A Case of Agricultural Product E-Marketplace
Innovation in China
Jing Mu
Dept. Information Management and Electronic Business
Beijing Union University
Beijing, China
mj_beijing@163.com
Abstract: With the development of Information Technology
and economics, e-commerce makes it possible that
transaction occurs in low risk and low cost by virtual
market, which fulfills communication among enterprises
who owns their characteristics. However, it is not very
popular for agricultural products to utilize the Internet to
trade in China. This research project attempts to carry
about research on a case of e-market to find development
strategic of agricultural product transaction in China,
A qualitative research approach was utilized to analyze
the application of agricultural product e-marketplace The
results of this study conclude that diversity measures are
taken suit to different of traders including farmers,
agricultural enterprises and so on to better transaction in
agricultural product in China, which agricultural concerns
are keen to get more involved in e-markets to improve in
the immediate future.
Keywords: B2B, e-marketplaces, Business mode,
Agricultural Product
I. INTRODUCTION
E-commerce makes it possible that agricultural product
producers are easy to access new markets at low cost,
which not only improves competitiveness and customer
services, and also reduce transaction costs. In terms of this,
e-commerce is being fantastic propelling in the developing
world. The effect of e-commerce on the agricultural sector
and the implications for farmers and agribusiness has for
some time been considered a controversial topic. E-
commerce is regarded as new mode which makes
information concentrated and market accessible A few
supporters view e-commerce as the benefit from
developing business and farm and agribusiness. Until now,
only few studies have been conducted on the impact that e-
commerce has on agricultural concerns in developing
countries.
This study focuses on e-marketplaces within the
agricultural product transaction in China, which
is currently adopted by growers, producers, and consumers
of agricultural products.
As of June in 2010, China's total above-scale
e-commerce site has reached 20,700. Which there are 8200
B2B e-commerce service enterprises, B2C and there are up
to 12,500 C2C and other non-mainstream pattern
companies. E-commerce sites in 2010 will total over
23,000. At the same time, the Chinese e-commerce
market turnover reached 2.25 trillion Yuan; At the end of
the year, B2B transaction volume is expected to reach
Wanxin Xue
Dept. Information Management and Electronic Business
Beijing Union University
Beijing, China
xuewanxin@126.com
3.85 trillion Yuan, while the B2C transaction volume is
expected to exceed 430 billion Yuan. There are about
6,000 agricultural sites, in which there are 2000 in e-
commerce.
As shown, 10% of the global arable land solve the
problems which is out of poverty in 22 percent of the
world population in China. At the same time, the
agricultural economy developed from 34.2 billion in the
1950s to 3.4 trillion in 2008. Although agriculture reform
has made significant improvement in the past thirty years
in China, The real income gap between city and rural is 4:1
because of the formation of urban-rural dual structure
which results in sluggish rural consumption, farmers knot
tired down, weak agricultural infrastructure characteristics
significantly.
Do we really solve the food crisis yet? There are
$39.59 billion exports in 2009 and $52.55 billion imports,
trade deficit is $12.96 billion, there are imports of 46.331
million tons of oilseeds, and there are imports of 9.502
million tons of edible vegetable oil, and there are imports
of 3.151 million tons of barley grain. We can see that
imports increased significantly. China’s agricultural
imports and exports amounted to $552 Billion, exports
$21.94 billion and imports $33.26 billion, trade deficit was
$113.1, expanding 90.5% times.
Chinese agricultural investment rate of return is too
low, the reasons are as followed:
 The rising cost of agricultural production
 A prolonged slump in agricultural prices
 Agricultural production and management of the
basic characteristics: household production,
small business,
 Solve the "three rural" issue is the essence of
agricultural modernization, agricultural
modernization of agriculture is the fundamental
way modernization of agriculture must be the
basis of agricultural industrialization.
II. LITERATURE REVIEW
A. Introduction
Marketplaces play a important role in the transaction,
which makes the exchange of information, goods,
services, and payments more easy, from which buyers,
sellers, market intermediaries can get enormous benefit. In
addition, marketplaces fascinate the interaction between
buyers, sellers and intermediaries, which comprises only
the planning phase for the transformation of goods.
However, traditional marketplaces take into account
transactions only. With the development of the Internet,
electronic marketplaces create a new role.
Business-to-Business (B2B) on the Internet gives new
exchange mode that enable businesses to compete on equal
basis in markets all over the world. E-marketplaces bring
more buyers and sellers together and therefore which
enable buyers and sellers to find each other. There are
several advantages for e-marketplace as the following: (a)
reduce transaction costs, (b) expand their transaction scale,
and (c) improve their service levels. Whether on a
country-wide level or a sector-wide level, the better
developed information and communications technology
infrastructure, the faster the development; Of all the
potential benefits of B2B e-commerce, from which the
agricultural product transaction benefits: which not only
promote information flows, facilitate participators
coordination, but also reduce and eliminate transaction
costs.
B. E-Marketplaces in Chinese Agriculture
Agriculture plays a important role in the world, which
has many facets and relatively large linkage effects with
the rest of the economy .such as the regions of the
Chinese produce special agricultural product. It is
obvious that e-marketplaces support all the stages in the
supply chain of the agricultural sector. As agricultural
products are reaped from the land, e-marketplaces help
growers, producers, transporters, processors, wholesalers,
retailers, regulators, and consumers to cooperate,
communicate, and coordinate what is a somewhat
important thing and makes agricultural product fast
transfer from supplier to demander.
C. Types of Agricultural product E-Marketplaces
There are two types of e-marketplaces according to the
nature of the agricultural sector. Agricultural supply chain
consists of processing, distribution, and retailing. in
agricultural products. They are as follows:
 E-marketplace: An e-marketplace provides
transaction services, which tends to attract the
buyers and sellers in the supply chain to complete
transaction process in order.
 Release information: Online exchange information
is typically an electronic marketplace where
buyers and sellers gather to know each other.
Exchange information will typically prepare for
auction or reverse auction trading systems,
supported by sector news and information.
With the changing concept of agricultural product
transaction, e-marketplaces have been taken to promote
agricultural product transaction.
III. RESEARCH METHODOLOGY
As shown, there is imperfect legal system, bad faith in
farmers, contract irregularities, and excessive government
intervention in and so on. Transactions are difficult
because of systematic asymmetric; there are many
asymmetries: business entities, distribution channels,
market information, technology, equipment, services, and
supplies.
Traditional "company plus farmer" is plight of
farming contract. Contract in the traditional farming
exposed serious breach of orders, the national compliance
rate is less than 30%; excessive government intervention,
the standard disputes, fraudulent orders, orders for
non-standard range of issues, a serious impediment to the
development of contract farming, which makes enterprises
become the victim of "Chinese-style contract farming".
The success of "company plus farmer" is only a small area
of the township level, which has a very large distance
away from the industrialization of agriculture.
There is the fundamental way to solve – by utilizing
scientific and technological progress means to develop
China's agricultural industry.
The way of breaking the farming contract should base
on a big market, big circulation:
 Circulation of competitiveness has become a core
competence.
 U.S. Production accounts for only 10%, the
economy accounts for 25%, finance accounts for
60%, trade accounts for 60%. The total turnover of
social capital is seventy and six. China's current
assets turnover is twice, and a business asset
turnover is three times.
Changes in distribution system are as follows:
 Domestic and international integration
 The integration of the regional circulation
 Urban and rural
 The integration of manufacturing and
circulation integration
 Three-dimensional, chaos-based
 The transformation of economic means
 Power in the new round of competition in
the overall recycling
 The overall flow of innovation theory.
 Unified large market for agricultural products
A more qualitative approach was chosen a case to
further explore the experience of concerns with
e-marketplace participation. A good example is the
Shanghai bulk agricultural commodities e-commerce Co.,
Ltd.(CCBOT), agriculture, which has expanded its
electronic trading hub to allow other industry participants
such as traders, feed factories, millers and handling, and
storage operators to make use of it. It has embarked on a
national drive to centralize individual farmer and co-op
grain volumes for the group. Whose goal is becoming the
center for global e-commerce staple agricultural products,
including trading center, settlement center, pricing center,
information center, resource allocation center. Which
exceeded 100 billion in net trading on September in 2010
and which will establish 2861 dealers nationwide service
centers, one million farm shop on site broker CCBOT,
600 000 farmers by the organization, the annual size of
the transaction more than 3.5 trillion Yuan in 2012. At
present, It established national warehousing and
logistics support system, including 55 specify warehouses,
the total inventory capacity of 1.31 million tons, set
up good relation with China food system, the local state
reserve enterprises and foreign enterprises. It also
establishes 304 service outlets for agricultural in cities in
2009.
Its innovation business mode is shown as figure1,
which includes:
  Information Website in agricultural product
 Agricultural products online store
 Listed: move, shoot
 Spot special trading
 Forward transactions in
transaction
website
peasant
peasant
peasant Agricultural Agriculture
product transaction
C2B
broker enterprise
B2B
Logistics, store, transaction, pay, settlement, and technology
service.
E-commerce Service Platform
Figure 1. innovation business
There are three characteristics in special trading of
agricultural products in CCBOT:
 Standardized contracts: the contract delivery date
to meet the needs of the production cycle.
 Margin system: the traders involved in
the transaction, whose value of the contract only
required \to submit a certain percentage of
deposit (not less than 20%), the sale can be
achieved.
 Daily, every other day or period of time without
liability settlement system: to ensure that both
100% compliance and control market risks.
There are four properties in special trading of
agricultural products in CCBOT:
 Focus on electronic trade matching, all dealers
participated in and focused on matching
transaction via the Internet. Trading Center in
accordance with time priority, the principle of
price priority, giving buyers and sellers through
the computer match the deal.
 Trading Direction: electronic matching and
trading transactions to implement many ways,
is a party and presided over the public
traders dealer counterparties; only market
trader the auspices of an exclusive deal to sell
can be issued the original order, all the rest
involved in the transaction which can only be
bought.
 Price Limit System: Each contract
transaction price in the previous trading day's
settlement price on the basis is of no more than
10% of the ups and downs ups and downs as
the maximum rate, beyond the ups and
downs of the price range is invalid.
 T plus 0 trading mechanism: the date of
purchase contract can be sold the day open.
There are five points in special trading of agricultural
products in CCBOT:
 The introduction of traders access system, and
only meet
Online shop
he statutory requirements of the enterprises or
economic organizations, and special industry
groups (such as: distribution of agricultural
products broker) review can be granted after the
market involved in the transaction.
 Deposit not less than 20%; (grade bonds)
consumer  The total order by the chair completely with
consumer liquidity traders in the market within the
consumer
approved self-control, presided over the
B2C
production and operation plans according to
traders decided to sell the total amount can also
be determined based on the amount of
production of liquidity to implement the remaining
Lock delivery;
 The introduction of third-party physical
delivery of the specified storage system;
 All contracts entered the delivery period, presided
over the settlement issue dealers that can
lock and become non-transferable, irrevocable
contract, direct access to physical delivery.
mode “One hundred Country, one hundred products”
project, according to regional planning in accordance with
national agricultural economy and the “geographical
characteristics of agricultural protection flag”, will
promote local agricultural products in the country to
utilize e-commerce platform of CCBOT to carry about
transaction. Thousands of outlets nationwide, joins
hundreds of thousands of dealers nationwide
(agricultural supermarkets, wholesale markets of
agricultural products, agricultural products processing
enterprises, trade in agricultural products within and
outside the enterprise) rely on CCBOT to accomplish
transaction. Product was chosen according to the following:
 Most local characteristics of agricultural
products have access to national geographical
indications protection products
 The most potential for development of
agricultural products which was included in the
agricultural industry development plan in the
local government and has regulate product
quality standards and Local standards and
national standards. Companies w h i c h l i s t
products apply for an industry leading enterprises
and must obtain local government approval or
recommendation of industry associations.
There are many kinds of product in major transaction
types: including tea, menthol, rapeseed, rapeseed
meal, traded-off products consist of rapeseed oil, palm oil,
cottonseed meal, cottonseed oil, mixed meal, soybean
oil. Plan species will includes walnuts, hazelnuts,
peanuts, jujube, chestnut, beans, sorghum, mug
beans, millet, dried persimmons, pepper, pepper,
wolfberry, pear, apple, banana, citrus and so on.
CCBOT will play four roles: 1) crack the dilemma of
agriculture orders; 2) crack the problem of agricultural
finance;3) the national agricultural scientific and rational
allocation of resources; and 4) China's agricultural pricing.
And CCBOT gives the two security: 1) the number of
agricultural safety and security first; 2) the second quality
safety of agricultural products.
These interviews underlined the outcome with
comments on the importance of the perceived benefits and
the compatibility of the firm’s values, preferred work
practices, and technology infrastructure. The high quality
standards of most agricultural products also play big roles
in the e-market. With which young firms can distribute
products not only in national but also to far away
countries on a large scale. They consider e-marketplace
adoption once they see how it fits into their way of doing
business and how it is correctly applied.
IV. CONCLUSIONS
Even though a traditional wait-and-see attitude toward
new developments in e-commerce regarding Chinese
agriculture still lingers, with the help of e-market like
CCBOT, which continuously innovate business mode suit
for its customers with diversity characters, there are also
many agribusinesses and farmers be aware of the benefits
that can be reaped from using e-commerce. In general
speaking, agricultural product producer, retailers, market
agents, as well as customers, are adopting e-marketplaces.
As the data shown, there are many enterprises with
different size adopting e-commerce and e-marketplace to
carry about transaction in related to agricultural product.
Farmers and agricultural cooperatives mainly use the e-
marketplace for selling their products. Agricultural
products are being traded by e-marketplaces in China,
including the grain, vegetables, and fruits and so on.
Despite the increasing development of e-marketplaces,
there are still skeptical on developing and adopting e-
marketplaces in agricultural products. For example, the use
of e-marketplaces is highly confined and still government
owned and protected in some sectors. The research model
proposed in this study has shown that several retailers have
developed their own private e-commerce platform to carry
about transaction at the end of the supply chain, which
focus on the buy-side and continuously develops the
market to invites much more producers and suppliers to
participate.
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