2.5 India and China

Differences in government initiatives, infrastructure, business experience and culture intervene to make ebusiness vary with the country concerned. China with India offers an instructive comparison, the world's largest communist country with the world's largest democracy. Both have large and growing Internet populations. Both face immense problems of poverty, and inequalities between urban and rural Internet access. Both were exposed to the technology at about the same time, but have taken different paths to implementation. China was ahead of India in IT skills and infrastructure, but thought to be behind in e-readiness. {1} The global slowdown has changed expectations, however, and with internal investment has come a rapid growth in Chinese ebusiness in selected areas. {2} {10} {19}

The broad picture in 2010-11: {4} {5}

Infrastructure

China developed the Internet in three phases. From 1987 to 1993 only a few scientific research institutions were allowed access. From 1994 to 2002 the access was widened, and the government encouraged electronic government, electronic business, distance education, distance medical treatment, and a digital library (the country adding 106 million landlines, 163 million cell phone subscribers, and 36 million new cable television subscribers). From 2002, most services were available to Chinese citizens. {3}

In contrast, India added only 15 million land-lines between 1999 and 2002, and there are considerable disparities between states. Outsourcing to India of call centers further stretched the infrastructure to breaking point in many cities, causing power outages, increased IT costs, and a need for qualified graduates. Although Prime Minister Vajpayee proclaimed that 'IT is India's tomorrow' as early as 1998, and the government promoted several initiatives to help connect rural villages, including small-scale rural telephone exchanges and very low cost computers (SIMPUTER: hand-held and battery-operated) accessible to poor, often illiterate users, the Internet models are beginning to look quite different from those in industrial countries. {3}

Regulatory Policies

Chinese universities joined the Internet six years after those in India, but policy makers soon realized its potential. {3} Businesses were also encouraged to be competitive in world markets, and there are today more Chinese Internet users than north American. Government regulation is more intrusive in China than in India or the USA, and censorship apparent. Internet penetration in urban areas was six times of that in rural areas in 2006, and the disparity was expected to continue as employment concentrated in manufacturing areas. {3}

India is a country of rapid growth, and one well known for call centers, online business support, and IT skills, but Internet use lags considerably behind that of China, despite low-cost broadband access and cheap computers. The government has encouraged the development of the Internet and information technology through various incentives, however, and by exempting the industry from burdensome regulations and controls. Some 23% of its budget was allocated to IT development, solar power encouraged, and cyber-cafes located near railway stations. Unfortunately, while Internet backbone costs have dropped, last mile costs remain high. Government is less controlling in India, and rather than urge 'leapfrogging' over western experience, may act more as a catalyst in developing sustainable industries that fit local conditions. {3}

Cultural Issues

Business in both China and India is traditionally much more person-to-person than in the west, and additionally suffers from mass poverty, illiteracy, and (in India particularly) endemic corruption.

For reasons of national pride and prestige, China has focused on increasing the number of people using the Internet. A much smaller fraction of India's population has taken to the Internet, but that part is well-educated, media-savvy, youngish and generally middle class. {3}

Chinese cultural characteristics that influence IT adoption include a preference not to live in debt, a desire to touch and feel articles before buying them, a fear of a disappointing shopping experience, security issues with providing credit or debit card numbers to strangers, and an ineffective distribution system where purchased items can be delayed or lost in transit. Entrepreneurship is more acceptable in India, and the poverty-stricken rural areas are being targeted for IT development, women in particular being encouraged to develop web-based businesses. {3}

Web Pages

China and India use different languages and different Internet search engines, though the Chinese online marketplace Alibaba has recently entered the India market. {7}

Chinese and Indian webpages tend to be livelier than their western counterparts: more crowded, brighter colors, less regimented. Even the colors have different connotations: {8}

Internet Habits

Indians prefer email and surfing to online shopping, being generally reluctant to use credit cards. {3} Chinese users are predominantly young (18-30) and with high school education: their preferred use of the Internet is: {8}

Mobile Phones

Chinese mobiles are generally lower-end second-generation, but a host of Chinese companies are launching self-developed smartphones. {16} Mobile phone use an predictions are: {9}

eCommerce

Travel {11} and electrical goods are the main market sectors for Indian ecommerce, but there is increasing interest in jewelery and textiles, {12} and in health and beauty products, cars, real estate and investment. {11} eBay had over 13,000 registered Indian companies in 2011, and Amway India, part of the $9.2-billion US-based direct selling company, was finalizing plans for a new manufacturing base in 2011. {12}

Online sales in China reached 4.5 trillion yuan ($684 billion) in 2010 {14} {17}, and are expected to rise steeply. {18} eBay sales alone in the Asia-Pacific region attained $4 billion, the top five categories sold by eBay mainland Chinese sellers being clothing and accessories, jewelry, gems and watches, mobile phones and accessories, computers and consumer electronics. {15}

Challenges

To the usual business problems in China and India — lack of business trust, an indifferent delivery system, officialdom and government corruption — ebusiness brings added challenges. Rural sections of the country have little or no Internet access. Where access exists, it can be relatively costly. Overseas IT investment is restricted and/or regulated by political considerations. Internet payment providers are few and not wholly trusted. Ecommerce does not distinguish between goods and services, creating tax difficulties. Cyberlaws are still under development, and some provisions are controversial. Each country has its own business culture, which may not transfer easily to the net. In many rural areas, the pressing concern is not business but basic survival. {6}

Questions

1. Outline the main differences between China and India in their histories of ebusiness.
2. What are the main uses of the Internet in India?
3. How have international developments changed ebusiness in China?
4. Compare ebusiness in China and India now.
5. Describe a recent important ebusiness development in China and India. Why are they so different?

Sources and Further Reading

1. Global E-Commerce: Impacts of National Environment and Policy by Kenneth L. Kraemer, Jason Dedrick, Nigel P. Melville and Kevin Zhu. CUP 2006. Based on 2,100 in-depth interviews.
2. The Internet's New Billion: Digital Consumers in Brasil, Russia, India, China and Indonesia. Boston Consulting Group. 2010.
3. China and India: E-Business in the Developing World by Peter Raven and Xiaoqing Huang in E-Business Models, Services, and Communications by In Lee. IGI Global. November 2007. An academic study with detailed citation.
4. Internet Usage in Asia. Internet World Stats. March 2011.
5. GNI per capita, PPP (per current international $). World Bank. 2010 figures.
6. Emerging Markets and E-Commerce in Developing Economies by Kamel Rouibah, Omar E. M. Khalil and Aboul Ella Hassanien. IGI Global. October 2008.
7. Alibaba.com's Passage to India by Jim Erickson. Alizila. January 2011.
8. Successful e-Commerce in China. Slideshare. 2008.
9. The Internet's New Billion: Digital Consumers in Brazil, Russia, India, China and Indonesia. Boston Consulting Group. 2010.
10. E-commerce to quadruple by 2015, official says by Chen Xin. China Daily. July 2011.
11. Prospects of E-Commerce in India by Shweta Sharma and Sugandha Mittal. Rimtengg. 2009.
12. E-commerce poised for faster growth, says eBay. Hindu Business Line. March 2011.
13. Smartphone Penetration in Asia Set to Boom by Hanis Harun. Nielson. July 2011.
14. China e-commerce sales up 22% in 2010. Physorg. January 201.
15. China and Hong Kong lead eBay's charge through Asia — and the world. Independent. September 2011.
16. Baidu mulls mobile, cloud computing Part of increasingly crowded China mobile Internet space by Melanie Lee. Montreal Gazette. September 2011.
17. Chinese E-Commerce Tops $38.5 Billion; What Comes Next? ReadWriteWeb. April 2010.
18. Looking east: China's online sales will triple in five years, study says by Paul Demery. Internet Retailer. October 2010.
19. The global online population will increase 43% by 2014: Forrester Research says China will outpace India for e-commerce spending by Allison Enright. Internet Retailer. August 2010.
20. 7 Trends of China E-Commerce in 2010. China Business Marketing. August 2010.
21. Cisco Exec on Growth of Worldwide Ecommerce, Cultural Differences. Practical Ecommerce. June 2011.