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Lies, con jobs affect China's e-commerce

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More than half of Chinese netizens think online transactions are unsafe, which has had a huge negative impact on China's e-commerce development, according to industry experts.

Mao Wei, chief scientist with China Internet Network Information Center (CNNIC), said in the latest survey, CNNIC found 50.3 percent of Chinese netizens claimed they don't believe in making online transactions, and 50.8 percent of people said they often encounter fake and exaggerated information when surfing the Internet.

"The Internet in China has a credit crisis. It influenced the domestic online market, as people tend to stop transactions or log out when they find websites are doubtful," Mao said at the 13th China International E-commerce Conference on Tuesday.

Phishing websites or fake websites, which attempt to acquire private and confidential information from online users, have seen a big surge in numbers this year, Mao added.

In the first 11 months of 2010, China Anti-phishing Coalition traced and handled a record high of 20,570 phishing websites, an increase of 136 percent compared with the same period last year. Of these 20,570 phishing websites, about 74.4 percent were involved in fraudulent online trading.

Mao cited a case in which a man established a website called "State Tobacco Monopoly Bureau", and started selling fake cigarettes online, making a profit of more than 5 million yuan ($754,637) before he was caught.

"Because of the credit crisis, many honest sellers may lose potential orders because they cannot prove they are reliable," said Mao. He estimated phishing activities led to a direct economic loss to China of more than 7.6 billion yuan this year.

The growth of e-commerce is accelerating in China, as the country has the largest number of Internet users in the world. According to a report issued by CNNIC in July, there were 420 million Internet users in China by June and more than 140 million netizens shopped online.

Deutsche Bank expected China's e-commerce market to help facilitate consumer transaction volumes of more than 1.5 trillion yuan by 2014, with a compound annual growth rate of 42 percent. Internet penetration will grow to 59.3 percent, from the present 31.8 percent, to 812 million individual users by 2014, the bank estimated.

Liu Fengjun, assistant vice-president of China UnionPay Co - China's largest bank card industry association, said bank card holders lack confidence in online transactions.

"It (the confidence loss) formed a barrier in persuading people to transfer money online, so we construct a network both in virtual and real world, to offer more choices for people," Liu said.

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