سرمایه گذاری مستقیم خارجی و نوآوری در بخش تجارت الکترونیک در چین

By comparing the business practices and performance of foreign-invested and local Internet companies in China, this article outlines the important factors that multinational corporations must address to gain competitive advantages in China's e-commerce sector. Specifically, this research compares EachNet (eBay) with Taobao in the consumer-to-consumer market; eLong (Expedia) with Ctrip and Joyo (Amazon) with Dangdang in the business-to-consumer market; and the online search engines Google China and Baidu. The author underscores the importance of local knowledge for firm performance and success. Foreign firms must improve their understanding of and ability to adapt to local cultural, social, economic, and political environments.

China has undergone vast economic reforms and encouraged foreign direct investment (FDI) in recent few decades. As a result, its economy has opened more to foreign businesses and investors, and FDI has risen. In 2007, China's inward FDI was estimated at $758 billion, ranking it sixth after the United States, United Kingdom, Germany, France, Germany, and Hong Kong (CIA, 2008). Approximately 490 of the world's 500 biggest companies have set up offices or acquired companies in China; more than 1160 global R&D centers have been established (First Financial Daily, 2008). With the development of China's Internet infrastructure, new business models and technologies have been introduced to China, and major U.S. Internet companies have been directly investing its e-commerce market since the late 1990s. Among these entrants are industry leaders, such as the online auction site eBay, which acquired EachNet; Amazon, which acquired Joyo; Expedia, which owns a majority share of eLong; and Google, which built its own Web presence from the ground up. However, their performance in the respective e-commerce markets has lagged behind that of their local competitors by a large margin. Table 1 presents the background of these companies, as well as the local rivals they face and their performance in their respective markets. Using these companies as exemplars, this study examines foreign firms’ ability to transfer their technological leadership and market dominance to the Chinese market. The case studies of foreign-invested multinational companies (MNCs) in Chinese e-commerce markets allow for comparisons of their business practices with those of local companies, particularly with regard to their ability to employ their Web site (i.e., information technology) to engage and communicate with customers. The research reveals that Chinese companies not only adopt and implement new technologies and business models developed by foreign firms but also do a better job innovating with the technology to cater to the local customers. To compete with their local rivals, U.S. companies thus require a better understanding of the macro environment, need to provide services tailored to the local customers, and must resolve potential conflicts within their organizations that arise from their acquisitions. Even more important, they need to rethink and modify strategies that may have worked in the United States and learn from their Chinese competitors how to maintain a foothold in that unique market. This study therefore outlines in detail the practical insights and recommendations for both MNCs and domestic companies derived from the case studies. The rest of this article is organized as follows: Section 2 contains a review of related literature and some relevant hypotheses for testing. Section 3 provides an overview of China's Internet market and discusses the specific conditions that mark the e-commerce industry, consumers, and major players in the market. Section 4 presents the case studies as a means to contrast some U.S. multinationals with their local rivals in several markets, according to their entry strategy, investment decisions, marketing practices, and competition outcomes. The conclusion in Section 5 offers a discussion of the major implications of these case studies and recommendations for both MNCs and domestic companies.

Many U.S. industry leaders in e-commerce invested in China only to find tough local rivals and dismal outcomes. China represents huge demand and potential, yet it makes it frustratingly difficult for foreign firms to gain a competitive advantage. The Chinese Internet companies discussed herein are not pioneers of a technology or business model; on the contrary, they all adopted existing ideas. What makes the Chinese companies successful is that they developed the necessary infrastructure and solved specific problems in the Chinese market (e.g., online payment, trust issues), as well as innovated according to local market needs. Their abundant resources include entrepreneurship, an understanding of local market, political networks, technical talent, and funds that can help them grow in the long run. In this low uncertainty avoidance culture, local business managers are flexible and able to provide products and services that meet local needs. These case studies reveal that a well-established U.S. brand name does not automatically transfer to China. Acquisition gives MNCs full control of a business, it also creates risks and a limited ability to incentivize the acquired company. The low technology barrier in e-commerce makes it easy to imitate various business models. Therefore, MNCs must be prepared to compete with local firms and even, perhaps, learn from them. Because technology transfer is relatively easy, firms compete according to how well they adapt their management style and understand the local market. This feature is particularly important for the China's e-commerce market, which changes rapidly, is highly customer driven, and provides success through local and political networks. On the basis of the case studies, this study proposes a four-part strategy for multinationals in the e-commerce sector of China: • Be flexible: Adapt products and services to the local market. The firm must be flexible with its marketing mix strategies (product selection, price, distribution, and promotion). Building and promoting a healthy online community is particularly vital for Internet companies in China. Customers rely heavily on others’ opinions and experience to reduce the risks they perceive in online transactions. In addition, MNCs need to learn from local companies in adapting their existing technology. • Be anticipative: A firm must be forward-looking and identify potential entrant and competitive moves. It remains uncertain whether an early or late entry has a clear advantage. eBay entered China in 2002, earlier than Taobao (2003) and paipai (2006), yet its market share suffered steady declines due to competition. Amazon and Google entered China relatively late, and their performance still lags behind that of their competitors. Being anticipative and in tune with the market dynamics while avoiding stagnation may be the real key to preventing failures. • Be unique: Establish a position that is unique in the market to acquire and maintain a loyal customer base. Because the Internet market is highly interactive and customer-driven, firms need to focus closely on customer needs. Firms should invest in developing a specialty that differentiates them from the competition in areas such as price, product selection, safe transactions, secure payments, on-time delivery, and targeted promotions. Such specialties can help the firm maintain a competitive advantage and avoid damaging head-on competition. • Be ready: It is important for the firm to comply with government policies for doing business, not only in China but also in foreign countries in general. As China's Internet market continues to develop, some markets have been preempted. Unless MNCs can serve the local customer better than local firms, they should consider staying away. For example, the social network service (SNS) site xiaonei.com, modeled after Facebook, has grown a larger customer base and achieved even better funding than Facebook (Marshall, 2008). This situation will make it hard for Facebook or other non-Chinese companies to enter the SNS market in China. This research also suggests some valuable lessons for domestic companies: • Don’t be afraid: In a fluid industry like e-commerce, technology is easily available and transferable. Firms should not be intimidated by seemingly formidable MNCs but rather should trust their own instincts and focus on improving existing technology and perfecting their ability to deliver long-term customer value. • Differentiate products and services: Currently there is much overlap in the products and services offered by firms, which can lead to damaging price competition and low margins. Developing a unique selling proposition that customers value is vital for firms’ long-term growth. For example, a firm could invest in and promote a technology that resolves the online trust issues or simplifies after-sales logistics for buyers and sellers. Customers will perceive and value that firm as a “risk-free” or “hassle-free” service provider, not as just another online listing agent. • Explore sustainable business models: In early stages, businesses tend to compete for market share at the expense of profitability, which is not sustainable in the long run. Value-added services must be developed to serve the needs of different customers segments. Firms can explore a variety of pricing models and price services according to customer needs. • Invest in analytics: Even though many firms now work to gain an understanding of customer preferences through surveys and online or offline interactions, they still need to recognize that consumers do not respond to direct questioning or answer questions truthfully. Valuable insights about consumer preferences can be gained from their revealed preference and behavior (Montgomery & Srinivasan, 2003). With the Internet, firms can collect, store, and systematically analyze consumer behavioral information at a low costs. The ability to understand consumer preferences thus has become a primary basis on which firms compete. In conclusion, with an increasingly improving infrastructure and policy and management skills, competent domestic players have emerged in China's e-commerce sector. They are actively adopting the latest technologies and innovating to provide products and services that cater to local needs. The advantages enjoyed by MNCs thus have decreased, whereas entrepreneurship continues to grow in China. Much foreign capital has poured into China, fueling the rapid development of the e-commerce sector. In addition, China's economy has been growing quickly, which requires firms to stay in tune with the macro environment, including political, legal, financial, and economic changes. These new developments all impose real challenges for MNCs that hope to enter the Chinese market. Strategies that worked in the home market may not be useful in China. Instead, MNCs should take lessons from their local rivals about how to serve the local market. Furthermore, as Chinese Internet companies start to enter the global marketplace, they should take to heart the lessons learned by the MNCs in China and avoid repeating their mistakes. According to the CEO of Alibaba, Jack Ma, who attempted to summarize the characteristics of China's e-commerce, “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.… The most significant trend … will be the emergence of a new class of entrepreneurs …. [that] provides the best chance we have to encourage economic development at a grassroots level in China, and around the world” (Ma, 2008).