by Claudia Bruemmer

Ecommerce is growing exponentially in China. Internet services offered by portals like Baidu, Sina, Sohu, Alibaba and NetEase have encouraged Chinese consumers to buy more products and services online by offering value and convenience. As a result, ecommerce has increased tremendously over the last few years. The China Market Research Group estimated a 90 percent growth in ecommerce in China from 2009 to 2010.

China is the world’s most populous country. While the number of Internet users in China increased 28.9 percent in 2009 to 384 million users, it is up to 420 million users today. That’s more than the number of people in the United States.

With an online population approaching 500 million users, China’s Internet players are becoming more and more innovative with new ways to monetize their products and services. This is a departure from the early days when they merely followed U.S. Internet firms.

The top Chinese firms are maturing rapidly and moving toward two major trends: innovation and e-business. Chinese companies started by adapting Western models to Chinese tastes. That’s how Baidu beat Google in China and Taobao beat eBay – they took what works in the U.S. and adapted it for local regulatory and consumer preferences. However, in the last few years, more and more Chinese companies have been launching entirely new formats.

One such company is Kaixin001, launched in 2009 as a Facebook-clone social networking and gaming site. The first game it launched allowed users to literally “buy” new friends. Now it launches a new game every two to three months and remains very popular. It has photo uploading, blogging, music sharing and is especially popular with young Chinese Internet users.

Much of China’s ecommerce growth is being driven by younger buyers. The China Market Research Group found that users in China between the ages of 13 and 28 spend 20 hours a week online on average. This compares to 12 hours a week for young buyers in the U.S.

Ecommerce is fast becoming the preferred way to shop in China. One reason for the growth of online shopping is the fact that China has more Internet and mobile phone users than any place else in the world. While Chinese merchants have traditionally relied on sales from brick-and-mortar retail stores, the tide is turning with the increased use of online payment options such as credit cards and Alipay. As a result, ecommerce is on the rise and flourishing in China.

Another reason for the popularity of ecommerce in China is the ready availability of new and exciting products in the far-flung provinces and provincial areas of China where there are few big-city stores. Consumers in China’s third and fourth tier cities – places like Hohot, Fuzhou, Nanchang, Cixi and Chaozhou – have access to the same products and brands available in Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou by shopping online.  Known as the ecommerce center of China, Hangzhou is located on Southeastern coast of China and is the capital of Zhejiang Province. It is sometimes called Paradise on Earth, Home of Silk or Town of Fish and Rice.

To meet consumer demand, wholesalers and merchants must rely on new Internet strategies. Therefore, China’s wholesalers, manufacturers and retailers are developing tactics for generating online sales, branding their companies, and knowing how to fulfill the needs of buyers and consumers online. These tactics include managing customer service expectations, promoting trust factors, managing supply chain dynamics, displaying product selections and making customer satisfaction a priority in order to gain new customers and encourage repeat business from existing customers.

A few years ago, analysts said Chinese consumers were not interested in ecommerce because of payment problems and lack of trust. Consumers had trust issues about fake goods and products that broke easily. Since then, marketers have helped consumers feel more comfortable shopping online with better customer service and by offering payment systems that do not release payment until after the buyer receives the goods.

Wholesale portals have made global buyers feel more confident in purchasing goods online from overseas vendors by listing suppliers that are pre-certified by a third-party agency as genuine and trustworthy.

For instance, a buyer sourcing furniture on Manufacturer.com would would find at least three suppliers certified as Supplier Pass™ vendors by 1st PMF Bancorp as shown below. These suppliers passed a company background test to earn a Gold Shield listing. This can help foreign buyers feel more confident in trading with an unknown supplier.

As a result of fostering trust in online sales, ecommerce sales in China rose to $36.6 billion (3.6 trillion yuan) in 2009 and reached $331 billion (2.25 trillion yuan) in the first half of 2010.

Make no mistake, ecommerce is booming in China. And Chinese Internet players are coming up with new ways to monetize their products and services hoping to dominate world markets in years to come.