Cultural barriers for foreign companies that seek to conduct internet commerce in China
Many companies entering the global market, especially in the online platform, undermine the challenge caused by cultural differences. Although global consumer trends have become more uniform, values and decision-making systems still present significant challenges for foreign firms operating in different countries. According to the case study, unlike the rest of the world, China has never widely used credit cards because of its established cultural aversion to debt. One of the cultural hurdles that Western companies face when doing business online with China is the lack of credit cards as a payment option. Additionally, the government of China has made it challenging for big payment corporations like Visa and Mastercard to open stores. It is challenging to use online commerce to exchange money for goods and services in China due to the lack of such payment methods.
Moreover, most Chinese rarely use social media platforms like Google,Facebook or Twitter even when given a chance and prefer China’s monolithic platforms that control the market, such as Tencent’s WeChat, Youku Tudou, and Weibo. China’s domestic websites pose another challenging cultural obstacle foreign firms encounter while conducting online business with China. As the case study states, Chinese companies have discovered that application of the WeChat platform simplifies capturing consumers’ attention.
Technical obstacles
One of the technical obstacles international firms experience when doing business online with China is the Great Firewall of China, a system of regulations and technology controls that allows the Chinese government to censor the internet. According to the study, China can restrict access to social media platforms from other countries, and can slow down international internet traffic. Moreover, China has its own set of standards in terms of security, as it mandates that foreign companies store key data in China for security checks.
Organizational obstacles
One of the organizational obstacles foreign firms encounter when conducting online trade with China is the numerous hurdles that international enterprises are required to clear to enter China’s strong e-commerce market. According to the case study Chinese charges extremely high initial market entry costs, overpriced annual service fees and huge commissions on sale for a foreign country to run an enterprise in China. Furthermore, Chinese people routinely adopt cutting-edge technologies and commercial strategies from markets outside of their own and end up setting higher prices than other countries.
How cultural obstacles may prevent organizations from implementing e-commerce sites in China
Because credit cards are not widely used in China, several reputable foreign businesses might be afraid of setting up e-commerce sites there.Minimal usage of credit cards as a payment option forfeits any potential income the foreign firm would have made from China’s massive internet users. Apart from Venmo or PayPal, most nations often use credit cards as a payment method. Therefore, switching to a particular mobile payment platform for only one region could be expensive, especially with low sales.
How technical obstacles may prevent organizations from implementing e-commerce sites in China
Access to China’s local consumers by foreign firms may be difficult due to the Chinese government’s regulation of websites on the internet. With the time and resources required to target China’s market online, organizations may view implementing e-commerce sites as too risky. Restricting certain online websites results from China’s capacity to develop its goods and services that meet customers’ demands, such as offering items or services comparable to Apple’s iPhone, Google, Facebook, and Twitter. Since the rules are so demanding, many businesses have avoided targeting China’s market in e-commerce.
Social media platforms aids business enterprises in developing a good customer relationship which fosters customer loyalty. Moreover, firms are able to gather feedback from customers that helps in evaluating the performance of the business. It also broadens the customer base of the business that enables the business access global markets. Chinese’ restrictions of these social media platforms make it hard for enterprises to reach their customers. As a result, many retract from conducting online business with China.
How organizational obstacles may prevent organizations from implementing e-commerce sites in China
Some organizations may find implementing e-commerce in China quite expensive due to the enormous entry and maintenance costs required for an enterprise to operate in China. An organization may be unable to reach targeted profits since the rate of return on the invested capital might be lower than the costs incurred to operate the business.
Steps a company could do to enable a prosperous online presence in China
Conducting a survey in China’s market at the very beginning is one of the actions a company can take to to enable a prosperous online presence in China. Determining what satisfies Chinese customers can be done by researching where they shop and what they purchase. Moreover, agents of a company can travel to China and examine how competitors produce and price their products.
Focusing on gaining China’s market trust is another step a company should take to establish a successful e-commerce presence in China. The company should invest more in market entry costs and focus its energy on marketing, establishing good public relations, and adapting to China’s cultural trends, such as using established mobile platforms to make payments rather than credit cards.
Current e-commerce opportunities in China
According to Wang, Chin, Caputo, and Liu (2022), e-commerce has emerged as the most significant business activity, particularly in China, since it is one of the world’s largest and fast-growing economies. Due to COVID-19’s effects, e-commerce expanded even further to rural parts of china to suit the need to decrease personal contact. E-commerce has provided opportunities for most rural areas in china through the development of Taobao villages by Alibaba Group’s Taobao e-commerce platform. Local governments and ICT companies also contributed significantly to the advancement of Taobao villages by providing funds.
Moreover, Shaji, a rural area in China, has been able to experience e-commerce opportunities. Shaji area planted the first entrepreneurial seed, and afterwards, residents in neighbouring villages started to emulate it, leading to the scaling up and expansion of the seed business model.
Major factors driving the internationalization of business
The emerging global economic system that establishes worldwide networks through advanced technology has enabled the internalization of business. Moreover, effective communication, the use of modern technology, the application of global social standards, political stability, and knowing global market trends are some of the major factors driving the internationalization of business. Most enterprises with solid international networks are associated with successful businesses.
How current and potential future pandemics influence e-commerce growth globally
The global rise and expansion of the internet have created a platform for virtual interaction, creating new possibilities for implementing online purchasing and selling of products and services. The sale of products or services through the internet and making of payments through an electronic network is e-commerce( Pantelimon, Georgescu, & Posedaru, 2020). According to Pantelimon, Georgescu, and Posedaru (2020), some complementary industries have emerged due to e-commerce, including supply chain management, software development, storage and transportation services, and online marketing.
The current pandemic, especially COVID-19, has positively impacted the global growth of e-commerce ( Pantelimon, Georgescu, & Posedaru, 2020). Due to the pandemic’s unpredictability, many people started working from home. People altered their consumption patterns by avoiding physical business entities to preserve social distance. Pantelimon, Georgescu, and Posedaru (2020) argue that most people switched to online shopping, which fueled the expansion of organizations involved in e-commerce. During the pandemic’s peak, these firms tried to develop more robust business models to cater to the numerous internet customers. According to the authors, global e-commerce sales are expected to rise further in case of future pandemics since online shopping habits are likely to be the new norm in the future.
Potential ethical concerns in conducting business on a global scale
Trevino and Nelson (2021) argue that business ethics are crucial, particularly when running an international enterprise, because recent corporate history has conclusively shown significant hazards in detaching business from ethics and values. Unethical accounting methods, discrimination, and lack of business privacy due to social media’s rapid expansion are some of the most prevalent ethical issues in conducting business on a global scale (Trevino & Nelson, 2021).
The authors demonstrate how several corruption scandals involving organizations like Enron and WorldCom have altered public perceptions of various organizations and raised public awareness of which corporations to trust. Scandals have a lasting impact on the business and the nations involved since consumers lose faith in the company. The management is, therefore, compelled to divert resources from areas where they had been productive to track how many customers the business is losing and on strategies to rebuild trust. Enterprises are therefore urged to observe ethical practices while operating globally.
References
Pantelimon, F. V., Georgescu, T. M., & Posedaru, B. Ş. (2020). The impact of mobile e-commerce on gdp: A comparative analysis between romania and germany and how covid-19 influences the e-commerce activity worldwide. Informatica Economica, 24(2), 27-41.
Trevino, L. K., & Nelson, K. A. (2021). Managing business ethics: Straight talk about how to do it right. John Wiley & Sons.
Wang, Y., Chin, T., Caputo, F., & Liu, H. (2022). How supportive leadership promotes employee innovation under uncertainty: evidence from Chinese E-commerce industry. Sustainability, 14(12), 7491.
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