DATE=4/27/2000 TYPE=BACKGROUND REPORT TITLE=CHINA INTERNET - E-COMMERCE NUMBER=5-46208 BYLINE=STEPHANIE MANN DATELINE=WASHINGTON INTERNET=YES CONTENT= VOICED AT: /// EDS: THIS IS THE THIRD OF FOUR REPORTS ON THE INTERNET IN CHINA. THE FIRST TWO REPORTS WERE ISSUED WEDNESDAY AS 5-46200 AND 5-46201. /// INTRO: The Chinese government sees commerce on the Internet as an important new part of the country's economy. Top officials are reportedly considering preferential tax treatment for online e-commerce transactions. Correspondent Stephanie Mann recently visited the Beijing offices of a company that is selling Chinese-language books online and has set high goals for its future. TEXT: Company co-president Peggy Yu wants to do for China what Amazon.com [amazon-dot-com] has done for the United States - offer readers a convenient way to purchase any books they want. Ms. Yu and a partner (Li Guoqing) started the company Science and Culture Book Infotech in 1997, and began selling books last November at its Internet website, Dangdang.com. Peggy Yu says she is an avid reader. And when she was studying and working in New York City in the late 1980's and early 1990's, she enjoyed shopping at book superstores (such as Barnes & Noble) as well as at neighborhood book shops. She got the idea for her Internet bookstore after she returned home to Beijing in 1997. /// YU ACT ONE /// I looked around China and I (saw), you know, there are no superstores in China. Most stores are so poorly stocked. ... And I felt readers in China were so poorly served, and I wanted to do something about it. ... And I think the Internet is the best thing. /// END ACT /// So, Ms. Yu decided to use her education, a business degree from New York University, and her experience, as a consultant on mergers and acquisitions, to set up an Internet bookstore. In addition to her own investment, initial funding for the company came from a Boston-based venture capital firm and a European company that specializes in publishing concerns in formerly socialist countries. // OPT // Before Dangdang.com could start selling books, the company had to spend two years establishing a database of all the books that were available -- something that retailers in the West take for granted but which previously did not exist in China. // END OPT // Ms. Yu says her e-commerce company is not yet making a profit, but she has high hopes. /// YU ACT TWO /// We started sales in November, and our growth rate has been very encouraging. It's about 30 percent monthly growth rate ... and we are doing very well. In terms of profit, since we have to spend a lot of money on infrastructure, technology and we begin to spend money on marketing, so we haven't turned a profit yet. But I think the prospect for profit looks very good, because Dangdang has a very solid business model and has a good growth margin. /// END ACT /// Peggy Yu says Dangdang wants to provide the largest choice of Chinese-language books to its customers. So far, she says, the most popular categories have been computer books and English-language learning books. She says there is also a great interest in science books - such as chemistry and veterinary medicine - as well as books on tourism. Orders come from major Chinese cities and from remote counties, including villages in Tibet and Xinjiang -- places Ms. Yu says she was surprised to learn that people even have access to the Internet. She says Dangdang has also received orders from Chinese people living in Paris and Poland, even though the company has not advertised overseas. Now, Dangdang sells only books published in China, but Ms. Yu says she hopes soon to be able to offer books published elsewhere. /// BEGIN OPT /// /// YU ACT THREE /// I really want to offer what Amazon is offering Americans, to the Chinese. I want to offer three-million English titles in China, and I'm actually working on that with suppliers in the States and in the U-K [United Kingdom]. /// END ACT /// On a recent workday, the Dangdang.com office on the north side of Beijing was busy with young employees processing orders and updating the website listings. The marketing director had just been hired away from Microsoft-China and was preparing to train another group of new employees. Ms. Yu says the company has about 80 or 90 employees, but the number keeps changing because more come on board each week. Conducting e-commerce is more cumbersome in China than in many other countries. First, Chinese banks do not speedily process electronic funds transfers, and many people do not have credit cards. Therefore, Ms. Yu says her company accepts four different methods of payment. Secondly, China does not have nationwide express-delivery companies, so Ms. Yu relies on the postal system and bicycle delivery boys. /// END OPT /// Ms. Yu says there are some other online Chinese language bookstores, but she does not see them as competitors to Dangdang.com. /// YU ACT FOUR /// Because, number one, we are definitely the category leader. And we have the largest selection of titles, either online or off-line. ... And we look at other websites. Some of them, I call them online bookstands. They have very few titles, maybe 10 [or] 12 titles, or a couple hundred titles. ... And then there are other companies that just put a certain type of book information online and they don't have [a] function to sell books. /// END ACT /// Ms. Yu says people recognize Dangdang.com as the online bookstore of Chinese language titles, and she hopes to keep it that way. In fact, the name of the website comes from the Chinese phrase "xiang dang dang," which means "everybody knows your name." (Signed) NEB/SMN/KL/WTW 27-Apr-2000 11:40 AM EDT (27-Apr-2000 1540 UTC) NNNN Source: Voice of America .