Discussion on the Cultivation and Promotion of the Online

Discussion on the Cultivation and Promotion of the Online
Specialized Markets — Case of Zhejiang Province
DING Zhigang1, CAI Xiaoli2
1. School of Economic and Management, University of Shaoxing, Zhejiang, P.R.China. 312000
2. School of Economic and Management, Zhejiang Industry Polytechnic College, Zhejiang,
P.R.China, 312000
：
Abstract The development of electronic commerce brings about many profound changes in
trade patterns, and also contributes to the gradual transition of the traditional specialized market
to the online specialized market. This paper firstly discusses the challenges faced by traditional
specialized markets and the comparative advantages of online specialized market and proposes
a conceptual model of online specialized market; and then uses example method to propose
three countermeasures to cultivate the online specialized market, as cooperate with the vertical
industry e-commerce websites, cooperate with the professional vertical website development
and operation service providers and self-build websites to gradually improve; and lastly points
out it is important to vigorously promote the development of the online specialized markets in
the areas such as market development, market environment, industry groups, and government
policies and so on.
Keywords specialized market, electronic commerce, developing model, Zhejiang
：
1 Introduction
Specialized market is the commodity traded place, which is formed in a certain region, operates
in accordance with the market laws, and in which one or more related goods are the main
transaction objects, wholesale is the main mode of operation [1]. The specialized market as an
institutional arrangement of commodity transaction has many advantages, such as gathering
business flow, logistics, information flow, saving the cost of market transactions and so on,
which has made an indelible contribution to the economic development of Zhejiang Province [2].
Since the 1980s, specialized market has been booming in Zhejiang, and mutually
complementary with the SME, and has formed a number of distinctive massive economic
regions. In the end of 2009, the province had a total of 4,232 commodity transaction markets
(including 38 on-line transaction markets), and the total commodity exchange turnover reached
1168.8 billion Yuan. Among them, 670 commodity transaction markets whose turnover has
more than 100 million Yuan had 22.98 million square meters of business area, rented out
390,000 stalls, and achieved turnover of 964.7 billion Yuan [3]
The available studies of specialized market mainly focus on the interaction relationship between
the specialized market and the massive economy [4], the interaction between the specialized
market and e-commerce [5,6,7] and so on. There is seldom direct research on online specialized
market, John Debenham thought the development of online specialized market is primarily
based on vendors can conveniently and timely access to information which help the vendors
take reasonable actions to influence the market. [8] This paper will discusses the challenges faced
by existing traditional specialized markets and the comparative advantages of online
specialized market and develop the corresponding cultivation and promotion proposals
targeting different specialized market.
2 The challenges faced by traditional specialized markets
With the more intensification of market competition, the rapid development of information
technology and some problems of their own, Zhejiang traditional specialized markets are facing
unprecedented challenges and crises.
218
2.1 Market competition is intensifying
The one challenge is from the rapid rise of the similar market outside Zhejiang, which take
away many clients and cargos and weaken the distribution function of Zhejiang specialized
markets; the other major challenge is from the rapid development of domestic and foreign
supermarket chains, with their advanced management concepts and techniques, excellent
quality and service, similar sales scope and convenient purchase conditions, which put a
tremendous impact on the traditional wholesale markets.
2.2 A large number of core customers are loosing
A large number of manufacture enterprises which grew into large-scale, high-standard corporate
from the SMEs have opened stores, sales shop, build up marketing network across the country
and gradually break away from the wholesale market channels, Zhejiang specialized market are
loosing support from a large number of strong enterprise products, which lead to the decline of
traditional specialized markets.
2.3The rapid development of e-commerce is bringing potential and great threats.
In the new century, Internet and its application technology have got rapid development and
popularization in the commercial activities. E-commerce has many advantages such as
substantially increase trade opportunities, reduce trade costs, improve trade efficiency and etc.,
particularly direct transactions on the Internet make the importance of brokers weaken or
disappeared. For the brokers position of the specialized wholesale markets, the potential
impacts and challenges is self-evident.
2.4 The specialized market quality upgrades too slow
At present, duplication of specialized markets occurs frequently in Zhejiang. As the result, the
low specialized concentration of commodity, waste of resources and dispersed advantages
seriously restrict the enhancement of Zhejiang specialized market quality. Overall, the operators
in the specialized markets are less educated; the average scales are small. Sale or commission is
still the main operation mode. The transaction objects are mostly low-end products. A number
of markets lack support from local strong industry and show a shrinking trend in the fierce
competition. In Yiwu and Shaoxing, the continued prosperous markets appeared the
phenomenon of stores sublease and high rents, which lead to higher operation costs and
weakened market advantages.
3 The comparative advantages and the conceptual model of online specialized
markets
3.1The comparative advantages of online specialized markets
3.1.1Compared with the traditional specialized market, the online specialized markets have
many advantages.
Online specialized markets can get a large number of manufacturers, retailers and consumers
together, in all aspects of marketing and sales to establish a multi-polar connected component,
to avoid the traditional ex-post regulation and waste of resources to enhance trade efficiency.
Information exchange as a medium of online virtual market transcends time and geographical
constraints, and to a large extent, changes location disadvantage and competitive disadvantage
of certain companies which is difficult to overcome under the traditional trade mechanism, and
greatly promotes the process of market integration and globalization.
3.1.2Compared with Alibaba, HC Global Sources and other simple e-commerce platforms,
online specialized markets also appear their unique advantages.
Online specialized markets have years of real business which brings rich resources such as good
commercial credit records, excellent product quality as well as service quality, make online
shoppers assured. Plenty products provided by huge supply chain of the real specialized markets
provide online shoppers sufficient choices and more opportunities, and generate higher
219
spending. And online specialized markets can easily establish relationship with third party
logistics by using information technology and gain higher efficiency and lower cost advantages.
3.1.3Online specialized markets have talent advantages.
Online specialized markets have a large number of talents, who are not only well versed in the
consumer psychology and behavior, but also familiar with the characteristics of online trading
and whose comprehensive capabilities of online marketing, professional services, logistics
management, regional promotions, etc. are not possessed by current B2B or B2C online
commerce platform management personnel and traditional specialized market personnel.
3.2The conceptual model of online specialized markets
By analysis about the relevant function elements, this paper think that online specialized market
is a complex large-scale system, and generally include three parts as business services,
information services and policy environment and supporting services.( Shown in Figure 1)
Figure 1 The conceptual model of online specialized market
4 The evolution course and cultivation ways of online specialized markets
4.1 The evolution course of online specialized markets
After years of information network technology constantly being applied to the operations and
rapid integration of tangible and intangible markets, traditional specialized markets gradually
developed into mature online specialized markets. The evolution process can be roughly
divided into three stages: ( Shown in Figure 2)
Figure 2 The evolution course of online specialized market
4.1.1 Information central stage
This stage is the initial stage of the development of online specialized markets. The online
specialized markets mainly play "information center" role, transaction process is completed by
the physical entity market. Through online publishing and querying commercial information,
220
offline negotiating, contracting, paying and distributing, the information of transaction process
is preliminarily realized. Online information is the powerful means to gather business flow,
logistics and capital flow, and attract large manufacturers and users entering and merchandising,
which promotes the development and strengthening of physical market. Yuyao’s China Plastics
City (www.21cp.net) is at the stage now.
4.1.2 Tangible and intangible markets integration stage
The main features of this stage are that tangible market as main and intangible market as
supplement; spot transaction as main and online trade as supplement; tangible and intangible
markets combined and symbiotic development. Relying on the spot market, establish online
"virtual market" and provide online shops to market operators, mutual correspondence online
and offline market, linkage development and achieve seamless integration of tangible and
intangible market. Online shop operators to release information through the display of goods,
business, offline or online in the direct trading. Shaoxing’s China Textile City (www. zgqfc. gov.
cn) and Yiwu’s China Commodity City (www.ywbb.com) are the typical cases.
4.1.3 Intangible market dominant stage
This stage is currently the most comprehensive online specialized market model, which is
characterized by tangible market as main and intangible market as supplement; spot transaction
as main and online trade as supplement, most of the transactions are achieved by e-commerce
and major transaction processes including information dissemination, negotiation, account
settlement and supporting logistics are all online. This model is suitable to the
single-standardized products. Jiaxing’s China Silk Market (www.esilk.net) is the typical case.
4.2 The cultivation ways of online specialized markets
How to cultivate specialized online markets, enrich and improve online trading functions and
give guarantee in the logistics, payment and security to meet the needs of shoppers, is the
problem most specialized markets of Zhejiang have to face with. Generally, three ways are
included:
4.2.1 Specialized markets cooperate with the vertical industry e-commerce websites
By integrating both sides of existing resources, specialized markets can quickly establish
"network + entity" business model and effectively solve a range of problems such as business
credit, product quality and abundance, promotion, payment, logistics, costs, consumer stickiness
degree and so on., to achieve win-win situation, for example, Hangzhou Sijiqing Garment
Market (www.sjq.cn). In 2002, B2B information platform was introduced to the market mainly
for the clothes wholesale business with fixed customers, but developed slowly. In September of
2008, Sijiqing Garment Market started the strategic cooperation with Alibaba and formally
settled in Alibaba’s Chianes platform. Since then, Sijiqing Garment Net has developed rapidly,
and now has 5,000 seller members, 100,000 buyer members. Some suppliers’ more than 30%
orders are from the network. Cooperating with Alibaba, the market managers can enhance the
brand influence of Sijiqing Garment Market; the market tenants can get more customers and
more trading opportunities; the purchase can accurately locate offline suppliers and reduce
costs.
4.2.2 Specialized markets cooperate with the professional vertical website development and
operation service providers
In this model, there are not much of technical requirements to specialized markets, which just
send their information to professional vertical website development and operation service
providers and ask them to release information and maintain the websites. The professional
services help enterprises to enhance their markets, base on the local, go to the world, for
example, China Knitting Net (www.chinamzz.com). China Knitting Net is the professional
knitting sweater industry portal, relying on government, association, market and enterprises and
is the most vibrant professional portal in the industry. In October 2007, China Knitting Net
signed a strategic cooperation agreement with Zhejiang Net Sun Co., Ltd., to build international
trade city
Zhejiang Tongxiang Puyuan’s "sweater headquarters economy " e-commerce
platform, to provide one-stop, teaching-based e-marketing services for knitting sweater
—
221
industrial park, specialized market operators and enterprises, which can comprehensively
enhance international competitiveness of the specialized markets, create the first knitting
sweater specialized markets with the best combination of visible market and invisible market.
4.2.3 Specialized markets self-build websites to gradually improve
The former two models are the specialized markets cooperate with mature e-commerce network
platform, which can assist to build fully functional online specialized markets more quickly, but
in practice barriers of communication and cooperation often exist. The existing specialized
markets mostly self-build e-commerce websites to make up for their shortcomings and improve
their own competitiveness. This model requires the specialized markets to have full knowledge
of the market itself and gradually improve the functions of online specialized markets. In one
hand, the specialized markets need appropriate development of e-commerce functions; in the
other hand, need enhance the specialized markets management. The two sides are mutually
reinforcing and complementary, for example, Gold Silk Net (www.esilk.net). Gold Silk Net
established in 1999. With the great advantages of the network, the platform gives full play to the
characteristics of the silk specialized markets, not only release real-time trading prices and
supply and demand information of China Silk Market, but also support the gradual realization
of fully interactive real-time information exchange, online trading and electronic settlement
among the market and customers.
5 Conclusion
Overall, Zhejiang Province has achieved great success in constructing and upgrading the online
specialized markets. However, due to various internal and external factors such as the
specialized market itself, market environment, government policies and etc., most of the online
specialized markets have failed to break the traditional business model and lie on the crossroads
of development. In view of this, in order to vigorously promote the cultivation and upgrading of
the online specialized markets, it should enhance market environment information, further
increase online market investment, accelerate construction of industry information, improve the
credit system, safeguard the security of online transactions, increase the government efforts to
support the online specialized markets, regulate online specialized markets trading environment.
Acknowledgments:
This research is supported by China’s Ministry of Education as the part of humanities and social
science research project “Research on the digital publishing business model”
No.
09YJA630100
（
）
References
[1]. WANG Xiao-fei, ZHANG Han-qing. The Development Strategies of Specialized Market
in Information Age. Business Economics and Administration,2003,8:22-24(in Chinese)
[2]. YANG Jing, SHAO Pei-ji .Research of Constructing Electronic Special Market places.
Journal of University of Electronic(Social Sciences Edition), 2005,4:47-50(in Chinese)
[3]. Zhejiang Provincial Administration for Industry and Commerce. The Report on the 2009
Commodity
Trading
Market
of
Zhejiang
Province.
http://www.zjaic.gov.cn/zjaic/zfxxgk/xxgkml/zfyjywj/wj/sc/201003/t20100308_75732.ht
m,2010-03-08.
[4]. YANG Qiang, SHAN Dan. The Interactive Development of Traditional Manufacture
Industrial Cluster and Technical Market in Zhejiang. Commercial Research,
2005,13:142-145(in Chinese)
[5]. LU Lijun, YU Bin-bin. E-commerce and Specialized Market in Transition and Upgrade
Based on On-site Investigation and Analysis of Questionnaires in YIWU Commodity
Market. Journal of Intelligence,2009,7:33-38(in Chinese)
222
[6]. MA Bin, XU Yue-qian Interactive Development Between Specific Market and Electronic
Commerce——A Case Study in Zhejiang Province. Business Economics and
Administration,2005,03:15-19(in Chinese)
[7]. WANG Ji-jin. The New Development of Zhejiang Specialized Market in the Era of
E-Commerce. China Business and Market,2005,9:31-33(in Chinese)
[8]. John Debenham. Supporting the actors in an electronic market place. In proceedings
Twenty First International Conference on Knowledge Based Systems and Applied
Artificial Intelligence, ES’2001: Applications and Innovations in Expert Systems
223