Shenzhen, a booming city on the south coast of China, near Hong Kong, wishes to add to its high-tech export with the aid of e-commerce.
Affected by the recent global slump, Shenzhen’s local businesses, mostly SMEs heavily relying on export, are in a hard time to boost revenues as usual, meanwhile with keeping costs down becoming a prominent issue. In this situation, Shenzhen Government sees a chance to upgrade these enterprises with the aid of e-commerce, deemed a highly cost-effective channel to reach buyers. www.ecvv.com, an innovative business-to-business website that provides online presentation for suppliers and products, is among the e-commerce companies selected to back up by the government.
Nowadays, Shenzhen’s economics much incline to export-oriented manufacturers, 99% of which are SMEs. For the past years, these enterprises have made the city’s miracle of fast development. Situation, however, is not always good. They are also the ones that weather the austere climate of global economics. To help smaller businesses get through the difficulty, Shenzhen has put the support to e-commerce on the agenda, in the hope of recharging high-tech production with high-end Internet services.
The government has promised to prop Internet service providers that are able to bring more value to SMEs. Support policies involve introduction of talents, establishment of Internet industrial parks, tax reduction or exemption, and subsidies for overseas marketing.
According to Mr. Feng Dechong, vice director of Shenzhen Small and Medium-Sized Enterprises Center, e-commerce has great potential. Only 11% of the SMEs are using Internet for transaction and business development. And in Japan and South Korea, companies who use e-commerce more usually have higher transaction amount by 1 to 2 percentage points.
Most SMEs in Shenzhen are victims of the global wide recession caused by soaring oil price as well as domestic deflation policy, A latest report shows that in the first half year of 2008 67,000 SMEs in the country went bankrupt and more than 20,000,000 workers lost their jobs. Even in Zhejiang, the province with the most SMEs, 20% closed as a result of insufficient fund and reduced production.
What should the surviving SMEs do? “With the progress of e-commerce, SMEs are more likely to get rid of the tough situation. But B2B isn’t the cure-all. SMEs should always be concerned about how to put costs down to improve competition, under any circumstances. Putting money on affordable and effective channels, especially when the market is tight, is the ultimate way to make a success. In that sense, B2B is a solution.” Mr. Chen, CEO of ecvv.com, pointed out.