Value Creation in B2B E-Markets of China: A Practical Perspective Jing Zhao a, , Shan Wang b and Wilfred V Huang c
Center for International Cooperation in E-Business, College of Management China University of Geosciences, Wuhan 430074, P.R.China firstname.lastname@example.org
Department of Management Science, School of Business, Renmin University, 59 Zhong Guan Cun Avenue, Haidian District, Beijing 100872, P.R. China email@example.com c
College of Business, Alfred University, Alfred, NY 14802, U.S.A. firstname.lastname@example.org
In China, the development of e-market has unique characteristics in the transactional processes and market mechanisms, which relate largely to the current industry structure, financial infrastructure and organization structure. This paper seeks to develop a conceptual model of B2B e-market value creation strategy, and can also be used to highlight the complexity of such activities for Chinese B2B e-markets. A process-oriented approach to modelling the value of e-market, rather than strategic position theory or a simple descriptive approach, is found to be more suitable and has been selected. The model consists of two dimensions: the e-commerce process and the controlling complexity. We apply the model in an actual Chinese B2B e-market (Alibaba.com). The crucial value creation activities and strategies in the four phases of e-commerce process are identified, and the controlling complexity of these activities is evaluated in the model. The model offers an effective approach to study the dynamic structure of transactional processes and bring into light the special issues of e-market development in China. Managers can resort to the model to offer more value to their customers by designing an effective e-market process.
Keywords: B2B E-Market Model, E-commerce process, Controlling complexity, Value creation factor and E-commerce strategies.
E-commerce is revitalizing the need and the value to innovate the business process. It opens up new forms of business relationships and enables new markets, new business, and new marketing paradigms  . The B2B e-market is one of the underlying enabling technologies. It is an emarket between enterprises, which creates a new trading mechanism in a highly efficient and effective manner. It assembles numerous buyers and sellers into on-line transactions. Both sides “know “each other through issuing and searching of business information, then negotiating and completing a contract over the Internet. As B2B transactions are increasing on the Internet, it has become critical for firms to rely on Web-based supply chains or e-supply chains in order to providing almost real-time response to market conditions . SAP AG from 145
Jing Zhao, Shan Wang and Wilfred V Huang Germany reported that an enterprise using B2B e-business could reduce its purchase cost by 57.7%, its transactional cost by 30-70%, and its inventory cost by 25-40% . This research seeks to develop a conceptual model that is suitable for analysing the B2B e-markets in China. Such a model should help us to seek effective strategies in creating an effective e-market in Chinese business environment. We first introduce the development of e-markets in China, and highlight the unfavourable business environment of implementing e-commerce. Then we provide a literature review on value creation in e-market, since an effective e-market strategy should focus on providing real value to customers. Among all approaches addressing e-market value creation, we choose the process-oriented approach due to its relevance. Next, we develop a conceptual model with two dimensions: the e-commerce process and the controlling complexity. We then analyze Alibaba, a B2B e-market in China, using the proposed B2B E-Market Model. The result highlights (1) the...