silk was woven during this period.
The Pien-fu, the Chang-pao and the Shen-i are the three types of Chinese traditional clothing. Pien-fu is a twopiece costume, which includes a tunic-like top that reaches the knee and an ankle-length skirt. The Chang-pao
is a long robe while the Shen-I is a combination of pien-fu and Chang-pao. It is a tunic and a skirt sewn together
to form a long robe. All the traditional Chinese garments have minimum stitches. Embroidered edgings, draped
silks, decorative bands and embellishments on shoulders and wide sashes are used as ornamentation. As a part
of the Chinese culture all traditional Chinese clothes are dark in color. Dark colors are preferred to the light ones.
The common people for everyday-use, prefer light colors.
Chinese Architecture
The traditional Chinese architecture being a part of Chinese culture, is based on the principles of balance and
symmetry. The Chinese architecture joins rectangular shapes of varying sizes to form a building. The traditional
Chinese architecture uses wood as a the basic building material. Wood means life and the Chinese culture gives

more importance to sustenance of life in various forms. The traditional rectangular Chinese houses are divided
into several rooms, using wooden pillars and beams. The interior spaces of these houses exhibit the ethical and
social values of Chinese culture.
Traditional Chinese Transportation
The historians and archaeologists state that Chinese culture had not invented any means of transportation. They
also state that no form of chariots existed prior to 1200 B.C. The historians believe that chariots were used only
during the Bronze Age.
Traditional Chinese Literature
The Chinese literature exhibits the understanding of the intellectuals of ancient China. The traditional Chinese
literature proves that Chinese culture was one of the civilized cultures in the world. The books that narrate the
culture and traditions of ancient China show that Chinese were well-versed in astrology, astronomy, poetry,
constellations, calendar and so on. Zhou Dynasty was the Golden Period in Chinese literature and this dynasty is
marked as the milestone of Chinese culture and tradition.
Chinese traditions and culture vary from one Chinese province to another. The large part of Chinese traditions
and culture depend on spirituality. The belief in life after death and reincarnation were the part of Chinese
tradition and culture.

Business Ethics in China

by Miriam Schulman
If you want to talk about business ethics in China, don't set yourself up as the Western expert imposing foreign models
on the Chinese. That was the message of Stephan Rothlin, general secretary of the Center for International
Business Ethics (CIBE) in Beijing in remarks to theBusiness and Organizational Ethics Partnership of the
Markkula Center for Applied Ethics March 23.
The Chinese, Rothlin said, are very open to considering ethical issues: "They want to be global players, and they
realize that in order to become a real global power, they have to eliminate corrupt practices." Many students at the
Beijing University of International Business and Economics, where CIBE is based, are pursuing an MBA because they
are frustrated by the corruption they witness, he noted.
But the Chinese do not want paternalism from the West. Instead, Rothlin said, they want acknowledgement that "they
can offer something, that they can actually become a driver in the field of ethics." Because the Chinese are emerging
as an economic powerhouse, any ethical rules they integrate into their businesses practices will have an impact on the
whole world.
Often, the Chinese see hypocrisy in criticism of their country by companies that tout their own ethical codes but then
close their eyes to what their own Chinese subcontractors are doing, Rothlin said. To counteract this skepticism toward
Western critiques, he counseled an approach that acknowledges unethical conduct in other cultures as well. Swiss by
birth, Rothlin teaches about the failure of Swissair in 2001 "to avoid suggesting that only China has problems."
He gives the same advice to those who want to work with Chinese companies or bring their businesses to China. "The
strategy should be to limit the output of Western experts to a minimum," he said. Setting up a code of ethics, for
example, should be primarily the job of the Chinese. "It does not mean anything if you translate your existing code
from English and distribute it," he cautioned. "The Chinese will say, 'Yes, thank you,' and then throw the code away."
Of course, that indifferent kind of implementation would not work anywhere in the world, even, as one member of the
partnership pointed out, "in San Diego."
Rather than imposing a code, Rothlin argued, "let the Chinese develop their own codes. Then the managers can
identify themselves with these codes."

Rothlin emphasizes China's own philosophical traditions when he talks about business ethics with the Chinese. He gave
this example of how he discusses the problem of corruption, which often includes favoring family and cronies. Some
students of China have argued that the Chinese are encouraged in such favoritism by their traditions. They point to
Confucius' focus on responsibility to family, citing his admonition that a person who sees his father steal a sheep
should not turn his father over to the authorities.
But Rothlin points out counter-arguments within the Chinese tradition itself. Mozi, a philosopher of the 5th century
BCE, tried to replace the Confucian focus on the clan with a more universal caring. He saw favoring the family as the
root of corruption and instead advocated laws that protect everyone equally.
Using his insights into Chinese philosophy, Rothlin has developed a textbook in Chinese, Becoming a Top-NotchPlayer: 18 Rules of International Business Ethics (Beijing: Renmin University Press, 2004). The book draws on
Chinese experiences for case studies and examples. His center has also supported the translation of various classic
business ethics texts into Chinese and the development of rigorous research on business ethics issues at Beijing
University of International Business and Economics.
Rothlin addressed the Business and Organizational Ethics Partnership as part of reciprocal visits between CIBE and the
Markkula Center for Applied Ethics. Markkula Executive Director Kirk O. Hanson has consulted with CIBE, the first
center of its kind in China, and serves as honorary chair.
Other speakers at the March Partnership meeting included Dan Sweeney from the Center for Corporate Excellence on
"Tone at the Top and Executive Compensation" ; Robert Finocchio, teaching scholar at SCU and private investor on
"Incorporating Ethics into the Organization s Strategic Plan"; and Frank Daly, Markkula Center Fellow, Eric Pressler,
Apple Computer, and Sam Piazza, Hewlett Packard, on "Rules-Driven and Values-Driven Ethical Approaches: Tradeoffs."
The Business and Organizational Ethics Partnership brings together executives and scholars in a forum designed
to increase the members' knowledge about effectively managing ethics in their organizations. Founded in 2003, the
partnership currently includes 14 business organizations and 10 faculty members who share the goals of honing ethics
and compliance policies and practices, and advancing the state of business ethics knowledge.

18 Rules of International Business Ethics

Rule 1: If you strive to understand the values of different cultures, you will find common points.
Rule 2: if you analyze the facts, you will realize that honesty and reliability benefit you.
Rule 3: if you analyze case studies from different perspectives, you will discover the benefits of fair play.
Rule 4: Respecting your colleagues is the smartest investment you can make.
Rule 5: To increase productivity, provide safe and healthy working conditions.
Rule 6: To inspire trust, make your performance transparent.
Rule 7: Your loyal dissent can lead your institution in the right direction.
Rule 8: Downsizing your labor force is only beneficial when you respect each stakeholder.
Rule 9: To establish your brand name, act as a fair competitor.
Rule 10: Reduce the gap between the rich and poor by developing a new social security system.
Rule 11: if you act against discrimination, you will increase your productivity and profitability.
Rule 12: If you protect intellectual property, all stakeholders will receive their due share.

Rule 13: Ongoing changes in information technology require new forms of loyalty.
Rule 14: Your public relations strategy will only secure your reputation if it witnesses your drive for quality and
excellence.
Rule 15: Your economic achievements will only stand on firm ground if you diminish corruption.
Rule 16: Long-term success urgently calls you to constantly care for the environment.
Rule 17: To become a refined player, sharpen your discernment and cultivate good manners.
Rule 18: Care for your business by caring for society.

Miriam Schulman is the communications director of the Markkula Center for Applied Ethics.
March 2006

Doing Business in China

Things go better with feng shui
BEIJING Dont be fooled by the burgeoning glass-and-steel business districts of Beijing and Shanghai doing business in these
cities is not the same as in New York or Paris.
Chinese and expatriate business executives working in China agree that it takes major mental adjustments to manage successful
business ventures in the New China.
Business in China is only 30 years old, advises Peter Trampe, business development director for ISS Facility Services in Beijing.
Todays commercial enterprise arises out of the policy-driven efforts of the government to modernize China after 30 years of isolation
under Mao Tse-tung.

Paul Lien, general manager of PCI Executive Search in Beijing, agrees with Trampes assessment but he adds that the culture
surrounding the conduct of business in China is more than 3,000 years old. The underlying traditions of business in China grow from
thousands of years of Buddhist and Confucian teachings that emphasize humility, social harmony and patience and that are frequently
at odds with the individualism of fast-paced Western business culture, Lien explains.
CHINA FAST FACTS
Each year China graduates seven million English speaking students from its universities, more than from all US universities.
China is the worlds second largest auto producer, according to the International Association of Motor Vehicle Manufacturers.
China is the worlds third largest auto buyer and is expected to assume the number-one spot soon.
China was the worlds fourth largest economy in 2008, according to the IMF, the World Bank and the CIA World Fact Book.
China is the worlds second largest consumer of luxury goods, after Japan and ahead of the United States, according to the World
Luxury Association. Consumption is concentrated in the under-30 age group.
China alone accounted for nearly three-quarters of the growth in world primary energy consumption in 2008, according the BP
Statistical Review of World Energy/2009.
Chinas economic output has quadrupled since 1978 and continues to grow at a rate of more than eight per cent per year.
Over thousands of years, China has accounted for roughly 25 per cent of global economic activity. Economists say this output dropped
dramatically during the years 1949 to 1980, but China is now moving toward reclaiming its traditional share of the world economy.

Chinas total population is roughly 1.25 billion people.

Trampe, a Danish national who speaks fluent Mandarin, lists a lengthy succession of factors that influence the conduct of business in
China.

First, he says, Westerners must understand that Chinese tend to be loyal to individuals mentors, patrons and bosses whom they trust
but not necessarily to companies. As a result, the departure of a respected manager from a company can lead to the loss of several
other employees.
If Mr. Wang leaves, 14 other people might go with him, Trampe says.
Two related concepts, he says, are guanxi, the exchange of personal favours that builds business relationships, and face or respect.
The personal loyalties on which business is based are built up slowly and carefully, through the exchange of personal favours that
establish increasing trust. Trust comes before important business and trust takes time, so business takes time and cannot be rushed, he
says. Guanxi is a process that evolves, one step at a time.
The danger, he points out, is that guanxi can and frequently does blur the line between legitimate business and corruption and
Westerners must be on guard to maintain standards. As another Westerner puts it, Good guanxi, you make business; bad guanxi, you
go nowhere.
Face or respect is important in every culture, but vital in China, where trust and personal connections are at the core of business.
Westerners must therefore not get impatient with the slow pace of business in China or with unfamiliar customs. Any show of temper
may insult your new partner, causing a loss of face that will damage vital personal relationships. Temper also results in loss of face for
the angry Westerner, whether he knows it or not, and makes him less respected.
Trampe says its also important to understand the Chinese view of contracts, which tends to be situational. In the West, we see a
contract as setting out rights and obligations of parties to an agreement. In China they view a contract as a list of expected rights and
obligations, unless the situation changes. And because business is only 30 years old, contract law has fewer precedents and tends to
draw on local custom.
Based as it is, on tradition, face and respect for rank, Chinese business culture tends to be hierarchical and communication runs one
way, from top to bottom. Trampe says this means employees will be very reluctant to ask questions of their managers. It also implies
that the imposition of matrix organizational structures is usually doomed to failure and empowerment of employees only works with
younger people who will also have to trust their managers before they take ownership in a project.
Hierarchies aside, Lien says, its important to understand that Chinese senior executives will tend to seek consensus within their own
organizations before completing any business agreement. Expecting to discuss business terms and receive immediate agreement is
usually unrealistic. Lien says this means Westerners should avoid pressing Chinese partners for a decision, quickly or otherwise.
Negotiations simply take as long as they take.
You have to live longer than your negotiating counterpart, he says with a smile.
Christoph Aniel, CEO of Mondial Assistance in Beijing, says his time in China has taught him to be aware of body language. This, he
says, is because Buddhist/Confucian traditions emphasize social harmony and frown on direct confrontation. When Chinese disagree,
they will tend to avoid saying so directly.
They wont say no, and when they say yes it may simply be a commitment to continue talking, Aniel says. Chinese negotiators will
also be reluctant to say they dont like some aspect of a proposal, because this might give offense. Instead they will prefer to go on
talking around the issue in hopes of achieving understanding of the problem.
He uses a chart to show the differences between Chinese and Western Culture:
Chinese Culture

Western Culture

group oriented

oriented to the individual

relationship driven

goal driven

conflict averse

inclined to address points of conflict

seeks harmony, avoids confrontation

seeks immediate resolution of issues

communication is top down

communication is multi-directional

no terminates negotiations

no means make me another offer

yes enables negotiations to continue

yes is an agreement to close the deal

Aniel recommends four steps to making business work in China:

Learn to speak the language;

Create team spirit among employees and be part of the team;

Be clear on goals and processes and always follow up on expected actions; and,

Be patient, its China and Chinese ways will prevail.

Giuseppe Milito, of Stones International Executive Search in Hong Kong, has become a feng shui (fung shway) master as part of his
effort to connect with Chinese culture. Feng shui is the art of seeking harmony with the universe and ones surrounding environment
and Milito says it can play an important but often invisible role in business dealings. He recalls one executive balked at signing a
contract with an eager new employer until it was discovered that, according to feng shui, the proposed starting date was inauspicious. A
new starting date was proposed and the agreement proceeded without further delay.
Morgan Chang, managing director of PCI in Beijing, Shanghai and Taipei, says all these factors are important to business in China. But
theres one more dynamic that must be understood and thats the character of Generation Y, born in 1980 to 1990.
Chinas one-child policy means that the upcoming generation of workers and business leaders has its own distinctive character. It
means that Chinese families have concentrated all the resources of parents and grandparents on one child. Gen-Y people therefore
tend to be well educated, bilingual, very determined, confident and optimistic. And they are the primary force that has made China the
worlds second largest consumer of luxury goods.
All of them can speak English quite well, Chang says, noting that more English speaking students graduate Chinese universities each
year than are graduated from all the universities in the United States.
Neil Morrison, of Stones International in Hong Kong, says the Chinese business method has plenty to recommend it.
There is a lot the West can learn from the East, Morrison says after many years in Hong Kong. The West can learn from China in
terms of values and trust, as well as about work ethic and willingness to learn. China has become an economic super power in the
space of less than 30 years, so they must be doing many things right.

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