With world economies and trade becoming increasingly global, it is clear that the development of e-commerce cannot be confined to particular cities or regions. As one of the main proponents of e-commerce in Hong Kong, Tradelink has long been active in collaborating with its counterparts in other regions. One of these is the China International Electronic Commerce Centre (CIECC), a government organisation specialising in the promotion of e-commerce in China.

Following accession to the World Trade Organisation (WTO), the development of the Internet and e-commerce in China has begun to change immensely. We talked to Liu Junsheng, Director of the CIECC, about these topics.

Q: Could you share with our Hong Kong readers some details about the CIECC?

A: The CIECC was established in February 1996 and is a direct subsidiary of the Ministry of Foreign Trade and Economic Cooperation. We are responsible for the construction and management of the China International Electronic Commerce Network (the backbone of the National Golden Gate Infrastructure) and the China International Economic Business Internet.

As a national provider of e-commerce services, the CIECC aims to assist and provide solutions for local enterprises and government organisations. Our services can be categorised as: e-administration services for government organisations; e-commerce application services for enterprises; and Internet value-added services.

The CIECC currently has subsidiary offices in 93 cities around the country and employs some 1,000 technical support and marketing personnel. We have built a secure network that comprises platforms for communication, data exchange and application deployment. Through this network, we have established connections and data interchanges with a range of government departments and agencies, including the Customs Department, the Bureau of Foreign Exchange Control, the Bureau of National Tax and various commercial banks.

Q: What do you consider the significance to enterprises in China of the development of e-commerce?

A: E-commerce influences many aspect of business. Its emergence enables traditional businesses to re-invent themselves to meet the demands of the e-commerce age and make the most of the opportunities that arise.

Firstly, e-commerce completely alters a modern business environment. It compels enterprises to face a brand new market - a global base of customers and competitors - and to interact directly with suppliers, distributors and end-users. Companies must therefore re-assess their situations and formulate new strategies.

E-commerce also empowers companies with new competitiveness. Before the e-commerce age, companies could be successful simply by being in a good location. However, in the e-commerce era, they have to ask themselves what kind of competitive edge they have. Is it the strength of their products and services, or is it their research capabilities? Is it a manpower advantage or a capital advantage? Or is it an edge in production and marketing? Eventually, companies have to concentrate on developing their core competitiveness, and forgo those operations where they do not have an advantage.

E-commerce also forces companies to respond to market demands in the fastest way possible. To do this, they have to feed a vast amount of market information into their Enterprise Information System so that they can deliver quotes, products and services to clients in the shortest time frame.

In addition, e-commerce re-organises enterprise structures. To use e-commerce to enhance competitiveness, companies need to adopt a "flat" structure that is capable of self-management and innovation. Companies must respond quickly to keep up with the market, and the key to accomplishing that is the fast transmission of information within an organisation. Companies with an elaborate hierarchy only delay the flow of information, while a "flat" structure allows for more efficient internal cooperation and quicker responses.

Finally, e-commerce restructures cooperation as a result of high-level communication. From production to marketing, from management to strategic planning and execution, cooperation is the crucial link. Only by forming a strong network can companies keep up with market changes. From order information and inventory details to sales figures and production information, companies must facilitate the sharing of data and e-commerce is the tool that allows that to be done efficiently.

Q: The Internet is developing at a furious pace in China. How is this significant for local e-commerce companies? Do you think China has a mature environment for e-commerce? As the Internet and e-commerce initiatives thrive in China, what role will the CIECC play in this process?

A: Over the past few years, the international e-commerce scene has slowed down slightly, with some of the previous "star" web portals having difficulties staying afloat. Although this may make people think that "e-commerce is not for China", our observations suggest that the development of e-commerce has quietly entered a new phase. The first phase of e-commerce in China took place in 1997 and 1998, propelled mainly by the media. The second phase appeared in 1999 and 2000, where e-commerce service providers were the main focus. In 2001, we entered the third phase of the e-commerce era in China, where local enterprises are the driving force behind its development, with management beginning to realise the true significance of e-commerce in the business world and becoming more active in its adoption. To enable companies to do that, we provide a series of training courses.

E-commerce is also a new way of doing business. Given that all businesses need to go through a long, complex testing period before being accepted by the market, and that our enterprises are at the beginning of that process in terms of the development of e-commerce, it would be imprudent to judge right now whether China is mature enough to accept e-commerce as a business model.

Q: What collaborative projects are currently underway between the CIECC and Tradelink? What kind of synergy do you see between the two organisations?

A: In March 2000, we began our cooperation with Tradelink, making the CIECC the first and only mainland China network service organisation to provide electronic customs declaration services for Hong Kong.

In June 2002, the CIECC jointly launched the JingMao-Link, the Hong Kong-China Synchronised Information Management System developed by Tradelink. The JingMao-Link will be introduced in phases, with cities in Guangdong Province, including Guangzhou, Panyu, Foshan, Jiangmen, Zhongshan and Zhuhai, being covered in the first phase. More cities will be added in the future.

The CIECC and Tradelink are also founding members of the Pan-Asian E-commerce Alliance (PAA), whose objective is to promote cross-border e-commerce within the Pan-Asian region for matters related to secure trading, secure cross-certification between Certification Authorities (CAs), standardisation of trade documents, Pan-Asian gateway networks and logistic monitoring services.

This cooperation is based on many years of collaboration, and will certainly provide faster and more convenient information services for international trade, creating a win-win situation for economic and trade development in both China and Hong Kong. Through close cooperation, China will lay a solid technological and market-based foundation for international e-commerce cross-border transactions, as well as pave the way for the country's foreign trade companies to perform customs checks electronically.

Q: As the world economy becomes more integrated, it is inevitable that China's economic system will become more open. How is the CIECC dealing with this?

A: This year, China's imports and exports have continued to grow steadily. According to customs statistics, between January and October, the total value of exports and imports was US$500.26 billion, an increase of 19.7% over last year. Exports stood at US$262.5 billion, an increase of 20.6%, while imports were at US$237.76 billion, up 18.7%. This resulted in a trade surplus of US$24.74 billion. The statistics show that the general export sector is experiencing powerful growth and the import sector is recovering quickly. The export of processed goods is also growing well and imports are increasing too, as is the growth of imports and exports by foreign-investment enterprises.

I mention these facts because, ever since the establishment of the CIECC, we have been providing technical support and services for the processing of foreign trade information and network management. We have also developed a number of application systems for government use.

Take processing and trading for example; between January and October this year, the total value of imported and exported processed goods was US$244.51 billion, an increase of 24.1% over last year. Exports accounted for US$145.24 billion, representing 55.3% of the country's total export value, an increase of 20.6%. The JM2000 system that we developed provides on-line approval for contracts, inquiries and management services. Since its official launch in July this year, the number of contracts submitted and approved has increased ten-fold, which is a strong indication that companies have full confidence in the reliability and security of our JM2000 system.

The CIECC also offers practical services to promote foreign trade by meeting the needs of those government departments in charge of this sector, and facilitating the government's improvement and modernisation of management.

The CIECC is the seventh-largest Internet operator in China, responsible for building and operating China's No. 7 network - CIETnet. It has two international channels connected to the China Internet Exchange Centre and nine other domestic Internet service providers that are connected internationally. Supported by a bandwidth of 155 Mbps, it is linked with foreign e-commerce networks (such as GE and Lucent), Tradelink-eBiz in Hong Kong, and the Trade and Development Centre of the United Nations.

In addition, the CIECC is open, participatory and cooperative in welcoming the development of international e-commerce. We serve both the government and companies, which is why we are always exploring international e-commerce opportunities. In fact, since 1996, we have built a series of e-commerce sites, including the Online Trade Fair, the China Commodities Trade Market and the Online Yibo Mart, which are active in facilitating companies' participation in international e-commerce.

Q: E-commerce has been growing steadily in Asia. Has the CIECC formulated any specific strategies to deal with this growth? As a founding member of the PAA, what expectations does the CIECC have regarding the future development of this organisation?

A: The objective of the PAA is to promote cross border e-commerce within the Pan-Asian area. We hope that the Alliance will implement secure CA cross-certification, and share and exchange information by 2005. It is only at this stage that the PAA will really play an important role in international e-commerce.