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BIZCHINA> Center
Entrepreneurs cash in on virtual gold rush
By Tuo Yannan (China Daily)
Updated: 2008-11-07 10:04

The fact that China has more Internet users than anywhere else in the world may be just another one of those statistical records that prompt cynics to ask: so what?

But to budding entrepreneurs like Han Ruotong of Beijing, the growing Internet population in China holds the promise of a gold mine. The 30-year-old former advertising executive quit her well-paying job several years ago to concentrate on her online pet shop. Instead of cats and dogs, her shop specializes in more exotic species, like Angora rabbits and chinchillas - a rabbit-sized rodent native to the Andes in South America.

Although Han, sharing her tight 14 sq m office with a dozen or so jittery animals in cages, has yet to hit the Internet jackpot, she has no regrets. "I know I made the right choice," she said. "I've always wanted to own a business."

Many other people from all walks of life who share Han's ambition are finding that the Internet substantially enabled them to become their own boss. There is no shortage of rag-to-riches stories in which the heroes, or heroines, turned their back on the old world and bravely embarked on their business ventures in cyberspace with nothing more than a personal computer and a mobile phone.

But this new gold rush is not blind speculation. The total online sales in 19 major cities in China amounted to 16.2 billion yuan in the first six months of 2008, according to the China Online Shopping Survey compiled by the China Internet Network Information Center.

The center noted that China now has 253 million Internet users. Another survey by international credit card company Master Card predicted that the number of Internet users in China will increase to 480 million in 2010. By then, the volume of online transactions in China is expected to overtake Japan and South Korea to be the highest in Asia, the report said.

Han has never seen those figures. She got into the online business because of a chinchilla, or six of them, to be precise.

One day, she happened to walk past a pet shop and fell in love with a strange looking furry animal in the window. It was, of course, a chinchilla. This one was not for sale, but it was possible to order them, with the minimum number being six.

After taking delivery of the six rodents, Han persevered and put the other five up for sale on Internet auction site Taobao.com. After they were all sold, she kept receiving enquiries from interested buyers. That gave her the idea to do what she had wanted to do all the time, start her own business. After just a couple of years, her online shop's revenue reached an average of 40,000 yuan a month. "That's better than I had expected," she said.

She is not the only happy online vendor. As of the first quarter of 2008, Taobao.com had more than 62 million registered members. Total transactions on the auction site in the first quarter of 2008 topped 18.8 billion yuan, compared with 43.3 billion yuan for the whole of 2007.

Individual traders are not the only ones to open online shops, big companies and multinational companies are also seeking business opportunities on the Internet. Lenovo Group, the world's fourth-largest PC maker, launched a Taobao online store on Aug 26 to sell products directly to consumers. The company said this was part of its efforts to expand its marketing channels, and would keep on tapping the new online shopping platform to boost its business scale.

Along with C2C and B2B, B+B2C now exists in China. Qeeka.com, as a "B", set up an e-commerce platform for various suppliers (B) and users (C) aged between 25 and 40, creating a new online shopping mode. In this mode, the supplier, supervised by the website, provide a discount through the online shop, and the online shop gathers a lot of individual consumers to make a single bulk order, delivering price reductions of up to 30 percent.

It is a bilateral business mode for both sides. The price of group procurements is fairly low for consumers since group shopping eliminates the sales link and results in cost reductions for suppliers, On the other hand, suppliers are able to get the full amount of cash group-buying orders while they have to accept divided payment from supermarkets and project contractors.

"The monthly fee for keeping an online shop is from 1,000 to 10,000 yuan, and the annual income for online shop will be over 30 million yuan for Qeeka," company founder Deng Huajin said. The group procurement volume was 140 million yuan in 2006, with a growth rate of 120 percent year-on-year; the platform sales volume reached approx 300 million yuan in 2007 and will exceed 1 billion yuan this year.

"I am preparing to decorate my new house this month, and me and my wife made lots of inquiries at decorating retail supermarkets, finally I tried online group shopping, saving me almost 15,000 yuan on ceramic tiles and the kitchen sink. Before that, I had no experience of online shopping, as it is not easy to accept this new way of shopping at my age, but now I think buying on the Internet is a good thing, and I feel young and fashionable when I discuss online shopping with my son," said Li Xin, a 45-year-old salesman in Shanghai.


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