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E-commerce and Import/export

E-commerce is the acronym for electronics commerce which means executing buying and selling of goods and services (payment processing included) and the associated due diligence on the internet for domestic and global sourcing. Import and export operators were cautious in their initial reaction to the new way of international trade.

-Concerns of International Trade over E-Commerce and Global Sourcing

International trade community was skeptic about e-commerce let alone conducting import/export and global sourcing. It is harsh to blame them for not conducting their regular global sourcing and international trade activities as there were gaping security concerns as there was lack of awareness. E-commerce isn’t all about money transfer and/or credit card processing over internet as was assumed. The present day, e-commerce permits online shopping, e-filing of customs documents enquiry floating and invoicing before a single dollar is transmitted. All these are exact same activities involved in offline import/export in a global sourcing scene with huge amounts of time and labor removed.

More over, the security concerns are effectively addressed specific to private business and money transfer with applications like SSL and firewalls. The SSL technologies are so easy that even freshers can avail them and launch global sourcing if they possess requisite import and export licenses.

-Limitations of E-Commerce in Online Import and Export

Let me declare, the limitations of e-commerce aren’t technical lacunas but inadequacies to the conduct of international trade like global sourcing and import and export. An e-commerce portal failing to convey the value proposition of a sound product defies seller expectation much unlike the focused selling by offline retailers.

Wrongful estimations of resources, timeframe/sequencing are common in an automated import/export supported by e-commerce/global sourcing. Your best efforts, products may not reach the deserving import/ export traders looking for global sourcing unless otherwise followed up by direct marketing.

E-commerce companies in international trade are constantly innovating and have succeeding in their endeavor. Amazon and BizRate are doing not just global sourcing but import and export also through e-commerce backed up by ground operations. If stock/commodities trading and banking around the globe is a success, it’s mainly due to the robust e-commerce. Import and export as well as international trade laws are suitably amended to ensure secure commerce.

Forget the likes of Amazon or BizRate; tiny businessmen are in international trade and are doing import/export besides global sourcing, day in and day out, thanks to e-commerce over the popular website EBay.

E-commerce in Global Sourcing Scenario

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-What Is E-commerce And How Does It Augments Global Sourcing

E-commerce or electronic commerce, as it is popular, allows domestic as well as international trade over the Internet. The advent of E-commerce is boon for global sourcing and import and export. The boost to global sourcing and import/export through E-commerce is because of its to conduct online marketing, monitoring supply chain and monetary & data transaction in a dependable manner.

-Evolution of E-commerce with Global Sourcing

It is hard to tell whether import/export volume has swelled because of E-commerce but sure it made global sourcing easier to monitor with its evolutionary phases. Three decades ago, it facilitated fund transfers- albeit electronically besides facilitating exchange of POs and invoices in international trade. Electronic teller machines are the recent manifestations now overtaken by internet creditcard processing and endorsement of unsigned invoices even in international trade.

-Why is E-commerce Popular in International Trade and Import/Export

Looked at from both import and export traders’ perspective, international trade is easier conducted electronically. Here are the points why present international trade depends much on E-commerce.

1. Quick and ease of setting up E-commerce storefronts for both global sourcing as well as import/export

2. Automatic running off of an import and export outfit without having to recruit many staff

3. Global sourcing agents/companies can evaluate/list import/export vendors online

4. Software assisted documentation for each global sourcing and import export transaction

5. Ability to handle multiple, quick and secure data and money transaction crucial to international trade, simultaneously

-Security Concerns in E-commerce Assisted Global Sourcing

E-commerce is not without security concerns, loss/misuse of encrypted data which are still being seriously being viewed by import/export operators before engaging in international trade electronically. The truth is E-commerce providers employ SSL (Secure Sockets Layer) to encrypt data/money (remember banks) transfer from your desktop to your clients’. You can say, E-commerce is secure for both import/export operators as well as global sourcing agents alike.

E-commerce has arrived on the global sourcing scene as both import and export and international trade partners are accepting it. Despite its growing stature and popularity E-commerce is still thriving in retail sector domestically and the international trade needs to cover a long distance before it catches up. Another reason for import/export operators’ leaning towards E-commerce is the growing costs of delays in processing POs and invoices through traditional methods which render global sourcing useless.

E-commerce 1

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E-commerce is nothing but import and export of products of international trade through Internet and other available computer network resources. The best part of the e-commerce process is the whole set of import and export of products and goods are done through Internet and the shopper or trader is able to choose the required product and the financial transaction is done through using either credit card or money transfer.

The websites which provide e-commerce will provide the photos of the products in an online catalogue, and the prices are quoted and the trader can choose the product and respectively import or export if it is an international trade and through this service of e-commerce the global sourcing has come so handy now a days.

This process of e-commerce enables the customer to view the products online, without wasting much of his time. If the trader is on international trade, the job becomes easier as e-commerce enables him more time and choices to view more products, which are imported and exported.

The e-commerce process is much easier as selling offline such as in show rooms, will cost you more, and time consuming too. As it involves telephone, e-mail and even sometimes the sales executive has to visit the customer’s place of business. But in the e-commerce process, even international trade can be carried out without much trouble, as posting of the products will do more than enough. The main gain is for the international trade in the long run. As the customer need not visit the showrooms, internationally to go through his products, the customer or trader access through the e-commerce website links and accordingly import and export the products and goods.

Another important criterion in the e-commerce websites is that the financial, personal information disclosed by the trader should not be sold to any other company for any other solicitation process. Confidentiality will gain more market for the e-commerce projects in the long run for international trade.

The next factor, which disturbs the mind of the consumer or trader through e-commerce websites that too on an international trade is that the customer feels that in the long run he may feels dissatisfied with the product as the products is not been examined physically.

To satisfy a trader or a consumer of international trade who does more of global sourcing is that more of FAQ’s and a detailed technological support, which will be provided through the service period, should be mentioned in the e-commerce websites.

The e-commerce website which proceeds in global sourcing and international trade should be able to design their website in such a way that it is applicable for all small, medium and big sized companies. Particularly, the e-commerce website which deals in international trade should be well designed by professional experts, so that by one single click the customer or trader who wishes to import and export the products on global sourcing should be able to get the required details. Thus, the global sourcing process, which is been carried out by e-commerce, can flourish.

E-commerce: Triggering a Revaluation of Global Transfer Pricing

Paper presented on

“E-commerce: triggering a revaluation of Global Transfer Pricing”

in Seminar on Accounting Issues

by

Shabiha Durga

Research Scholar, UCCMS, Mohan Lal Sukhadia University, Udaipur

E-commerce: an insight

The fast development of technology has revolutionized the entire concept of business and commercialization since the last two-three decades. World is shrinking with the expanding electronic culture encompassing the business community. E-commerce enables the cross-border business transactions in real time, making the users more contented through effortless dealings from their own work stations or homes. Be it exchange of information, filling the shopping cart, orders processing, making payments or receiving invoices; everything has now been made electronic. No more has a housewife to rush to the nearest kirana store or drive 10 kms from her home to the shopping mall in the city to fetch the household items. All she needs to ease herself from these time consuming visits is to get an access to the internet and shop every listed item sitting comfortably at her home! And this is what the present day shopping culture is. The whole metrics of the stores have now transformed drastically. The small mismanaged store at the end of the street has now been replaced by the online stores, and the shopkeepers by the customer care cell guiding the virtual customer to shop well.

E-commerce is gaining the popularity very fast

? Low set up cost: The online services provided by the organizations do not call for any huge investments and not even physical merchandise in many cases. The large retail showrooms simply display the products on the site.

? Free market: The market of e-commerce is not having any restrictions on entry of the sellers of goods or services. It is limitless and hence serves as a good platform for the budding and small players too.

? Global access: Same as for the number of sellers in the market, there is no restriction to the buyers of the commodities. E-commerce has a much wider customer base than a physically operated store or service station.

? Technology: With the rapidly growing avenues in e-commerce, the newer technologies are mushrooming day-by-day to make it more effective and user friendly.

? Real time transactions: Transaction via electronic carriers is less time consuming and more effective.

? Cost effectiveness: With the shortening supply chains, the direct effect is on prices of the final products.

? Ease of payments: many services make payments easy via the internet. Smart cards and credit cards services provided by internet shopping are assured of security and hence improvise the standards.

? Personalization: The websites keep a track of past orders made by a particular customer, so that when he returns at a later stage, he is guided to those links he visited earlier.

Globalization of the economy, shorter product life cycles, hard-hitting competition and frequent changes in technology are some of the many factors giving rise to the emergence of e-commerce. Keeping up with the Darwin’s theory of “survival of the fittest” every organization is trying hard to board the new age band-wagon.

The concept of Transfer Pricing

Transfer pricing refers to the pricing of goods and services within a multi-divisional organization, particularly in regard to cross-border transactions.

Transfer pricing is the price that is assumed to have been charged by one part of a company for products and services it provides to another part of the same company, in order to calculate each division’s profit (or loss) separately. Transfer pricing provisions primarily require any income arising out from an International transaction between two or more associated enterprises to be at arm’s length price and comparable to similar transactions between unrelated enterprises.

In order to discover the correct profitability, the firm should be sure that interdivisional transfer prices are the prices that would have been paid had the transactions been independent companies, so-called “Arm’s length prices”. Transfer pricing assumes greater significance in case of entities with a number of affiliates and subsidiaries located in different currency areas and under different legal and political systems. In overseas operations the MNCs may be confronted with many complicated variables such as differential taxes, tariffs, exchange controls, government regulations, inflation, political systems, etc.

Relevance of Transfer Pricing methods in E-commerce

In the age of IT enabled transnational exchanges of commodities, the concept of transfer pricing holds a major significant role. To ease the commodity and service transfers, the new international transactions, policies and protocols are getting moderated accordingly. Now, the MNCs have awakened to the fact that international accepted transfer pricing methods are no longer applicable to e-commerce cross-border activities. Also, they are aware that their corporate financial officers and accountants must help reduce the risk of transfer pricing tax audits of either Internal Revenue Service or host countries’ tax authorities. As multinationals manage their cross border global business transactions, traditional transfer pricing for e-commerce transactions may be more difficult to apply to reduce their worldwide tax liabilities and globally integrate their production and marketing strategies.

Earlier, the transfer pricing tax regulations were written within the framework of national sovereignty in tax system before the discovery of e-commerce. Tax authorities consider ecommerce as a threat to revenues from traditional income tax systems and; therefore, they are pushed to ensure their tax system integrity by closing the loopholes for either tax avoidance or tax evasion through the use of ecommerce. On the other hand, corporate financial officers (CFO) and accountants who work for MNCs should ensure that their transfer pricing policies reduce the risk of audits. To protect their tax bases, tax authorities must ensure they collect a fair amount of corporate income tax from multinational corporations (MNCs) operating in their jurisdictions and have become more alert in enforcing the rules of transfer pricing. MNCs could face inconsistent and unfair treatment of cross-border transactions, double taxation and penalties for noncompliance with different tax regulations of different countries. The complexity of the issue might require MNCs to redefine and update their strategies to go with the new challenge of the information technology in the twenty-first century.

Maguire (1999) argue that e-commerce may not present new transfer pricing problems; it only magnifies exiting issues such as the valuation of intangibles and services, and compliance with documentation and information reporting requirements. Moreover, the Organization of Economic and Cooperation Development (OECD) still think that existing principles in dealing with e-transfer pricing transactions are adequate, and that e-commerce has not presented any fundamentally new problems for transfer pricing. However, due to rapid development in communications resulting in instantaneous transmission of information, tax administrations are concerned that it may become more difficult to identify, trace, quantify and verify cross border transactions, and there are difficulties in applying internationally accepted transfer pricing methods to e-commerce.

MNCs, tax authorities, and international organizations are at the crossroads of not being able to solve the complicated problems created by e-commerce and international transfer pricing transactions. As MNCs mange their cross border business transactions, transfer pricing methods and strategies for e-commerce may be more difficult to apply in reducing their tax liabilities and integrate their production and marketing strategies on a worldwide basis.

First, the issues of choosing the right transfer price that fits the nature of cross-border ecommerce activities will be investigated.

Second, taxation of products or services transferred through the Internet by tax authorities will be discussed. Finally, certain guidelines to protect MNCs and reduce their risk against transfer pricing audits by tax authorities will be recommended.

Methods of Transfer Pricing by E-commerce based MNCs:

It is presumed that the use of non-traditional business practices such as the web by online retailers should not theoretically result in generated income being treated differently for tax purposes. However, the nature of ecommerce business tends to mix up national borders and the source of income. Under Section 482 of IRC, the permissible methods for determining an arm’s-length price are: (a) comparable uncontrolled price method, (b) resale price method, and (c) cost-plus method.

The three methods are required to be used in order, and a fourth alternative method may be used for all other situations in which none of the first three are considered appropriate and reasonable. The fourth one can be based on profit-split approaches such as the comparable profits method and several split-profit methods.

The OECD transfer pricing guidelines were first issued in 1979 and have become internationally respected. They maintain the arm’s length principle of treating related enterprises within a multinational group and affirm traditional transaction methods as the preferred way of implementing the principle.

OECD’s definition of Arm’s length principle

Although there are discrepancies in the specifics of each country’s laws concerning the application of the arm’s length principle, the fact that they are primarily based in the OECD Guidelines means that, although such a strategy carries a greater taxation risk than solutions tailored to each country, global transfer pricing policies can be effectively used to determine an appropriate range representing the arm’s length price for transactions carried out across a global enterprise.

However, different countries may accept different methods of calculating the transfer price (i.e. Japan requires that the three “traditional” methods, outlined below, be systematically discounted before allowing the use of alternative methods, while the United States accepts the most appropriate method regardless), so care must be taken in such circumstances. In addition, some countries may have immature transfer pricing regimes or apply the arm’s length principle in different ways—Brazil, for example, does not apply the arm’s length principle despite the existence of transfer pricing legislation.

Traditional methods

1. Comparable Uncontrolled Price method

The Comparable Uncontrolled Price (CUP) method compares the price at which a controlled transaction is conducted to the price at which a comparable uncontrolled transaction is conducted. This makes it the easiest to conceptually grasp, as the arm’s length price is, quite simply, determined by the sale price between two unrelated corporations. However, the fact that virtually any minor change in the circumstances of trade (billing period, amount of trade, branding, etc.) may have a significant effect on the price makes it exceedingly difficult to find a transaction–much less transactions–that are sufficiently comparable.

Should they exist, such comparable transactions fall into two categories: external comparables and internal comparables. The former is a comparable uncontrolled transaction in the purest sense of the term–if Company A, in France, sells widgets to its subsidiary A(sub) in Turkey, then an external comparable transaction would be the sale of widgets from French Company B to Turkish Company C (an unrelated enterprise) on identical terms as the trade between A and A(sub). An internal comparable transaction, then, would be either the trade of widgets between Company A and Company C, or the trade of widgets between Company B and Company A(sub), with the term “internal” referring to the fact that one of the parties involved in the tested transaction is also involved in the comparable uncontrolled transaction.

2. Cost Plus method

The Cost Plus (CP) method, generally used for the trade of finished goods, is determined by adding an appropriate markup to the costs incurred by the selling party in manufacturing/purchasing the goods or services provided, with the appropriate markup being based on the profits of other companies comparable to the tested party. For example, the arm’s length price for a transaction involving the sale of finished clothing to a related distributor would be determined by adding an appropriate markup to the cost of materials, labour, manufacturing, and so on. Cost based method calculates transfer price on the cost of the goods or services available as per the cost accounting records of the company. The method is generally accepted by the tax customs authorities, since it provides some indication that the transfer price approximates the real cost of item. Cost based approaches are how ever not as transparent as they appear. A company can easily manipulate its cost accounts to alter the magnitude of the transfer price. Companies that adopt the cost based transfer pricing method have to choose between alternative approaches : Actual cost approach Standard cost approach Variable cost approach Marginal cost approach

Apart from this, companies also have to decide on the treatment of fixed cost and research and development cost. These issues can prove problematic for the company that adopts a cost based transfer pricing method. Cost based method usually creates difficulties for the selling profit centre. As their incentives to be cost effective may fall, if they know that they can recover increased cost simply by raising the transfer price without an incentive. To produce efficiently the transfer price may erode the competitiveness of the final product in the market place.

3. Resale Price method

The Resale Price (RP), while similar to the CP method, is found by working backwards from transactions taking place at the next stage in the supply chain, and is determined by subtracting an appropriate gross markup from the sale price to an unrelated third party, with the appropriate gross margin being determined by examining the conditions under which the goods or services are sold and comparing said transaction to other, third-party transactions. In our clothing example, then, the arm’s length price would be determined by subtracting an appropriate gross margin from the price at which the distributor sold the products received from the manufacturer to third-party retailers–department stores, boutiques, etc.

In this example, both the CP and RP methods are being used to examine the same transaction–the one between the manufacturer and the distributor–meaning that the selection of one for use is ultimately dependent on the availability of data and comparable transactions. This flexibility is not available in other transactions, particularly those involving intangible goods (i.e. it is exceedingly difficult to determine the costs involved in developing technological know-how, and so the arm’s length price for the payment of royalties from one company to another is best determined by working backwards from the profits gained based on the usage of the know-how–in other words, the RP method).

Internal Revenue Service

Section 482 of the Code authorizes the IRS, (United States Department of Treasury) to adjust the income, deductions, credits, or allowances of commonly controlled taxpayers to prevent evasion of taxes or to clearly reflect their income. The regulations under section 482 generally provide that prices charged by one affiliate to another, in an intercompany transaction involving the transfer of goods, services, or intangibles, yield results that are consistent with the results that would have been realized if uncontrolled taxpayers had engaged in the same transaction under the same circumstances.

Profit allocation will usually be according to the distribution of corporate sales, with the sales valued at the “correct” exchange rate. The advantages of preventing distortions in transfer prices must be balanced against the potential gains from using distorted transfer prices to reduce tariffs, taxes, political risks, and exchange losses. This balance can be a difficult problem for multinational corporations.

Benefits of E-commerce in China

Body:

International trade and e-commerce industry of China is the source of development of this country in global sourcing. Over the years, China has slowly but gradually moved along the success path and much of it has been credited to the use of new technology and business approaches in international trade. E-commerce has served a lot and the benefits are uncountable.

Some well known benefits of e-commerce in the business scene of China are:

-Increased import

With the initiation of e-commerce in China, retail store owners have great many options to sell their products which are provided by manufacturers, distributors, and the suppliers through international trade. It offers the consumers a number of choices to select from wide range of e-commerce product. The cost of production has reduced greatly and income generated has increased in international trade. Even opting for import business on a large scale is very easy now, and all due to e-commerce practices in China.

-Increased export

Due to e-commerce processes finding new customers in foreign countries has become easy for the Chinese manufacturers. Foreign market and global sourcing is largely being targeted by the Chinese manufacturers, and e-commerce is proving to be beneficial for it. Selling product via e-commerce in various countries also increases the chances of profitable returns. Now you can protect your transactions with foreign customers in international trade by using letters of credit.

-Easy Licensing procedure

The process of becoming a licensing agent in Chinese e-commerce is very easy. It assists in global sourcing and e-commerce business. With it you can get royalties by selling online the products of domestic sellers to foreign corporations.

-Earn good amount of fees by finding the buyers

Through e-commerce you can make very good amount of money in the form of fees from domestic companies by arranging foreign buyers for international trade with them.

-Drop Shipping

Drop shipping is an important term in e-commerce. It means a product delivery service provided by wholesalers or distributors to the customers in global sourcing. The sellers or drop shippers are often engaged with the retailers to sell their products in international trade. In such services you are not required to handle customs declarations or broker details.

-Service of Mail Order

You can insert a mail order service with the current business process in e-commerce. In this process you can place your order online to your suppliers, retail stores and other businesses and will in turn increase your sales greatly. This method of selling via e-commerce is very conducive for global sourcing in China.

Thus e-commerce in China assists in increasing the business opportunities on a large scale. It provides an impetus to global sourcing and helps in reaching the customers through online mode of business.

2009 China international e-commerce conference will be held on September 12, 2009 in Guangdong province

News from China B2B research center, 2009 China (Guangdong) international e-commerce conference will hold on September 12, 2009 in Baiyun International Conference Center ceremoniously in Guangzhou.

Organized by the Guangdong Provincial Information Industry Department, the Guangzhou People’s Municipal Government and China Electronic Commerce Association, the conference set “to promote innovation, boost transformation, and strive for creating the International Electronic Commerce Center” as the theme and hold around the target of how to achieve “further establish the Pearl River Delta Region International E-Commerce center “.

Except some major officials from relevant departments will attend the meeting, the meeting also invited many seniors of leading enterprises on e-commerce home and abroad, such as China Mobile, China Union Pay, Alibaba, Tencent, IBM, Cisco, Google, Amazon, eBay, and the European Union Resident Representative in China, Hong Kong and Macao delegates and local service providers.

The meeting will give a platform to present e-commerce application, supporting system and safeguard measures, exchange experience, share new ideas, analyze application cases, inspire the participants thinking, and open the sight of practitioners.

E-commerce is a new industry representative and the core of the modern industrial system with a flexible response capabilities and broad space for development.

It is not only a technology tool for businesses to recruit more business, but also basing on the level of industry resources allocation through the effective integration of procurement, manufacturing, sales, channels, payment, information, logistics and other activities to establish a new marketing and growth mode.

E-commerce can help SMEs break through the regional restrictions and trade monopolies in the international competition. Spreading and deepening e-commerce applications, could also contribute to the innovation and development of traditional industries, which plays a pivotal role in assisting upgrading the regional economy.

The conference is the largest e-commerce activities of the southern area so far, which provides participants a perfect opportunity for comprehensive revealing the nature of e-commerce and in-depth understanding panorama of the international e-commerce center.

As a winner of domestic e-commerce, epathchina.com (www.epathchina.com) certainly will concentrate on the great issue. This is a good chance for epathchina.com to learn advanced marketing features from other excellent e-commerce enterprises and conclude work experience to make up for its own deficiencies.

Epathchina.com also makes an effort of keeping pace with Ebay.com, Amazon.com, Alibaba.com dhgate.com etc. and shortening the distance. Epathchina.com strives for standing as a winner of international e-commerce in the end.

Globalization of E-commerce in Business

  

  

TABLE OF CONTENTS

 1.0 Introduction

2.0 Literature and theories 3.0 Globalization of E-Commerce in Business 4.0 Research Methodology, Data Collection and Analysis 5.0 Future Research 6.0 Conclusion 7.0 References

  

1.0    Introduction

This paper examines how globalization of e-commerce is impacting business in general. With the increase of internet-based technologies, it has been the reason for recent stimulus globalization. In this Information Age, Internet commerce is a powerful tool in the economic growth of developing countries. While there are indications of ecommerce patronage among large firms in developing countries, there seems to be little and negligible use of the Internet for commerce among small and medium sized firms. E-commerce ensures better business in the SMEs and sustainable development of economics for developing countries. However, this is based on strong political will and good governance with a responsible and supportive private sector within an effective policy framework. As we know the complete definition of E-commerce is the use of electronic communications and digital information processing technology in business transactions to create, transform, and redefine relationships for value creation between or among organizations, and between organizations and individuals. E-commerce allows companies to increase their sales in domestic and foreign operations and the flexibility afforded by the technology also provides less costly opportunities to locate operations strategically. E-commerce not only reduces communication costs, but also increases flexibility in locating activities. Research point indicates that internet technology has led to an increase in international trade (Freund and Weinhold, 2002, 2004). This is the evidence of how it suggests profits from foreign operations have also increased in recent years (Hilsenrath, 2005). In the emerging global economy, e-commerce has increasingly become a necessary component of business strategy being a strong catalyst for economic development. Integration of information and communications technology (ICT) in business has evolved the relationships within organizations and those between and among organizations and individuals. The controversial current social and economic trends are globalization and the widespread adoption of information and communication technologies (ICTs). Many argue that these two trends are closely associated, each driving the other forward, and both being driven by other common forces, such as trade liberalization, deregulation, migration, and the expansion of capitalism and democracy (c.f., Held et al., 1999). Pohjola (2002) argues that the twin forces of globalization and the ICT revolution are combining to create the so-called New Economy, marked by higher rates of economic and productivity growth. “Technology is both driven by and a driver of globalization, as both forces continually reinforce one another” cited by (Bradley et al., 1993).Specifically,the use of ICT for ecommerce in business has enhanced productivity, encouraged greater customer participation, and enabled mass customization, besides reducing costs.Prior to development in the Internet and Web-based technologies, the distinctions between traditional markets and the global electronic marketplace-such as business capital size, among others-are gradually being narrowed down. Strategic positioning is the ability of a company to determine emerging opportunities and utilize the necessary human capital skills (such as intellectual resources) to make the most of these opportunities through an e-business strategy which is simple, workable and practicable within the context of a global information and new economic environment. Together with the appropriate strategy and policy approach with e-commerce enables small and medium scale enterprises to compete with large capital-rich businesses. On another plane, developing countries are given increased access to the global marketplace, where they compete with and complement of the more developed economies. Most of the developing countries are already participating in e-commerce, either as sellers or buyers. However, to facilitate e-commerce growth in these countries based on globalization phenomenal, the relatively under-developed information infrastructure must be improved. Significantly, economic trend of the past decade is the growing use of the Internet for conducting business. Many firms are being driven toward greater adoption of e-commerce by pressure to compete at the global level. The Internet and e-commerce are part of the process of globalization. Globalization is generally regarded as the increasing interconnectedness of the world through flows of information, capital, and people facilitated by trade and political openness as well as information technology (IT). “Beyond this, however, the nature and impacts of globalization are highly contested” cited by (Held et al., 1999). Convergence theorists regard globalization as a universal process of homogenization in which countries tend toward a common way of producing and organizing economic life with resulting common social outcomes (Bell, 1973; Ohmae, 1990, 1995). Divergence theorists argue that national diversity in the pursuit of differing social and economic outcomes will prevail and prevent convergence from taking place (Berger & Dore, 1996; Boyer, 1996; Hirst & Thompson, 1996;Wade, 1996). Transformation theorists regard globalization as an uneven process involving elements of both convergence and divergence, in which countries around the world are experiencing a process of profound change as they try to adapt to a more interconnected but uncertain world (Giddens, 1991, 2000). Globalization is being intensified by the spread of the Internet, linking businesses and individuals around the world into a common electronic network. There is great excitement about the Internet’s potential for removing geographical obstacles to economic growth and for achieving global integration in developing as well as in industrialized countries. A related concern is that uneven diffusion of e-commerce and the Internet is creating a “digital divide” and exacerbating the gap between rich and poor countries referred by Norris, 2001. Therefore, we are interested broadly in understanding the extent to which the Internet and e-commerce are diffusing among different countries, and the nature of their impacts on the globalization debate. However, in this article, we focus more narrowly on identifying the key factors shaping e-commerce diffusion globally in business. This paper examines that global forces such as competition and global production networks are common influences across different countries. Global forces are varied and uneven due to national characteristics such as information infrastructure, business innovation/entrepreneurship and consumer preferences and national policies that create different market and telecommunications regimes—variously driving, facilitating or inhibiting adoption (Boyer, 1996; Wade, 1996;Dedrick & Kraemer, 1998). With reference to International Data Corp (IDC) that estimates the value of global e-commerce in 2000 at US$ 350.38 billion. This is projected to climb to as high as US.14 trillion by 2004. IDC also predicts an increase in Asia’s percentage share in worldwide e-commerce revenue from 5% in 2000 to 10% in 2004 (See Figure 1 – Worldwide E-Commerce Revenue, 2000-2004). Asia-Pacific e-commerce revenues are projected to increase from .8 billion at year-end of 2001 to 8.5 billion by the end of 2004. Overall, this research makes several contribution, data collection primarily had been done in this paper to analyze on how globalization of e-commerce will benefits business moving forward in the future.

 

 2.0    Literature and Theories 

A review of principal and current literature on e-commerce is to explore the conceptual relationships of how globalization can give an impact to business electronically. Empirically, E?Commerce generally refers to the use of the internet for buying and selling activities including advertising, invitation to treat negotiation and conclusion of contracts (Rodgers, Yen and Chou, 2002; Chen and McQueen, 2008; Simpson and Docherty, 2004). E?Commerce adoption globally was first studied from the information systems perspective rather than the business perspective. The early studies identified critical success and failure factors on implementation of information systems studies on e?commerce adoption in business with specific geographic focus became popular in the last decade. Studies was conducted on worldwide firms such as Cisco Systems, Dell Computer and General Electric report impressive payoffs by making the Internet a key element in their strategies and business models, and by transforming their “brick-and-mortar” operations into e-commerce organizations. Cisco Systems and Dell Computer report in excess of 250% return on invested capital and over USD 650,000 in revenue per employee from their e-commerce operations. They had generated the highest gross profit margin in their respective industries. From a survey finding of over 400 information technology managers worldwide, relative to larger firms, smaller businesses who make effective use of Internet opportunities may also find that they are more innovative, faster in responding to environmental demands, and better able to quickly change or adapt business models to gain competitive advantage (Engler 1999). As a result, traditional firms, especially small organizations, are under increasing pressure to follow suit, and to achieve the often-cited benefits of e-commerce. Electronic commerce or e-commerce describes the use of electronic means and platforms to conduct a company’s business quoted by Kotler, 2003. Electronic commerce, also known as e-commerce, is more specific than e-business, it means that in addition to providing information to visitors about the company, its history, policies, products, and job opportunities, the company or site offers to transact or facilitate the selling of products and services online cited by Kotler 2003. Ecommerce is the process of buying and selling goods and services electronically with computerized business transactions using the Internet, networks, and other digital technologies referred by Laudon and Laudon, 2005. E-commerce (EC) builds on the structures of traditional commerce by adding the flexibility offered by electronic networks. Existing research points out that EC can offer readily discerned benefits in comparison to traditional environments through reduced transaction costs and search costs, more competitive product prices (Bakos 1991) and improved transaction efficiency (Srinivasan, Kekre and Mukhopadhyay 1994; Lee and Clark 1996). In the e-commerce research literature, greater levels of e-commerce adoption have been linked with improved organizational performance (Kraemer, Gibbs and Dedrick, 2002). Companies that adopt internet technology in various activities are aware of this benefit and hope to improve competitive advantage, communication, and products and services when they adopt e-commerce (Berrill, Goode and Hart, 2004). Diffusions of Innovation theory (Rogers, 1995) has been used as a basis for exploring e-commerce adoption in multiple studies. Diffusion is defined as the process by which an innovation is communicated through certain channels over time (Rogers, 1995). In relation to e-commerce adoption, the adoption of and the success in e-commerce has been tied to organizations? risk acceptance and tolerance of uncertainty (Featherman and Pavlou, 2003; Gibbs, Kraemer and Dedrick, 2003) It is important for businesses moving to the business to-business e-Commerce sector to evaluate all aspects of their organization and performance. Based on business need,the factors which will determine successful transformation, and then direct strategy and resources towards those factors.

 

The literature on e-Commerce adoption by businesses suggests that most research is based on four frameworks:

(1) The diffusion of innovation .

(2) The Technology-Organization-Environment Model

(3) Institutional theory

(4) Resource-based theory

 

 

3.0    Globalization of E-commerce in Business

Globalization of the buying behavior refer to organizations which are are open to suppliers from outside the local country.This type of organization are willing to consider foreign suppliers for the goods and services required for their business. Globalization of buying behavior could be highly global in which almost all the requirements of a particular category of goods and services which are sourced from abroad. It cannot be global at all with all services and goods being procured from within the home country as well as various other intermediate possibilities. There are few factors impacting globalization of e-commerce in business. In countries national environment perspective, we investigate each element and how it determines e-commerce diffusion across countries globally:-

1. Population and Demographic

With reference to (Table 1 –Demographic Overview and Urbanization)) and Table 2 (Population) below cited by W. Koenig, R.T. Wigand and R. Beck (2003); what we can summarized is that the German age distribution leans toward an aging population (Table 1) below. The number of inhabitants in Germany, and Europe, will continue to decrease until 2010, whereas in the U.S the population is increasing. In terms of consumer buying and the growth of the Web economy, the proportion of the relevant age group of 15-49 year olds, will decline quoted by [Zerdick et al., 2001]. Prior to (Table 2 – Forecast of Population Changes to 2010) as below, Table 2 shows that Germany’s population will decline in this decade to approximately 78 million inhabitants. A lower population base means fewer consumers and, together with the aging phenomenon, fewer employees in the working age range. As a consequence, the use of e-commerce services and consumption may increase in Germany as well-educated people retire and are likely to experience physical difficulties in moving around.

 

2. Economy (Gross Domestic Product, GDP)

“Germany is deeply integrated in the global economy” cited from W. Koenig, R.T. Wigand, and R. Beck (2003). In recent years, however, the conditions for national political actions changed fundamentally due to globalization of markets, and will continue to change. For e-commerce, these changes imply that an open market exists for firms to hire employees. However, firms face legal requirements because of the formal representation of employees, typically through unions. German unions take on a considerably stronger role in a firm’s well being compared to the U.S. Economic output in the U.S is growing rapidly, in spite of the lower economic output in Europe, led to a higher GDP in the U.S. in 1998. Germany was not able to pick up based on upward trend like the U.S. New consumer and investment indices predict a decline for 2001 and the first half of 2002. Refer to (Table 7-Average GDP growth 19915- 2001 for Germany) as above shows the average growth in GDP each year from 1995 to 2001.

 

6 principles to Guide the Development of Global E-Commerce in Business:

a) Adopt cautious approach to regulation: Allow global e-commerce a period of time to develop before determining which areas will require government action.

Two major threats to global ecommerce. One is to impose legal and regulatory frameworks before gaining a full understanding of the issues and needs involved. Cross border business-to consumer transactions represent a brand new form of trade; the old ways of regulating trade will not work on the Internet. Innovative solutions ranging from international treaties to online dispute resolution may be able to meet the goals of regulation— mitigating the risks to buyers and sellers. Global e-commerce faces many barriers including language, currency, and cultural differences; overseas shipping costs; and national brand identification. If nothing is done, the tendency will be for e-commerce to only happen into local zones, with consumers visiting only sites in their own country or a small number of countries with which they feel comfortable. In order to realize fully the benefits of global e-commerce, governments must help where necessary to reduce the risks of cross border transactions, but it will take time to determine when and where government action can be used effectively.

 

b) Increase global market access: Maximize opportunities for buyers and sellers to come together in marketplace

Empowering consumers and sellers—especially small enterprises—by expanding market access should be the main goal of any government action (or forbearance of action) regarding global e-commerce. A larger market lower the marginal costs associated with running Internet based businesses, allowing the companies to spread their fixed costs over more customers, which lowers prices. E-commerce will become more efficient and less costly by gaining global economies of scale. Greater market access also gives small entrepreneurial ventures a better chance at success. Low cost access to global markets is especially important for ventures in developing nations, which can use the power of global e-commerce to “leapfrog” their economic development efforts and sell to an array of wealthier consumers. Second, a global Internet provides consumers with global choice. Automated buyer agents that seek out the best price on a given item are increasing in popularity and promise to bring tremendous efficiency to the pricing of goods and services on the Internet. Expanding from national to international, will encourage competition and reduce prices. Greater market access gives all of these businesses in whatever country they happen to be located, a better chance at success, and gives consumers of all nations a broader choice of goods and services. Finally, as the infrastructure and systems to facilitate global e-commerce develop, access will also be increased in a more important market: the marketplace of ideas.

 

c) Don’t use regulations for protectionism: With the World Trade Organization

(WTO) or other multilateral trade agreements – should not be allowed to impose rules on e-commerce or the Internet with the intent of reducing online foreign competition.

Practice of protecting domestic producers through the use of seemingly unrelated regulations is an old one, but the growth of global e-commerce presents the opportunity to take it to a new level. The complexities of the technology, the legal issues involved, and the innovative business relationships between companies that conduct and facilitate ecommerce all lend themselves to regulations protecting domestic industries not only from foreign competitors, but from electronic commerce itself. As global e-commerce grows, the WTO will see more disputes about regulations aimed at the Internet and designed to give advantage to domestic industries. Examples include requiring Web sites to be delivered in the country’s native language, requiring transactions to occur in the country’s currency, requiring certain licenses or certifications to operate or use electronic equipment within the country, or requiring the use of nonstandard security protocol. The fear of the local government that a country is being left behind in the new world economy. The initial lead that the United States holds in e-commerce will create political controversies in other countries that are ripe for the use of nationalism as a tool to gain competitive advantage, or at least slow the incursion of foreign e-commerce to allow domestic industries to catch up: an electronic version of the McDonald’s controversy in France. Countries that use such tactics might gain in the short run, but over the long run they will limit their standard of living and hinder global e-commerce.

 

d) Enforce regulations domestically: Governments cannot impose their laws on foreign companies unless those companies target their activities within the government’s territory or a treaty is in effect.

In the off-line world, activities engaged in by citizens of one country don’t normally affect the

citizens of another country unless those activities are specifically aimed at them (such as sending international mail). An online business based in one country cannot be expected to comply with the laws of other countries—such as privacy regulations or marketing restrictions—merely because their Web site is accessible in other countries. On the other hand, if the Internet seller targets its goods or services to citizens of another country, that seller should be prepared to comply with the laws of that country. Targeting must subject a seller to the targeted country’s jurisdiction in order to prevent companies from relocating offshore to avoid local laws, a situation that would encourage the rise of cyber-havens. A government cannot exercise authority in another country when “reach out”, but it can exercise authority if someone in another country “reaches in” to consumers in its jurisdiction.

 

e) Limit restrictions on social, cultural and political content: Government restrictions

on content cannot block trade in violation of World Trade Organization principles and must be enforced only within the restricting government’s territory.

Given the wide variety of objectionable material available on the Internet, it is no surprise that some governments may seek to keep their citizens from accessing some content. These issues go to the very heart of national sovereignty. In the United States, where the constitutional guarantee of free speech has become ingrained in the culture, public sentiment is likely to come down on the side of more freedom, but the United States cannot impose that sentiment on other sovereign nations. Policies for global e-commerce should not be used as bargaining levers for these non-economic disputes over freedom and human rights; if Internet technology is made to bear responsibility for intractable social and political disagreements, it will not succeed. The first is that such controls must apply only to cultural, social, and political content, not trade. Nations that are signatories to the WTO have agreed to a set of principles to facilitate international trade and to a process for resolving disputes. Claims of cultural or political infringement should not be used as a back door method of discrimination against imports. If a country restricts global e-commerce on grounds A government cannot “reach out” and exercise authority in another country, but it can exercise authority if someone in another country “reaches in” to consumers in its jurisdiction. The second condition is that all content controls must be implemented domestically. In keeping with Principle above, governments cannot “reach out” to shut down Internet operators that reside outside of their jurisdiction. Governments must control content through laws and regulations that apply to their own citizens, such as requiring Internet Service Providers to filter certain content or punishing individual users for downloading prohibited content. Of course, exercising control over every citizen’s Internet behavior, while technically possible requires control over the technology and communications infrastructure that only a few governments are likely to exercise.10 Inherent in the spread of Internet technology and the attendant economic benefits is a realization that the more time citizens spend in cyberspace, the less control their governments will have over them. This is why expansion of global e-commerce must be balanced with respect for sovereignty; if a government feels that the trade-off between commerce and social stability is not in its interest, the former is more likely to be rejected.

 

g) Take advantage of technology: Encourage innovation in the development of technological tools and industry best practices that solve public policy problems.

The Internet lends itself to creative solutions to policy problems precisely because software is a powerful tool to give people the ability to manage their own transactions. Many technological solutions are being developed to facilitate an efficient and trusted environment for both buyers and sellers. This consumer-empowering technology, when fully implemented, may help alleviate the desire for strict government controls on data privacy practices and facilitate easier negotiation between nations with different privacy regimes. Technology promises other solutions as well, in areas from language translation to content control to dispute resolution Policymakers should turn to technology whenever possible and, more importantly, they should think in terms of what technology could do in the future rather than what it can do now. In order to facilitate the growth of global ecommerce,

 

Policy Recommendations has been discussed and propose:-:

• stay within the current international trade framework;

• make the moratorium on tariffs for electronic transmissions permanent;

• treat digitally delivered products as intangible goods;

• eliminate tariffs on small-value transactions;

• work with third parties seeking to provide solutions;

• promote consumer education efforts; and

• draft and enact global treaties governing criminal activity on the Internet.

 

Some Opinions on speeding up the development of e-Commerce, in which the Government decided to take measures in six areas:

1. legal environment,

2. supporting industries,

3. enterprise information,

4. technical support,

5. education

6. international co-operation

 

 

4.0    Research Methodology/ Data Collection and Analysis

Research methodology

I had been adopting primary and secondary market research data to reinforce the statement of “Globalization of e-commerce in Business”. The approach adopted is based on empirical research and analysis about the ongoing and foreseeable influence of various factors on e-commerce diffusion.

 

Data Collection and Analysis

Primary research data were collected through a structure questionnaire via online survey tool to answer the research questions. The objective is to determine the people acceptance on buying or selling behavior and pattern if they could accept e-commerce as the way that could contribute to business prior to globalization. The online survey was only sent to different age group level and different gender as we could analyzed through the pattern of acceptance based on various level. Total 72 responses sizes were received with each responses received was screened through for errors, incomplete and view only responses. However, 60 responses were considered complete and effective for data analysis. Respondent can be analyzed from the Summary Report – Mar 26, 2011 (Survey: Globalization of E-Commerce in Business – refer as attached). Total out of the total respondents 60% were males and 40% were females. Among the respondents only 1.7% were under 18 years old, 5% from 18 to 24 years old range, 56.7% informed that their age is belong to 25-34 age group, 35% is from 35-54 years old and finally 1.7% is from age above 55 years old. In term of working status, 3.3% is student, 3.3% is self-employed, 5% has their own business, 85% is working in Professional or Corporate bodies and 3.3% is not working. Regarding usage of internet everyday, 98.3% uses internet everyday and 1.7% is not based on total responses of 58 persons. Based on hours of internet login per-day with total responses of 57 persons, (3.5% login < 1 hour; 36.8% between 1-4 hours; 19.3% login < 6 hours and 40.4% states that they login >12 hours). In term of type of connection, (1.8% uses Cable/LAN; 15.8% is on ADSL/DSL; 14% uses Fiber optic (Unifi); 1.8% is on dial-up and majority with 66.7% respondents uses broadband/mobile/wireless internet).In term of location of login to the internet ( 43.6% login thru home; 50.9% login thru work or office; 3.6% login in hotspot area and 1.8% states they login thru internet cafe with total responses to this question is 55 persons). Prior to years of login to the internet ( 8.8% only uses internet service since 1-5 years; 36.8% is from 5 – 10 years and 54.4% uses internet more than 10 years with total responses of 57 persons). Total of 96.4% of respondents heard of e-commerce with 3.6% never at all (Total response is 56 persons). In term of visiting to e-commerce website with total response of 56 person: 89.3% states they had before and 10.7% indicates never. Buying or selling thru websites with total responses of 54 persons, 83.3% responded YES and 16.7% had answered NO. Those who responded YES with total response of 48 person, 29.2% say that they had buy or sell one week ago, 25% states one month ago, 35.4% indicates half a year ago and 10.4% states one year ago. Another questions about if they have an option to buy from local store or website (Total response is 55 person : 63.6% responded – Yes; 36.4% states – NO). 50% will still buy thru online/website and 50% thru local store even the price remain the same. Total of 83.6%  says that they trust e-commerce website with only 16.4% indicates no (Total response is 55 persons). In terms of motivation of buy and sell thru e-commerce website, total respondent of 56 persons; 7.1% believe that detail and sufficient product information motivates them; 7.1% sates privacy and security; 48.2% response is because of convenience and save time; 1.8% is due to customer review availability; 5.4% is because of promotion and advertisement; 8.9% is due to product price and quality comparison and 21.4% response is due to variety of global product). The main focus is on the response if e-commerce will be the way to move forward in doing business globally, (Total response of 56 person: 96.4% responded YES and 3.6% say NO).  In term of how they got to know e-commerce (Total response of 56 person: 8.9% is thru email/newsletter; 14.3% from friend; 48.2% is thru search engine; 25% is through social network and 3.6% is from newspaper or magazines. How will they rate browsing experience with total respondent of 56 person: 1.8% rate worst; 1.8% indicate bad; 26.8% stays neutral, 69.6% responded good. Finally, in term of rating experience of buying and selling through website with total response of 51 persons, 2% say worst, 19.6% remain neutral and 78.4% rate good. Prior to all the result of data collected and analyzed, the statistical result shown clearly indicates majority of the people agreed and even had experienced with trust to e-commerce that it is the way which will impact in business prior to globalization. 

Secondary research data is use based on detailed case studies by scholars and experts in 10 countries to explore which factors in the framework appear to be playing a role at this early stage of e-commerce in each country. I compared the results of these case studies across the countries on each of the factors and found that some factors were important influences on adoption across countries and some were not. Identifying the commonalities and differences among the countries, determined which factors were barriers and drivers to ecommerce, and assessed whether these findings pointed to convergence or divergence in the factors shaping diffusion and, ultimately, suggested convergence or divergence in ecommerce outcomes. This article presents as well the results from this cross-case analysis based on secondary research. (FIGURE 2 -E-commerce sales as % GDP with GDP per capita, 2000). Sources cited by IDC (2002), ITU (2001). The 10 countries in the study—Brazil, China, Denmark, France, Germany, Mexico, Japan, Singapore, Taiwan, and the United States were selected to include developed, newly industrializing, and developing nations, and to represent each major region of the world. Two types of data related to the countries are discussed in the article: (1) qualitative data, or findings, from the in-depth case studies prepared by scholars and experts in each country, and (2) statistical data compiled from the cases and secondary sources (IDC, ITU, UNDP, OECD) that enable cross-country comparison. (FIGURE 2 -E-commerce sales as % GDP with GDP per capita, 2000) illustrates this relationship between e-commerce sales as percent of GDP and 8 J. GIBBS ET AL. GDP per capita, with our 10 countries of focus in boldface type. The United States and Japan stand out as leaders in both e-commerce and GDP per capita. China, Brazil, and Mexico are lagging behind, while the other five countries fall somewhere in the middle. Furthermore, some countries such as Singapore, Taiwan, the United States, and Japan fall “above” the line, meaning that their e-commerce sales are higher than would be expected based on GDP alone. Other countries, namely, Denmark and France, fall “below” the line, meaning that their e-commerce sales are lower than would be predicted by the country’s wealth. Wealth alone does not provide a complete explanation of national differences in e-commerce adoption based on the data collected and analyzed. The initial findings from the cross-case analysis suggest that other factors do have an important impact on e-commerce adoption, especially factors of the global environment and national environment and, to a lesser extent, national policy.

 

5.0    Future research

Looking into the future research, we will need to get the academic experts to develop a common research protocol, conduct country and international analyses, and share findings at annual meetings, forum, comparison of research data and how Globalization of e-commerce will have an effect to either the growth or decline in business. Research protocol was developed to achieve multiple objectives on our findings. Initial objective was to develop a team culture to facilitate knowledge development and sharing of ideas. Second, a common survey instrument had need to be developed that to diverse the economies impact to Asia, Americas and Europe.Moreover, it had to be translated into multiple languages, independently checked and piloted in each country. Third, we had to collect secondary data that was comparable across countries with which to better understand their socio-economic environments and e-commerce diffusion over time, as a way of providing perspective for our cross-sectional survey. Finally, to complement both the Global E-Commerce survey, the secondary research data  is needed as to obtain a granular understanding of the Internet and e-commerce within each country. Individual country case studies is needed for each country, including specific industries and/or firms to see how EC evolved in business globally. These case studies usually were written by local academics experts.Development of several partnerships to carry out this work is necessary. First was our partnership with the academic experts in each country who signed on for the four-year effort. Second was a partnership with the International Data Corporation (IDC) of Framingham, MA. This International bodies will govern to develop the survey questionnaire, secure translations into multiple languages, check the questionnaire translations with their in-country staff, oversee conduct of the survey by the international survey firm, market probe and review the survey results. IDC should bee chosen for future research because it has experience working in many countries, conducts its own surveys in several countries, and has experts in e-commerce in each of the countries in this study. Partnership with Empirica, GMBH in Germany is also needed from the aspect of Europe nation for data and analysis related to projects sponsored by the European Commission’s Information Society Technologies (IST) Directorate General. This European nation bodies will help to provided additional data useful for special firm-level, cross country analyses that complemented the basic Globalization of Ecommerce analyses that covers a wider aspect mainly the impact to business.

 

 6.0    Conclusions

In conclusion to this research that I had embarked, this paper has found useful way of organizing the key factors influencing e-commerce diffusion which will need to be by more quantitative analyses in the future, primary and secondary data is needed to conclude of how e-commerce could impact the business growth globally. There is specific factors shaping the e-commerce that vary considerably. For Global e-commerce especially (business-to-business) model competitive forces are the greatest driver of adoption. Global competition and participation in global production networks create strong pressure to adopt e-commerce. Global competitive pressure is driving greater convergence in business practices through global integration of production networks and supply chains. Countries which are more open to such forces whether through international trade, trade liberalization, or foreign investment will more likely move toward higher e-commerce diffusion. As for Business-to-Commerce) model diffusion seems to be less affected by global forces and more affected by variables specific to the national and local environment, such as consumer preferences, retail structure, and local language and cultural factors. Findings from this research states that consumer preference for valuable content and concerns for security and privacy are the most significant factors. Prior to the converging around the world, country preferences for local content, culture and language  really differ significantly thus shaping e-commerce adoption across globally. This paper examines that the preliminary explanation for this difference is that B2B is driven by MNCs (Multi National companies) that “push” e-commerce to their global suppliers, customers, and their own subsidiaries. This will create the pressures on local companies to adopt e-commerce to stay competitive. Business practices become more standardized across borders in practice. Business education and imitation of best practices reinforce this convergence; as new innovation occurs in theory or practice in order to be competitive. In term of all consumers who really desire on convenience and enjoy low prices, consumer preferences and values, national culture, and distribution systems differ markedly across countries and define differences in local consumer markets. This distinction between B2B and B2C e-commerce as a global phenomenon has important implications. Theoretically, it gives support to the transformational perspective, which sees globalization as involving elements of both convergence and divergence. A country’s position in the global economy is largely dependent on location, labor cost, or other endowments, so that the impacts of B2B e-commerce may be limited Although Internet-based e-commerce is still in its infancy stage, this preliminary research indicates that its diffusion is an uneven process across countries and industries: certain countries and industries are driving the process while others lag behind. Moreover, despite the presence of global forces shaping diffusion, local differences in the factors influencing e-commerce diffusion are evident between countries, suggesting that the diffusion process is indeed shaped by national environments and policy rather than taking a universal trajectory. These findings imply that though Globalization of e-commerce in business is the way to move forward in future but it is not the factors of growth in economy or business performance of the  country. It has never been the same approach to adopt the diffusion of e-commerce across all countries in the world. There is so many elements and factors need to be taken into consideration. Therefore, more study is needed across all countries continuously over a period of 5 years to observe how e-commerce could shape the country economy and how it impact business performance in different industries of the country. This research also imply that future studies should focus on modeling the survey quantitatively to cross-reference check on empirical research done as to compare their relationship across all countries in the world.

 

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Lesser foreign trade affects e-commerce a lot

Recourse from International Financial, although the August data show poor performance of exports, but most research institutions are still very confident to future export prospects of China. When many traditional international trade enterprises got serious effect from the financial crisis, however, the e-commerce industry is not only unbeaten by the financial crisis, but also many enterprises are still able to grow in adversity. Judging from the recent Alibaba.com, Dhgate.com nets and other domestic e-commerce leaders’ performance in the medium-term can be seen that trend. Alibaba.com daily news shows, the total operating income reached 1.715 billion Yuan. Nevertheless, as a representative of lesser foreign trade platform Dhgate.com, achieves nearly 10 billion Yuan in the first half of2009 in online transactions. Though the whole e-commerce industry avoided “the storm’s eye” of the financial crisis, changing trends in international trade is a test for the every major e-commerce service provider. Insiders express, the general trend in international trade is trade flow steadily shortened, the bulk of foreign trade gradually decline, and lesser line rise rapidly Global Sources’ latest financial report show that the typical large B2B trade platform, got revenues of 54.2 million U.S. dollars in the second quarter 2009, down 14.89%; net profits of 5.1 million U.S. dollars, down 39.29%. The lesser typical export platform Dhgate.com network’s data showed that from 2006 to 2008 these three years, Dhgate.com reach a rapid speed growth to the annual growth rate of 2561%, in which nearly 14 billion Yuan from transaction volume in 2008, and in 2009, will likely exceed 2.5 billion. Daniel Wang, CEO of Dhgate.com said in an interview, that under the influences of financial crisis, overseas buyers’ purchasing behaviors are changing. Foreign small wholesalers’ high-frequency short-orders and small orders replace the original long and medium orders. A large number of overseas grassroots buyers’ roots emerge as a new force, and are promoting making “Made in China” transaction transformation a transition, which delivers the high-speed development opportunities to online-transactions based e-commerce platforms. It is understood that, Dhgate.com is the first B2B e-commerce site making integrated online trading and supply chain services, mainly to help overseas buyers find the small supply in China. In addition, Dhgate.com profit model is not to charge membership fees from domestic sellers, but to allow buyers and sellers use the site for free registration, and charge overseas buyers after completing transaction. Lesser foreign trade trend seems to have been accepted by the industry; recently, Alibaba.com has also launched a small wholesale and retail trade platform. For this platform, epathchina.com (www.epathchina.com) thinks services of Ali-express has no essential difference from EBay.com andDhgate.com; only in the seller access and charging method have subtle differences in transaction process, it essentially can be considered as foreign version of Taobao.com. The platform will become a new profit growth point of Alibaba.com, and compete with Dhgate.com and EBay, etc. As a lesser foreign trader, epathchina.com (www.epathchina.com) considers the trend a perfect commercial opportunity for its self-progressing. Based on its own featured marketing mode, utilizing other excellent major traders, epathchina.com hope to get a high stable development and stand in the international e-commerce.