Eachnet.com, a Chinese language online auction site, has its eyes on the title of China's largest consumer e-commerce community. The company claims to have 650,000 users and that its website receives more than 800,000 hits each day. The company also boasts that it has auctioned about $25 million worth of computer and technology related goods since its launch in August 1999. It says it can host over 35,000 simultaneous auctions.
Now, Eachnet.com plans further expansion with a new e-retail shopping and delivery service. Shoppers on Eachnet.com can purchase and arrange delivery of computers and consumer electronic goods online or via the telephone from several online shop fronts. iTEL is the combined telephone and internet support system for the shopping channel.
For the payment of goods online, Eachnet.com has a number of partner banks, including China Merchant Bank, through which consumers can make credit card, or funds transfer payments. For offline payments, it is a case of cash on delivery.
Why both online and offline payment and fulfillment services? "The credit and [payment] delivery industry is still developing in China," says Joanne Shen, spokeswoman for Eachnet.com. "Therefore, we have created an auction model which allows for consumers to conduct their transactions after having met face to face, and using cash."
She says that as the delivery and credit systems are fast developing in China, Eachnet.com will be evolving and expanding its services to accommodate the changing landscape in China.
China's changing landscape
The regulatory environment governing Chinese clearing and payment systems has eased in recent years. "All markets are looking to take out inefficiencies when it comes to payments and settlements," says Richard Wright, Global Product Manager of ePayment solutions for Standard Chartered. "This is the natural progression of transactional banking in most markets, and China is no different."
Both foreign currency and renminbi (RMB) clearance is conducted through local clearing centres. The speed of clearance depends on a number of factors, such as local practices, operating hours, available technology, and importantly the location of bank accounts. Where the payer and payee accounts are within the same city, clearance may take a day. But where a payee's account is in another city, it can take up to three weeks for the payee to receive goods from the transaction. But things are changing, and changing rapidly.
The central bank is piloting both the China National Automated Payment System (CNAPS) and RMB real-time gross settlement (RTGS) in 20 cities across the country. "Effectively, what this will offer is same-day value for cross city payments," says Wright. "This should increase the efficiency and simplify the payments infrastructure in China."
In some cities, foreign banks are allowed to participate in the pilot. "The ability to participate in this pilot is the biggest change in China for us [foreign banks]. Notionally, there is now a single point that we can go to clear payments," says Wright. "And I think the adoption rate of electronic payments for businesses will be very high and very quick in China. E-payments are cheaper, there is less risk and it allows us to provide a better level of service to our customers."
Keeping up
It is imperative that the banking industry in China keeps up with the rapidly blooming e-commerce market in Asia. International Data Corp, Asia-Pacific, predicts that by 2004 sales in B2B markets in Asia (excluding Japan) will amount to $996 million. By 2005, China should surpass Japan to become the second most connected country in the world, after the US. However, it says, creating a fully online settlement system for the B2B market is still "the holy grail, because there is no pervasive and complete way to do that at the moment . . . that is the case in China as it is all over the world."
In the business to consumer (B2C) markets, the statistics aren't as alluring. In a recent study by iamasia, it was found that only 5% of internet users in China have made a purchase online, compared with 15% of Hong Kong users. No doubt such statistics have played a part in the decision of internet sites like Eachnet.com to offer an offline purchase and payment options for consumers, who prefer to see and feel the goods, and bargain with merchants face to face.
