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E-shops Become Incubator of Newly Rich in China

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He Hongwei, a college graduate living in central eastern China's Zhejiang Province, five years ago fussed over landing a decent job amid red-hot competition in the world' s most crowded job market.

He then began selling novelty toys on the Internet. Five years on, he has grown into a billionaire and today is busy seeking employees to work in his own factory.

"I never thought I would make my fortune on the Internet, starting from scratch," the 35-year-old He said.

Several years ago, e-shopping was only a "shelter" for many young Chinese who turned to the Internet marketplace to make their living after failing to find decent jobs offline. Most of them earned only paper-thin profits, as e-commerce in China then was still in its infancy.

He's story, however, reflected a trend that e-business in China was no longer merely a way of survival, but has become an incubator for the newly-rich who had not expected they could make their fortunes online.

According to a report released by, China's largest Nasdaq-listed e-commerce company, earlier this month, some 77 million Chinese individuals and businesses have opened E-shops as of the end of this June.

Further, the number of e-shoppers has reached 142 million, or one-third of the nation's total online population.

Retail sales at e-shops more than tripled between 2007 and 2009, much faster than the 18 percent growth of retail sales in general during the same period. In the first half of this year, retail sales of e-businesses more than doubled to 211.8 billion yuan (US$31.6 billion).

Booming sales helped entrepreneurs with e-business start-ups live decent lives, as more than 1 million e-shops at, China's largest online marketplace, earn profits of at least 2,000 yuan a month.

As their businesses grow larger, more shops reported profits of over 10 million yuan a year. Sheng Zhenzhong, senior analyst with the research center of, declined to disclose how many such shops were listed on Taobao, but said the number is steadily rising.


As an old Chinese saying goes, free traders are not bad, which means businessmen should cheat to stay competitive.

The old tenet used to work in the early 1980s' when the market economy was initially practiced in China and many businessmen profited from selling shoddy goods.

But that could hardly be the case in today's online market, as integrity has become the most important traits for the Internet's commercial success in China.

Shi Hongwei is a wholesaler of stockings at He sells more than 2,000 pairs of socks everyday. For Shi, a young e-shop owner, this is quite a big deal. But, what he cares about most is the rating feedback from his customers.

At, an integrity rating has become the most important standard to help buyers select the most reliable sellers out of the tens of thousands of competitors.

Sellers have to do deal honestly in order to satisfy their customers and receive an integrity rating which ranges from a logo of a red heart as the lowest to a crown as the highest.

Last year, a customer complained about the color of the socks Shi's e-shop sold, claiming they were different from what was displayed on the website. After determining that this was due to a packaging error, Shi decided to take back the 150 parcels he had sent out, and then sent off the right color, instead.

"We suffered losses of more than 3,000 yuan from that, as we had to pay the second delivery costs. But it was worth it since, if we did not make up for our mistakes, we might lose our integrity and would never win our customers back," Shi said.

"The Internet amplifies both integrity and dishonesty. That's why we treasure our integrity rating, which is of make-or-break meaning for our online business," he said.

According to Sheng Zhenzhong's research, integrity has become a basic standard for someone who wants to open an e-shop at

"If you want to stay competitive, you have to stick to morality. Otherwise, you will not be given the chance to compete in the online market,"Sheng said.

Innovation, entrepreneurship

Honesty is a threshold for the online business world, but not only to ensure success. As competition becomes intense, innovative ideas are indispensable for businessman to make money, for instance, to sell goods which are not found in offline stores.

He Hongwei was among the first group of online retailers selling novelty toys and gadgets, such as mugs with photos printed on them and tailored mini-figures made to appear as the real human body.

"They are not only decorative, but also could lessen people's daily pressures and have a lot of fun. Also, they are made of environmentally-friendly materials, which also caters to fashion,"He said.

Brisk sales proved novelty toys have a huge market potential, so He decided to wholesale to grab a larger market share. To better understand customers's needs, he turned most of his business into tailored services, that is, to make products according to customers's unique orders and demands.

Now, sales from He's e-shops have exceeded 10 million yuan a year. He said it has not come easily, as he still recalls the difficult days with his wife sitting day and night in front of the computer, as he was in the warehouse preparing shipments.

Hard work is another important trait of Chinese e-commerce start-ups. Real stores are closed at 10:00 PM, at the latest. But many e-shops are still open after midnight, Sheng Zhenzhong said.

(Xinhua News Agency September 25, 2010)

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