Thursday, April 29, 2010

E-commerce in China

Browsing The Economist, I ran across an interesting article exploring, um, economics of all things. In particular, the economics of online retailing in China. Key points:
  • China provides a particularly good environment for online retailing because delivery of goods is unusually cheap and storefronts are unusually expensive, at least in relative terms.
  • Online retailing couldn't take off without widespread internet access (of course), but the other sticking point was the lack of a trusted, home-grown payment system. "Just use PayPal" wasn't an option.
  • Online retailing favors well-established brands, including Western brands, which would not necessarily be favored in the brick-and-mortar world.
  • Just as has happened elsewhere, physical retailers can be undercut by their own online prices. People come into the store to take a look, then buy online.
Once again, it's worth noting that the economic issues are in the driver's seat. Technology never gets far until the economic conditions are favorable. Only then (I claim, for the moment) does it begin to affect the economic conditions in turn.

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