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Last September, China's most successful consumer-to-consumer online marketplace, Taobao.com launched a massive online promotion. By offering exorbitantly low prices on a series of brand name consumer electronics by Lenovo, HP, Philips and others, the site attracted 1.8 billion visitors (non-unique) - the equivalent of every single person in China visiting the site at least once. With 145 million online shoppers expected by the end of 2010, e-commerce in China has come a long way since it began about a decade ago. What types of business models exist? Who's shopping online and what are they buying? And where do we go from here? Sponsor Guest author Joel Backaler writes The China Observer , an award-winning blog focused on Chinese technology trends and consumer culture. His writing has appeared in and he has been quoted by the Wall Street Journal China Journal, BusinessWeek, and Seeking Alpha. Joel is a Mandarin-speaking former Fulbright Fellow who has worked and lived in Taipei, Beijing and Singapore with Frontier Strategy Group. Follow Joel on Twitter . How did it all begin? Jack Ma and his partners launched Chinese e-commerce in 1998 with Alibaba.com , a business-to-business online platform. Like the Web firms of Silicon Valley, Chinese firms felt the shockwaves of the Internet bubble bursting in early 2000 - but in China the Internet industry continued to grow. 2003 was a turning point for Chinese e-commerce with the release of Alipay, Alibaba's version of PayPal, which provided a secure means for online payment. 2003 also marked the first entry of Western multinationals in the Chinese e-commerce market - first by Ebay taking a controlling stake in Eachnet, and then with Amazon subsequently doing the same with Joyo.com in 2004. Roles reversed in 2005 when Alibaba Group gained control over Yahoo!'s Chinese search platform. A period of explosive growth began in 2008 as China's e-commerce market grew to 100 billion RMB, with 80 million online shoppers. Where are we today? In 2009, China's e-commerce market totaled 263 billion RMB (approximately $38.5 billion) with growth equivalent to about 105% increase year-on-year. Currently, consumer-to-consumer (C2C) represents the largest segment of China's e-commerce market; however, business-to-consumer (B2C) is increasingly growing in importance due to two trends. Traditional Retailer to Online Retailer : Traditional retailers are developing e-commerce platforms as additional channels to get consumers to buy their products. From brand name domestic retailers to state-owned enterprises, there is a major push to go online. It has even been reported that Wal-Mart is set to release its own e-commerce platform for the Chinese and Japanese markets . Individual Seller to Online Retailer : Due to the extreme success of particular sellers on existing C2C sites like Taobao.com, online shops that began with a single college student or a small family have been forced to seek out additional support to satisfy market demand. As a result, these one-time, single-person operations have been incorporating into formal enterprises stepping into the B2C space. What types of business models exist? China's e-commerce platforms can be classified by the following three models: marketplace model, online retail model and traditional retail model. Marketplace Model : The marketplace model connects buyers and sellers, whether it is business-to-business or C2C. The company provides a platform to facilitate business between two parties but has no products of its own to offer. It maintains a searchable database of information for buyers and seller to connect, and a secure means to facilitate payment between both parties. Top B2B players : Alibaba.com, HC360.com, Myekoo.com Top C2C players : Taobao.com, Paipai.com, Eachnet.com Online Retail Model : The online retail model is where a company has no formal real-world storefront. It provides both products and a channel to sell directly to end customers. Top B2C Online Retailers : 360buy.com , Joyo.com, Dangdang.com Traditional Retail Model : The traditional retail model is similar to the online retail model; however, in addition to the online website the company also has real-world retail outlets. Top B2C Traditional Retailers : Gome (electronics), COFCO (state-owned: food and beverage), Lining (athletic apparel) Who's shopping online and what are they buying? Shanghai-based iResearch estimates that by the end of 2010 there will be 145 million online shoppers in China. Online shoppers are relatively young - the majority are between the ages of 18 and 35. While this number is split roughly evenly, slightly more women shop than men. In the early days of Chinese e-commerce, products such as software and DVDs were the top purchases. Currently clothing, books and cosmetics are the top sellers. Additionally, as we have seen in the U.S. with sites like Etsy, companies that focus on niche markets are also sprouting up. For example, 21Cake.com is a popular made-to-order online cake company that sells custom-made cakes online and delivers to China's major cities. Where do we go from here? China's e-commerce market is yet to fully mature, but it is entering a period of high-speed growth. C2C sellers that are growing more successful will begin to establish more formal companies, leading to an increase in the number of companies in China's B2C space. While many view the Internet as a sensitive area subject to regulation by the Chinese government, the government supports e-commerce due to its economic benefit and potential for job creation. One example is Xinjiang, a remote province in western China which recently experienced social unrest. Most websites and email there are blocked - but you can still access Alibaba.com and Taobao.com. Of China's e-commerce companies, Alibaba Group will remain the company to watch in this space for many years to come. However, there is still a lot of room for niche operators to capitalize on the growth potential of China's e-commerce market. Image by Kim2402 . Discuss

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Chinese E-Commerce Tops $38.5 Billion; What Comes Next?

PC maker Lenovo announced today that the company expects its mobile Internet products to account for 10%-20% of revenue in five years' time. This statement comes from President and COO, Rory Read, delivered at a media briefing that coincided with the launch of the newest Lenovo "LePhone" smartphone device in China. With the phone, a handset running the Google Android mobile OS, Lenovo hopes to grab a good-sized chunk of the still-emerging Chinese smartphone market. Sponsor Interestingly enough, Lenovo had, in early 2008, sold off its mobile phone unit to focus solely on its PC business. But as the financial crisis hit, companies delayed refreshing their corporate desktops and laptops in an effort to save money, a move which heavily impacted Lenovo's bottom line. Last year, the company decided to once again diversify their offerings by bringing back the mobile unit. In January, Lenovo launched an improved "Ophone" device at the Consumer Electronics Show in Las Vegas, its first smartphone since the $200 million reacquisition of the once-discarded mobile business, returned to the company in November of last year. At the time, Lenovo execs said the phone would be central to the company's mobile strategy. Today, they're echoing that sentiment. According to Chief Executive Yang Yuanqing, mobile Internet devices will overtake traditional PCs in the next five years. And Read reminded everyone that the smartphone market in China was only now emerging. "It's just the beginning," he said. PC Manufacturers Focused on Mobile Lenovo isn't the only PC manufacturer making changes in this direction, with smartphone launches laser-focused on China especially. Dell, for example, announced in November they would launch an Android-based handset called the Dell Mini 3 that would be sold only in Brazil and China to start. The company is also hard at work on an Android tablet, a colorful consumer-targeted device apparently being called the "Dell Streak." Acer, too, has a line of smartphones running both the Windows Mobile OS and Android, available outside the U.S. in parts of Europe and Asia. HP, although still more focused on PCs, is set to launch its first "new-wave" tablet in the form of the HP Slate , a multi-touch lightweight device running Windows 7.

For all the hype and all the discussion, the thousands of apps surrounding the service and our constant amazement at how fast or slow it grows, one point noted in a Twitter blog last night might bring us all back down to Earth for a moment - Twitter just became multilingual less than six months ago. If you're wondering, there are as many, if not more, Spanish speakers in the world as English. While Twitter is bragging about its expanding international audience , the next time you find yourself wondering why the service hasn't absolutely exploded on the worldwide stage, look at its translation issues. Sponsor Now, this wasn't the main point of Twitter's blog post , which tells us that more than 60% of Twitter accounts come from outside the U.S. But, it didn't seem like a rather noteworthy point. According to the company, the addition of a Spanish-language Twitter website saw an "immediate 50% boost in signups from Spanish-speaking countries." After the earthquake in Chile, signups "spiked 1200% and nearly all of those were using Spanish as their language." The reason we make this comparison is to remind ourselves of how infantile Twitter really is. We compare it to Facebook all too often, and that much-repeated statistic of 400 million users, but we don't bother to note that Facebook is also translated into more than 60 languages . So, while Twitter is not only striving to reach mainstream America, it is still only offered in two languages and it's a bit of a surprise that it's become as international a service as it has. While the blog brags that Indian politicians have spurned a recent growth in India, the country is also host the second largest number of English speakers worldwide. Jack Dorsey on Translation When ReadWriteWeb founder Richard MacManus recently spoke with Twitter co-founder Jack Dorsey and artist, architectural designer, activist and blogger Ai Weiwei , the question of translating Twitter was a central theme of the discussion. "Why don't you provide a Chinese language access to Twitter? Once you have this, you will have 100 times more audience," asked Ai Weiwei. "Is it possible for you to provide Chinese access to Twitter? I need a clear answer, yes or no." "I would say yes, its just a matter of time," replied Dorsey. "It's a matter of getting over techinical restraints." Dorsey explained that translation was an issue of scale and said that, just as was the case with Facebook, Twitter was being translated by its users. Dorsey admitted that if Twitter were translated into a local language, the people would immediately understand it, but that "it's a major failing of the technology right now that it's not." "The end goal," Dorsey said "is end-to-end translation in every language." Our own Frederic Lardinois detailed Dorsey's explanation of the translation setbacks on Twitter: According to Dorsey, it is just a question of time and mostly a technological issue. Given Twitter's problems with scaling the service, making it work for every character set creates some issues for Twitter because of the legacy framework that Twitter established in its early days. Currently, the company doesn't really have the resources to devote to this. Doresey did, however, argue that users already know how the service is meant to work and understand the setup of the Twitter page. We do have to ask - how hard is it to translate the little text we actually interact with on Twitter? Facebook, with all of its advertising pages, account pages, settings pages, and whatever else, is absolutely huge. Twitter, on the other hand, is rather small. We're pretty sure Twitter would have no problem finding some Chinese speakers to translate the login page and the account settings and whatever else, pro bono. And, as noted in the conversation with MacManus, Ai Weiwei and Dorsey, the benefits of a more translated Twitter could be world-changing. What say you, Twitter? We say get to it. Discuss

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Twitter's Translation Problem

It's worth noting that the cloud certainly has borders. It's the one reality that proves the cloud computing movement may seem at times abstract and vague but in the end it is the international politics of our world that creates some of the deepest issues for its place in the world markets. According to InformationWeek , The 451 Group presented a webcast that showed cloud computing adoption trails in Europe and Asia. About 57% op spending is in the United States with 31% in Europe and 12% in Asia. The numbers get even more polarized when you only look at the adoption for infrastructure as a service. A full 93% of spending is in the United States with 6% in Europe and 1% in the United States. Sponsor The low numbers almost makes it seem like some artificial effect is in play. And in some ways it really is. A lack of European data centers services by the large providers affects adoption. Rackspace, Terremark and Savvis are the primary companies looking to develop a presence in Europe. But they need to build data centers before they can have any real presence there. According to the 451 Group, 99 percent of European businesses are either small or mid-sized organizations. And they have plenty of choices from telecommunications providers. But here is an interesting twist. InformationWeek: One obstacle to both sides is the U.S. Patriot Act, which gives the U.S. government a right to demand data if it defines conditions as being an emergency or necessary to homeland security, and a measure that contradicts that power when the data is of European origin, the European Union's Data Protection Directive. In 2006, the European Court of Justice ruled that an agreement negotiated with the U.S. Department of Homeland Security was too broadly construed and violated the EU's directive. The agreement was about sharing data on European airline passengers headed for the U.S. The data sought by the U.S. was too broadly construed and violated the EU's directive, the court said. "Both measures could prevent establishing a cloud without borders," said 451's William Fellows. Cloud advocates say services established via an Internet data center should be accessible by people around the world, and they are in the case of Google search or Facebook apps. But when it comes to sensitive data, national borders still prevail because of conflicting laws." The issue is apparent now with Google's issues with the Chinese government. It's not the technology that is making cloud computing an issue. It's international politics. Discuss

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International Politics Slow Cloud Computing In Europe and Asia

Associated Press initially reported that three foreign journalists and one analyst have seen their email accounts hacked into today. The New York Times subsequently reported that there were "at least a dozen rights activists, academics and journalists who cover China," including the author Andrew Jacobs. AP: "They were greeted with messages saying, 'We've detected an issue with your account' and were told to contact Yahoo, they said Tuesday. Yahoo technicians told one of the four that his account had been hacked and restored his access, but it was not clear if the other instances were related." Sponsor Jacobs reported that "hackers altered (his) e-mail settings so that all correspondence was surreptitiously forwarded to another e-mail address." Among those affected were Clifford Coonan of Variety magazine and Kathleen McLaughlin, a freelancer. Agence France Presse reported that Yahoo! was avoiding directly addressing the hacks, saying only that it "condemns all cyberattacks regardless of origin or purpose." Yahoo! was roundly condemned for hurriedly turning over user information on reporter Shi Tao to the Chinese security forces in 2005. Their actions resulted in a long prison term for Shi for sharing Chinese media coverage policy with foreign sources. The late U.S. Congressman Tom Lantos called CEO Jerry Yang a "moral pygmy" for his collusion and subsequent slippery excuse-making. Earlier today, intermittent blocking of Google was reported in the country. China has the most sophisticated and widespread online censorship regime in the world, dovetailing social measures, criminal statutes and electronic measures. Additionally, some believe that government-sponsored, or at least encouraged, hackers have been behind multiple attacks on the properties of foreign companies, like the one that occasioned Google's surprising announcement of its intended withdrawal from China in January. Discuss

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Yahoo Hacked in China: Journalists, Others Affected