Many businesses 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 who want to do online business in a different country. According to the case study, unlike the rest of the world, China never has widely used credit because of its established cultural aversion to debt. The absence of credit cards as a payment choice is one of the cultural barriers that Western businesses encounter when conducting internet commerce with China. Additionally, the government of China has made it challenging for big payment corporations like Visa and Mastercard to open stores. The absence of such payment options in China makes it difficult to use online commerce to swap money for goods and services.
Moreover, most Chinese rarely visit foreign websites such as Google or Facebook 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 retailers and companies have discovered that using the WeChat platform rather than a direct-to-consumer smartphone app simplifies capturing consumers’ attention.
Technical obstacles
The Great Firewall of China that enables the Chinese government to control the internet through a combination of laws and technological measures is one of the technical barriers foreign enterprises encounter while conducting online business with China. According to the study, China can restrict access to websites from other countries, including Google, Facebook, Twitter, Snapchat, and the New York Times, 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, Initial deposits can be between $8,000 and $25,000. Moreover, annual service fees can range between $5,000 and $10,000, and commissions on sales are typically approximately 5%. Furthermore, the Chinese frequently adopt new technologies and business models outside the local market. For instance, Oppo and Vivo developed a smartphone that resembles Apple’s iPhone and has many of the same features but costs consumers half as much as an iPhone.
How cultural obstacles may prevent organizations from implementing e-commerce sites in China
Due to the low adoption of credit cards in China, some well-established foreign companies may be apprehensive about implementing e-commerce sites in China. 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 relatively expensive, especially if sales are weak.
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. China has its ideals regarding trusting particular suppliers and their goods or services.. If a company fails to pay its dues, it may be able to access the market and impact sales. The technological requirements for the Chinese internet filter could make operation challenging. It could be expensive to find alternatives.
China’s restrictions regarding the resources made accessible to its citizens make it quite challenging for foreign organizations to enter the Chinese e-commerce sector. 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 chosen not to target China’s market in e-commerce.
Steps a company could take to facilitate a successful e-commerce presence inChina
Conducting market research at the very beginning is one of the actions a company can take to facilitate a successful e-commerce presence in China. Finding out what Chinese customers like and don’t like can be done by researching where the customers 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. To benefit from e-commerce and maintain rural development, the Alibaba Group’s Taobao e-commerce platform, known as Taobao villages, evolved in rural China. The production-oriented Xishan, Qiaoyun, and Bainiu models and the market-oriented Beishan and Qingyanliu models made up the five Taobao village development models. Local governments and ICT companies also contributed significantly to the advancement of Taobao villages.
Moreover, Shaji area, a rural area in China, has been able to experience e-commerce opportunities. The first entrepreneurial seed was planted in the area. Afterward, residents in neighboring villages started to emulate the seed entrepreneur, which led to the scaling up and expansion of the seed business model. It is evident that e-commerce has provided opportunities for most rural areas in china.
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 purchasing and selling of products or services through the internet and sending of payments or data over 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.
However, 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 alter their consumption patterns by avoiding supermarkets, department stores, theaters, concerts, and fitness facilities to preserve their social distance. Pantelimon, Georgescu, and Posedaru (2020) argue that most people switched to online shopping, which fueled the expansion of businesses 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 business because recent corporate history has conclusively shown significant hazards in detaching business from ethics and values. Unethical accounting methods, harassment, 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 will therefore be 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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