Research on the E-business Strategy of ZAPCM 1. Shenghua JIA, Guofu ZHANG, Huaiwei LIU, Qinghua LIU

Transcription

1 Research on the E-business Strategy of ZAPCM 1 Shenghua JIA, Guofu ZHANG, Huaiwei LIU, Qinghua LIU Abstract: In the face of severe challenges from the coming net-economy era, Zhoushan Aquatic Product Center Market Co. Ltd. (ZAPCM), as the first-class aquaculture enterprises, has planned to set up its e-business mode to develop online virtual aquatic product market. And the strategy has been schemed to carry into effect with some other wholesale markets. The e-business mode and related executive schemes will be a model for other agriculture wholesale markets. Also, it can be used for references in their own e-business practice. Key words: fishery, wholesale market, e-business, business mode 1.Introduction ZAPCM, which was founded in May 1989, located at Zhoushan Shenjiamen Fishery Seaport, right beside the most important East Sea fishery area of China. It has unique abundant natural resource advantages. As the biggest oceanic product wholesale market, after ten years development, its capital asserts have reached 160 million yuan, and it also holds 30 hectare lands, 1,200 meters coastline, and 13 berths. In the market, there are four trade areas in which the fresh products, alive products, freezing products and dry products have been transacted respectively. Otherwise, there also have processing area and other relevant service areas. Up to now, there are more then 560 registered wholesalers, more then 300 service providers, and 4000 registered merchants. In 1999, the trade volume reached 2.3 billion yuan. The products have been transported to more then 20 provinces. Among these products, more then 30 percent have been exported to Japan, South Korea, Southeast Asia, West Europe, North America and other areas. Years of rocket-up development have won it many honors. ZAPCM had been praised as the National Agriculture Wholesale Market in 1995, and for years it has been praised as the first-class enterprise of Zhejiang province by the municipal government. In 2000, it was confirmed as one of the 151 top enterprises in agri-busiess. Now it has won the status in Aquaculture as the distribution center, the price center, and the information center. To meet the challenge of the Internet age, in Oct, 1999, ZAPCM set up its own online web site (international: national: ) to provide information on aquatic product prices, and it also provides services for manufactures, wholesalers, retailers and consumers. Since then it has won a good online reputation all over the country. Based on such a start point, ZAPAM must evaluate its e-business mode and related plan from a strategic level, and take the chance to upgrade its traditional business mode. 1 Zhoushan Aquatic Product Center Market Co. Ltd. Also named as Chinese Zhoushan International Aquatic Product Wholesale Center. 1

2 2. Feasibility Analysis and Orientation Although the recent collapse tide of Internet Company indicates the economic bubbles in the net-economy, no one can oppugn that e-business will upgrade the traditional business greatly. And so it is doing with the aquaculture. Usually aquaculture producers locate separately. The existing communication obstacles lead to the inefficient of resources. Such characteristics of fresh aquatic products as the productivity uncertainty, putrescibility, transport difficulties will result in many problems in traditional value chains. The outdated distribution channel can t fit the quick development of New Economy. Further more, domestic producers must face large numbers of foreign competitors. Under such background, it is very necessary for the domestic aquaculture enterprises to develop online business. Just because of the huge number and geographical decentralization of domestic aquatic product wholesale markets, and also because of the weakness of the aquatic product processors, it is necessary for wholesale market to develop aquaculture e-business. ZAPCM, as one of the top wholesale markets in domestic aquaculture, will win great economical and social effects when it takes the lead to develop online business. Further more, we see the necessity for e-business from the inherent limitations of the traditional aquaculture, the integration trends of domestic fishery, the challenge from globalization. Also the competition background of Aquatic product wholesale market has changed, which makes the online business a hot question for ZAPCM. Seen from the domestic and foreign environment, also from the enterprise conditions of ZAPCM, it is feasible to do online business. (1) Along with the more and more aquaculture enterprises landing on the Internet, there will be an opportunity to develop e-business in the online aquatic product market. According to incomplete statistics, there are about 400 web sites that mainly provide online aquaculture information. If you put a keyword fishery in Yahoo search engine ( you will find 13 items and 410 related links. If put in aquaculture, there will be 18 items and 215 related links. It means that the online environment has been gradually improved. (2) The obvious evolvement of aquatic product standardization work has impelled the developing step of online aquatic product market. We know that the Aquatic product can be divided into fresh product, freezing product, alive product, and dry products, and each kind includes all kinds of marine lives. It has an evident effect on the online expressions of aquatic product information, and 2

3 also holds back the online trade. Seeing the IT technology evolution and its deep effect on social lives, the central government has tried to promote the aqua-business, and pay more attention to the aquatic product standardization. Up to 2000, there are totally 45 national aquatic product criterions, and in aquaculture, 366 active criterions. The government has set up a perfect working group for the aquatic product standardization, and trained many specialists who are familiar not only with aquaculture, but also with the standardization work. As results, in recent years, the people s consciousness of standardization has increased greatly. It is helpful for individuals to read the online aquaculture information, and for the enterprises to do online business. (3) The central and municipal government has paid more and more attention to the e-business strategies of ZAPCM. ZAPCM is one of the 151 top agriculture enterprises. It has close link with the Fishery Bureau of the Central Government and the Fishery Department of the Zhejiang local government. Also as the directorial member of Zhejiang Aquatic Product Market Association, it has got well alone with other aquatic product associations. So the e-business has won widely assists. Otherwise, for years, ZAPCM has bend itself to corporate with the friend markets and won a valuable market networks system. It will bring great advantage for their online business. (4) The unique nature resources of ZAPCM will increase the feasibility of e-business. As a wholesale market in producing area, ZAPCM holds stable oceanic product supplies and unique fishery resources. With the favorable information of East Sea Area, ZAPCM can obtain the demand information on the processors, the fishing populations, the cultists, and the logistics in good time, which will assure the value of the online information. The friendship between ZAPCM and main markets in other areas of the country will increase the influence of the e-business platform. Further more, its import and export relationship with Japan, Korea, Europe, and America will bring the online clients valuable information on foreign markets. Therefore, the above-described resources will benefit the e-business of ZAPCM. (5) The reconstruction of Local Area Network (LAN) will to some extent reduce the risk of e-business for ZAPCM. ZAPCM has planned to rebuild the LAN to connect the four trade areas and the auction area, which will put into use soon, together. And that will bring out an integrated network system. The everyday management, offline business, and online business will be more efficient. Then ZAPCM can reduce the risk of its e-business. The target of its e-business can be described as the following sentences. To enhance its status as the information center, the price center, and the trade center, ZAPCM will develop the online aquatic product trade market with the unique resources advantages, 3

4 set up organic links between the physical market and the virtual market, improve its service functions and status in the market. When it wins profit in the market, ZAPCM will drive the aquaculture to hit a new level. Specifically, the target will include three stages: (1) The first stage is information collecting, processing, and online issuing in order to connect two points (One is the subordinate aquatic product wholesalers and processors, the other is the suppliers including vast fishermen and aquatic breeding enterprises.). In other words, the online information is provided mainly for the aquatic product enterprises. With the coherence advantages of ZAPCM, the Internet Company will integrate the different types of information on aquaculture to provide valuable services for related enterprises. (2) In stage two, ZAPCM will develop online trade on some selected products, when the Internet infrastructure and relative services have been improved enough. Firstly ZAPCM will provide online trade service on the dry products and some unique products of Zhoushan, and win good online reputations in a short time. (3) In stage three, after 5 years of hard work, ZAPCM will set up the online platform to provide aquatic product trade services. It will bring a nice bit of profits and benefit the society. 3. Online Business Pattern Since the e-business strategy has been supported by the Fishery Bureau of Zhejiang local government, and sponsored by other three aquatic product wholesale markets, the ZAPCM has set up a subsidiary Internet company to take the e-business into practice. The business pattern has based on the unique resources advantages and the core competence of enterprises. It will also absorb the experiences from the other aquatic enterprises, which have online business. So the e-business pattern will provide an online business platform for the aquatic product enterprises. So it can be named as online aquatic product virtual markets. Its target market is the aquatic product LA N of ZAOCM Information collection center in Fishery Bureau of Zhejiang local Information Information Other collection centers incollection centers in friend information other three wholesale wholesale markets in main channels markets cities Distri bution LAN of the Internet Company Web site Figure 1. E-business Bank Clien 4

5 enterprises or related businessmen, but not the individual consumers. The framework of the e-business strategy can be described as the figure 1. The online virtual product market is based on the investment of ZAPCM and other three aquatic product wholesale markets. It is closely linked with the physical aquatic product market of ZAPCM. Usually these two markets are quite different. But in essence, they are almost the same. Obviously, to do business whether online or offline, the enterprise must follow the economic rules of aquaculture, must understand what is the real demand of the target market, must have some related experiences. Without these vital factors, the business will inevitably fail. Of course, comparing with the physical market, online aquatic product has its own characteristics. We can conclude the online virtual aquatic product market as the table 1: Table 1: specific content of the business mode 1.information services 2. online trade online business center negotiation platform auction platform trade matching platform distribution services target market aquatic product and related enterprises aquatic product businessmen aquatic product businessmen auctioneers aquatic product enterprises and related businessmen aquatic product and related enterprises Notes Providing price information, product information, supply and demand information, aquaculture news, and related polices, etc. Trade the main four kinds of aquatic products online as the traditional business in physical market. Transact aquatic products which have large trade volumes hairballs, crabs etc which fit for online auctions Trade dry aquatic products online providing distribution services All of the online clients are registered as trade members by a registration system. According to their reputation and required online services, the trade clients online qualifications have been divided into several different levels. See the table 2: Table 2: Obligations of the Levels of the members Rights of the members members Can browse general columns except any Can logging in Ordinary member Bronze member Silver member Golden member trade information. Qualified for special information and trade information, can air their ideas on the BBS, can t trade. Have all the rights of bronze member, can own an online business center, can negotiate with others and auction. Have all the rights provided by the web site. without registered. Registered online, and pay for the services. hand in caution money(when trade) and relative fee hand in caution money(when trade) and relative fee 5

6 4.E-business Strategy In practice, the e-business strategy can be divided into two parts. The first part is the entry strategy when ZAPCM start online business. The second part is the long-time strategy when their web site becomes known. 4.1 The Entry Strategy The entry plan is composed of the following four aspects. See the following table. Table 3 Name Market strategy Technology strategy Finance strategy Human resource strategy Main Points Different from other existing aquaculture web sites, it emphasizes on market penetrating. It makes a mutual-benefit strategic alliance with the aquatic product wholesale markets in big cities, and set up information collecting center there. Further more, it will share the online market by competitive price and providing valuable business platform for the clients. The internet company takes the existing web site as a start point, and technologically upgrades it. It will take the following route: from buying techniques to technologically corporations, and then forming their own technical human power. And it will establish a large-scale database. Also the web site will be connected with the LAN of ZAPCM. The capital will come from the investment of the stakeholders, the sponsor from the government, the profits of the internet company, loan from banks or other enterprises. The internet company will engage and select IT manager, computer and aquaculture specialists from inside or outside of the ZAPCM. And it will set up a series of polices to access the performance of employees, and incentive them with bonus stocks or other ways. 4.2 Long-time Strategy (1) Information Integration Whether the information service provided by the web site would be accepted by clients, to some extent, lies on the fact that whether it is valuable for them or not. Few web sites can solve the problem. So ZAPCM takes a from one to more strategy to provide valuable business to the clients. The essential of this strategy is to increase the power in the online aquatic product information market by extending the above-described alliance. Firstly, ZAPCM select some influential aquatic product wholesale market and enterprises in the main cities in Zhejiang, Jiangshu, Fujian, and Shanghai, ally with them, and collect information through them. Secondly copy the strategy to the other areas of the country. As to foreign market information, ZAPCM mainly get it from the friend-markets or long-time cooperate partners in Japan, South Korea, West Europe, and North America. (2) Brand Strategy of the Web Site Brand strategy of web site is about to build the online brand by the services that provided by the online auction platform and transaction-matching platform, which will promote the brand of online virtual market and other products. Because the ZAPCM has planned the LAN auctions in the physical market, it will gain 6

7 experiences on auctions online. Then the online auction platform will be on the schedule, the products auctioned online will be some Zhoushan special local products, and then turn to other domestic aquatic products. Just because of the relatively small size of the numerous aquatic product processors and their demand for the matching transactions, the transaction-matching platform put into practice at the same time. The two platforms will both adopt online register system to manage the membership. (3) Build Reliable Distribution Systems and Secure Payment Systems From a long-time view, reliable distribution systems and secure payment systems will be the one of the vital factor factors for the success of e-business. The Internet Company will firstly analysis the geographical dispersion of the clients, their distribution demands, and other factors. Then the distribution system will be built on the background of the following three aspects: the existing distribution equipment, the allied partners, and the Third Part Logistics. It will perfectly solves the after service problems for the online buyers. As to the payment system, the Internet Company will take two ways--online payment and offline payment respectively on different conditions. Sometimes the Internet Company may offer assurances for the trade. (4) The Strategic Alliance To share the online market and achieve its e-business strategic target, ZAPCM allied with the following three types of enterprises. See the table. Table 4. E-business Strategic Alliance of ZAPCM. Object types Purposes Third Part Logistics Improve the distribution system Large scale aquatic product wholesale markets and Collect the fishery information and abstract the online clients aquaculture enterprises Universities and research Do research work on the aquatic product standardization and institutes consult on the strategic plan 5. Problems and Expectations Because it has met the need of the coming Internet-Economy Age, the e-business strategy will bring considerable profits for ZAPCM and benefit the society. (1) The two combinations: one is between the physical aquatic product market and the online virtual market, the other, between LAN and online virtual market, will inevitably reduce the transaction cost for the traders. It will also improve efficiency for ZAPCM. Because the network has organized the different parts of the aquaculture value chain, ZAPCM will exert its market-oriented effects as a top wholesale market, and buildup the competence of its physical wholesale business. (2) Online virtual market has advantages on lower transaction cost, 7 24 service systems, wide sales channels, and information resources etc. It can satisfy the demand of aquatic product businessmen better. When more and more businessmen logged in, online virtual market of ZAPCM will more share more online potential market share. 7

8 There are many obstacles for ZAPCM to develop e-business, which comes not only from the outside macro environments, but also from the inside of the enterprises. (3) As a wholesale market in producing area, ZAPCM will closely link the aquatic product producers, processors and consumers together by its e-business strategy. As a result, it will also harmonize improvement of the different parts on the aquaculoture value chain, accelerate the development of aquaculture business of our country, and benefit the society. At the same time, the e-business strategy must face many problems, which come either from the outside environment or from the inside of ZAPCM. (1) Currently the three vital restrictions--the network security problems, the distribution problems, and the online payment problems which obstacle the general online business, hold back the aquatic product online business of ZAPCM. Further more, the peoples online business concept, the unconsciousness of copyright protection, and the incomplete legislation systems etc will make it very difficult for ZAPCM to develop online business. (2) The characteristics of aquaculture will also be a big problem. For example, the poor standardization level have made the aquatic product can hardly be specifically described online. Also, the perishablity and the transport problems of the aquatic product have increased the difficulties of online trade. (3) As a state-owned enterprise, ZAPCM has some unconquerable problems. Which will the Internet Company some risk in its business and management. For instance, it is very difficult for ZAPCM to set up an efficient working team and relevant management patterns. When the competition in online market become more and more fierce, there will be some difficulties to penetrate the online market. And the cost will increase for the same reason. 6. Conclusions The rocket up development of Internet has brought deep impact on every aspect of the society. More and more enterprises have found their start point to develop e-business. Because of the low standardization level, putrefactive products and transport problems, it is more difficult for aquaculture enterprises to choose their e-business mode. ZAPCM has planned to start its e-business from the LAN and online virtual aquatic product market. It has won the backup from the Fishery Bureau of Zhejiang municipal government. In the prepare stage, ZAPCM has allied other three aquatic product wholesale market to invest in the E-business Company. Effective masseurs have been arranged to set up a web site, which will be an online platform to provide e-business services. Though it will in face of difficulties and risks, such an exploration is very necessary for the long-term development of an enterprise. And as far as its success, the support from the government is quite vital. 8

9 References: 1.Guo Qingshun, Su Shunkai, etc. the Technology, Tactics, and Applications of E-business. Zhongshan University Press. P Gu Yongcai. The Applications of E-business for Enterprises, Chinese Business United Press. P Hong Tao, Information Communications and the Trade Pattern of Chinese Agriculture Wholesale Market Maaarilyn Greenstein. Todd M.Feinman. Electronic Commerce Security, Risk, Management and Control. Chinese Machinery Press. About the author: Shenghua JIA, 38, vice president of the School of Management of Zhejiang University, Professor, guide tutor of Ph.D. candidates. Main research field: real estate investment, incentive theories, and net-economics. Address: Management College of Zhejiang University, Hangzhou, Zhejiang province, P. R. China. Post code: Zhang Guofu, male, general manager and board chairman of ZAPCM Liu Huaiwei, male, Ph.D. candidate of Zhejiang university Liu Qinghua, male, Ph.D. candidate of Zhejiang university 9