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by:
Jack M. Nilles
JALA International, Inc.
Los Angeles and Bonn, November 1999
Contact:
Gesellschaft für Kommunikations- und Technologieforschung mbH, Oxfordstr. 2, D-53111 Bonn
Tel.: (+49 02 2) 9 85 30-0, Fax: (+49 02 28) 9 85 30-12, Email: info@empirica.com, http://www.empirica.com, http://www.ecatt.com, Contact: Werner B. Korte
5 China
5.1 The economy
Figure 13: Estimated composition of the workforce in China
China is often called the world's largest sleeping giant. With a population of more than 1.25 billion, China comprises 20% of the world's population. Yet it is still definitely a developing country. Three-quarters of its workforce is engaged in farming and, although economic growth has been rapid in the past decade, GNP per capita is only about 12% of that in the United States, measured in purchasing power terms. Furhter, the country is in a recession, with 45% of state-owned industries losing money. Nevertheless, it has a growing information sector, as well as a continuing migration from the countryside to the cities. Figure 13 shows the expected changes in the composition of China's workforce.
Although the information sector appears to be a small sliver in Figure 13, it amounted to 16 million people by the end of 1998, one-fifth the size of the US information workforce.
Figure 14: Estimated Internet usage in China
While it might be said that the lack of telecommunications infrastructure (89 telephones per 1,000 population) is a handicap, it can also prove to be an advantage in China. Since there is essentially no antiquated plant to renovate, the network can develop digitally from the outset. The Chinese government began accelerating the development of the infrastructure to an annual growth rate of nearly 30% in 1998, while population growth is less than 1%. Still, the infrastructure is highly regulated, with heavy surcharges on international telecommunications (the charge for a three-minute phone call to the US is more than 600 times the cost of a local call), although local Internet access is very inexpensive. Furthermore, the government controls all telecommunications and tightly regulates Internet access to "undesirable" sites.
Nevertheless, privately operated ISPs and web sites are coming on line and Internet use is growing rapidly in China. Figure 14 shows the trend, with 9 million Chinese 'Netizens expected by the end of 2003.
5.2 E-commerce
There was very little active e-commerce in China as of mid-1999 but a number of tests were underway, from electronic banking with the Bank of China to some business-to-business trials by mainland Chinese firms. However, a number of factors inhibit the growth of e-commerce, ranging from regulatory issues to such fundamentals, for business-to-consumer e-commerce, as limited credit card use and security concerns. Multinational companies such as Hewlett-Packard (HP) are helping to solve the security issues. HP is also working with the Shanghai municipal government to develop an "e-commerce laboratory" to test and evaluate new e-commerce transaction technologies before they are made generally available.
Nevertheless, extensive levels of e-commerce in China appear to be several years away. Figure 15 shows our estimates for the country.
Figure 15: Estimated value of China' electronic commerce
5.3 New Ways to Work
Although data regarding telework in China are almost as scarce as those for e-commerce, it is possible to make some predictions of the growth of telework, based on decades of experience in the US. The current forecast is shown in Figure 16.
Figure 16: Estimated development of telework in China
Note the relatively high level of uncertainty here. If China were to follow the same development patterns as the US it might have as many as 85,000 teleworkers by the end of 2003. However, if matters are left to the private sector, the entry and telecommunications costs of telework could drastically reduce that number-to less than 10,000. The Chinese government shows much more interest in e-commerce than in telework.
