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E-commerce Offers New Hope to Jobless

Just a few years ago, Yang, a 48-year-old former railway worker, rarely gave the Internet a second thought. Then she spent three years struggling to keep her small retail outlet solvent. She experimented with different types of inventory, but rent, stock and utilities alone cost her about 5,000 yuan (US$602) a month. Profits were meager at best.

Yang began to run a "virtual" store online last year with an investment of a mere 100 yuan (US$12). Now the business is booking monthly sales of several thousand yuan and Yang is planning to expand from daily necessities into toys and jewelry.

More than 1,000 people in Shanghai have launched full-time careers in e-commerce since last July, when the local labor and social welfare authorities and the municipal e-commerce trade union launched a campaign to boost employment with Internet services.

The online business operators trade in cosmetics, clothing, accessories and footwear, digital cameras, cell phones, computers, audio-visual products and books.

Another 3,000 citizens have taken training in starting up an online business.

The trade union said that in 2003, e-commerce in Shanghai nearly doubled year-on-year to reach 50.4 billion yuan (US$6.1 billion), with virtual stores and online-franchised businesses quickly gaining in popularity.

Eachnet, a well-established e-commerce website based in Shanghai, registered more than 1,500 full-time online store startups, and jobs offered by the virtual stores now number more than 5,000. Including the e-stores operating only part-time, the number of online shops that started last year through Eachnet topped 50,000, according to the trade union.

Tang Lei, Eachnet's public relations manager says that online store operators can realize monthly turnover of 20,000 to 30,000 yuan (US$2,409 to US$3,614) with an average profit margin of 50 percent.

Meanwhile, another Shanghai-based e-commerce service provider specializing in electronics opened more than 30 online franchised stores over the past year, and says it has another 100 applications.

Zhao, a 50-year-old retiree from a local textile factory, raked in as much as 150,000 yuan (US$18,072) in monthly turnover from the franchised electronics operation.

Dubbed "grassroots e-commerce," online business startups have won favor with young college graduates as well as the middle-aged unemployed.

Xu, who was a Chinese language and literature major at the prestigious Fudan University in Shanghai, has opened an online store selling cosmetics. She is recording monthly sales of more than 10,000 yuan (US$1,204).

Low startup costs are one of the decisive factors behind the uptrend in grassroots e-commerce, said Yi Yong, head of the local e-commerce trade union.

Starting an online store costs roughly one-tenth of what it does to start a conventional small business, such as a purified water shop or a launderette.

The 100 e-commerce enterprises incorporated in Shanghai are now encouraged to reserve jobs for people trained by the municipal e-commerce trade union. Those who do so will be eligible for benefits from the municipal reemployment program, said Zhou Weidong, head of the Shanghai Commission for Building an IT-based Society.

Shanghai seeks to provide 500,000 jobs for the laid-off every year. The grassroots e-commerce campaign is expected to provide 10,000 jobs by the end of this year.

To achieve the goal, some regulatory barriers must be removed, according to Zhou. He cited an absence of e-commerce regulations, which is a hindrance to massive expansion. Without such rules, it is difficult to certify the legitimacy of an online transaction, Zhou said.

Inadequate and unqualified management is another obstacle to e-commerce growth, said a company official in the industry. Currently, most of the operators are laid-off or retired people who are not well educated.

(China Daily May 25, 2004)

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