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  E-business In China's Manufacturing Industry
May 20, 2008

China's e-business trading Yuan volume in the manufacturing sector reached 949.6 billion Yuan in 2007, up by 34.9% over 2006. Drivers for growth include favorable government policies, and manufacturing enterprises’ awareness of efficiency and cost benefits.

Large Chinese manufacturers like Baosteel Group, FAW Group, and SAIC Motor Corporation, have played an important role in e-business manufacturing application. They not only utilize third-party e-business platforms, but also have established their own e-business websites.

Large manufacturers drive the e-business ecosystem

Supply chain optimization, its associated efficiencies and cost savings are always an imperative for the manufacturing enterprise. Large manufacturers have the clout to drive their respective value chains.

 

 

 

 

 

 

Manufacturing E-Business Value Chain In China
Source: CCID Consulting, January 2008

Suppliers, systems integrators, channels and agents, and the customer all form the various components of the Chinese manufacturers’ supply chain. The e-business platform enables efficiencies through better and more current information exchange, more accurate and scaleable transactions, and hence more efficient resource allocation.

Moreover, the e-business platform, whether provided by the manufacturer or third parties, must realize revenues or cost savings in the long term.

Three business models emerge in China

CCID Consulting sees primarily three e-business models now, which are the Integrated E-business, Vertically Targeted, and Manufacturer Originated platforms.

Integrated eBusiness 

 

Provides comprehensive enterprise information, product information, research, and third-party B2B and B2C e-business trading services. There is some movement towards e-business website building and hosting.

Primary examples:

  • Advertising

  • Membership

  • Client/User Fees

  • Value-added Service Fees

Vertically Targeted

Provides vertically targeted product information and e-business trading services.

Examples:

  • Advertising

  • Membership

  • Client/User Fees

  • Value-added Service Fees

Manufacturer Originated

Provides services for the benefit of the manufacturer, suppliers, and customers, including online sales, procurement, logistics management, finance, research, subsidiary/supplier trading and other value-added services.

Primary manufacturer examples:

  • Baosteel Group Corporation Limited

  • FAW Group Corporation

  • SAIC Motor Corporation

Cost savings due to more efficient supply chain and direct customer sales.

Source: CCID Consulting, May 2008

Solid growth potential, but challenges remain

With the current developments thus far, CCID Consulting sees continued e-business development and Yuan volume growth in manufacturing. However, e-business adoption is still low, and applications narrow.

For commercial enterprises, CCID Consulting sees continued emphasis and development in the following:

  1. Improve e-business systems integration.
  2. Expand scope and penetration of e-business applications. One particular area is mobile e-business, which has better potential to reach smaller, upstream suppliers.
  3. Strengthen the infrastructure building for e-business applications.

CCID Consulting also believes China's government can play an important role, through policy and regulation, in facilitating manufacturing e-business development:

  1. Provide common standards for e-business trading.
  2. Encourage more market discipline in various business models.
  3. Improve the logistics, payment and financial environment.

 

For more information

Please contact us for these and other China-related data, information and products.

Unless otherwise specified, all information provided is sourced from CCID Consulting.

 
         
         
     

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