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CKGSB Professor Sun Baohong in Fortune Korea: Alibaba is the Role Model for the Rising Chinese E-Commerce Industry

November 02, 2013

Leading international e-commerce retailers such as eBay and Amazon.com are gearing up to enter the promising Chinese e-commerce market. In the past, there have been multiple cases where global retailers entered the Chinese market, yet failed to gain any significant performance.

Leading international e-commerce retailers such as eBay and Amazon.com are gearing up to enter the promising Chinese e-commerce market. In the past, there have been multiple cases where global retailers entered the Chinese market, yet failed to gain any significant performance. Professor Sun Baohong, during an interview with Fortune Korea, mentioned that when eBay previously tried to enter into China’s e-commerce market, they made the mistake of applying an American business model to the Chinese market.

When comparing global retailers, Professor Sun expressed appreciation for Alibaba’s innovations in distribution, which allow the company to keep pace with domestic market demand by shortening delivery time. She explained that online shoppers, including the major demographic known as “Balinghou” (一後世代, the post-80s), are losing patience with long delivery times, an issue which Alibaba is well-aware of.

The Chinese e-commerce market is making a series of expansions and variations. First of all, the online shopping environment has been transformed from the traditional PC to the mobile environment. Professor Sun explained that since the mobile environment has a higher influx rate, appealing to mobile shoppers will further help expand the e-commerce industry. She said that the growth of the Chinese e-commerce market is changing China’s distribution channels, and online shopping malls are posing credible threats to department stores and traditional retailers.

Professor Sun pointed out several challenges as well. The most urgent matter is financial fraud and infringement of intellectual property rights. Regarding the security issue, Professor Sun explained that thesee problems stem from the characteristics of an e-commerce market where sellers and buyers cannot be separated. She also advises international companies that the only way to outperform already existing e-commerce companies in China is to build the “brand community”, which means the firms should proactively communicate and form a social consensus with customers.

Original article PDF, in Korean.

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