By ALEXA OLESEN
(Virtual China News, May 19) Charles Wu found himself preaching to the converted yesterday in New York, when he spoke about the tremendous possibilities for e-commerce in China. But he was decidedly coy when it came to specifics.
Wu, the General Manager of e-business Solutions for the IBM Greater China Group, told a packed crowd about "young people leading the Internet revolution in China" and how he is "still bullish" on the China Internet market despite the recent volatility in the Asia technology markets. Wu spoke at a joint Asia Society and Japan Society conference titled "The Future of E-Commerce in Asia," held in the Time Life building. Executives from leading Chinese Web sites Sina.com, eTang, and Chinadotcom also spoke.
When pressed for dollar figures however, Wu shied away from saying how much IBM is actually shelling out or even re-couping in their mainland China business.
In January of this year IBM established a $500 million fund to help finance early-stage Internet companies who have already completed one round of financing. How much of that capital will go to China or China-related Internet businesses is unclear, but Wu indicated that it is a very, very small fraction of the global total.
Bubbling with Activity
Well known risks in mainland China limit the amount of venture capital IBM is willing to put into the country, but they are putting increasingly large numbers of human and dollar resources into China.
Since 1994 the Shanghai office of IBM has grown from 60 to 600 employees and the U.S. computer giant now has more than 5,000 employees throughout China, according to Wu.
IBM's fourth-quarter 1999 Asia-Pacific revenues were also on the rise, up 12 percent from the same quarter the previous year to $4.4 billion.
Much of that growth, in China at least, has been part of a sudden growth spurt, with IBM visibly re-doubling their energies and investments to keep up with the explosion of cyber-activity in China. Wu said that in the past 18 months the China internet sphere had been positively "bubbling with activity".
Cash-based Society
IBM has been busy outfitting the major Chinese internet players such as MeetChina.com, Sina.com, and eTang with e-commerce platforms and also working with smaller start-ups, such as BestofChina.com, a California-based online retailer, providing them with full e-commerce solutions. Another big part of their business has been courting state-owned enterprises in desperate need of reform as they take their first tentative steps into the cyber-age.
"24 months ago the old economy [China businesses] were not looking at the Internet as a tool they could leverage, but over the past 18 months we have been talking to practically all the large and the powerful old economy or traditional businesses, about helping them to harness the power of the Internet," said Wu, referring to the Chinese state-owned enterprises (SOE's) that are reforming as China becomes a full-fledged free market economy.
While there is great interest and great potential for e-commerce in China, there is still no adequate infrastructure for online purchases and a general cultural distrust of credit cards, explained Wu. Chinese society is still essentially a cash-based society. So, the first step in e-commerce for the PRC is education.
Three Steps Forward
To that end, IBM announced earlier this month a partnership with MeetChina.com to open 30 electronic commerce demonstration centers in southwestern China. The first already opened in Chengdu on May 9. These facilities were set up to introduce e-commerce technology to Chinese businesses and get them used to doing business online with different forms of credit. IBM projected that more than 100,000 Chinese business people would visit the mainland sites by the end of 2000.
"These demonstration centers will allow Chinese businesses across the country to gain first hand experience in e-commerce, and explain how the Internet can help them enter the global market," said Len Cordiner, chief executive officer of MeetChina.com, according to a company press release.
That education extends to the Chinese ministries who are in the practice of issuing -- and then revoking or revising -- fresh Internet regulations bi-monthly in an effort to control the way the Internet unfolds into China.
"I think China will continue to take three steps forward and two steps back. But what is encouraging to me is that I do believe that the top senior officials -- at least the ones I've dealt with -- are quite sincere. They are trying to get their arms around the Internet," Wu said.
