Gao, Tong, Rusu IAMOT 2006 1/11

Development of E-society in China

Shang Gao, Yunyun Tong, Lazar Rusu

Department of Computer and Systems Sciences (DSV)
Stockholm University/Royal Institute of Technology (SU/KTH), Stockholm, Sweden
shang@kth.se, x04-yto@dsv.su.se, lrusu@dsv.su.se

Abstract
The information and communication technology (ICT) is one of the main drivers that has today
profound societal implications, enabling and shaping the “e-society” in different countries and
regions in the world. Currently the development of e-society in China it’s a very important
objective for this country and therefore we believe that the ICT development has contributed too
to the fastest economic growth of this country in the last decade. Therefore our paper has looked
mainly to study some of the main important e-issues of the e-society development in China today
like are the e-business, e-government, e-learning and e-health through particular case studied.
The first e-issue that it has been analyzed in this paper is e-business that is very popular in China.
As a case study for the study of e-business we have selected Taobao.com a good application and
a reputation system. In case of the e-government applications we have seen that this e-issue it is
now in an initial stage in China and we have found here as a good example the e-government in
QingDao. In fact in our analysis we have found that most of the government agencies have their
own websites but many applications are still in construction phase. Regarding the e-learning
applications, a good model it is done by IBM-China that we believe it could be also a good
example for many enterprises. In fact here we figure out that in a near future there are some
potential conditions for the enterprises to implement the IBM-China model of e-learning. The last
but not the least as importance for developing of e-society is the e-health application. Today in
China the e-health applications are not so advanced developed in the medical and health care
system and good practices of e-health applications could be the development of Hospital
Information Systems (HIS) and the Electronic Medical Record (EMR). Based upon on the case
studies analyzed in the paper that could be considered examples of best practices and other
studies done by the authors we finally developed two scenarios for the urban and rural areas
regarding the future development trend of ICT and e-society in China in the next five years.

1. Introduction

1.1 Background
Nowadays, the development of e-society is playing more and more significant role all over the
world. It can accelerate the development of information and communication technology and
change the society into a new mode. For decades, advances in information technology have
enhanced living standard and economies around the world, especially in developed countries.
Based on this truth, most countries pay more attention to the development of Information
Communication Technology (ICT).
Governments around the world have recognized that the opportunities provided by information
and communication technology. They are now exploring new methods of delivering services and
interacting with residence more effectively and efficiently. Recently, most of governments of the
world established Ministry of Information Communication Technology, managing with
Gao, Tong, Rusu IAMOT 2006 2/11

developing electronic processes for government, business, health, learning, etc. So the concept of
electronic society is putting forward. This new policy aims to bring ICT to make effort on every
aspects of society. In consequent, it will bring more opportunity for the development of economy.
E-society mainly includes E-business, E-learning, E-health, E-government, and etc. There are
also critical issues what most of the citizens are concerning about in their daily life. E-business is
more and more popular during these years. Most of enterprises design some platforms through
Internet to deal with this issue. In the field of auction, EBay is the most famous one; in the field
of book sale, Amazon is another best choice, etc. The conduct of E-business also happens most
frequently in the issues including in e-society. However, other aspects like e-health, e-
government are not so popular as e-business, particularly in developing countries. At present,
these issues are in the progress. It will take some time to achieve the transformation procedure.

1.2 Hypothesis
We assume that the ICT development and electronic related policies that are using information
and communication technology it will help the building of the E-society. Therefore in our
hypothesis we have looked mainly to the study of the main important e-issues of the e-society
development in China today like are the e-business, e-government, e-learning and e-health
through particular case studied that could be considered examples of best practices. Base on these
arguments we have developed our hypothesis regarding e-society development in China like is
shown in Figure 1.

Figure 1. Our hypothesis for the study of E-society development in China

In section 2, we will introduce the ICT development in China; in section 3, we address the E-
society development of China in four aspects (E-business, E-government, E-learning, E-health)
which is the main objective of this paper; in the section 4 we have made two scenarios in order to
predict the future development trend of ICT and E-society in China and finally, we make our
conclusions in section 5.
Gao, Tong, Rusu IAMOT 2006 3/11

2．ICT development in China

As we mentioned in Chapter 1, the development of ICT is the driver to develop E-society.
Nowadays, E-Society is more or less relying on the development of Internet and the related
information technology. In this chapter, we will mainly introduce the Internet in China.

2.1 Internet
From October in 1997 to the July in 2005, the number of Internet users increases from 0.62
million to 103.00 million. And the number of computers, which accesses Internet, increases from
0.299 million in 1997 to 45.6 million. The figures in next page show the number of Internet users,
the amount of computers and the total band of leased international connection in recent years.
The total number of “WWW” website is about 677500, the detail of which is shown in the next
table. This statistic is from China Internet Network Information Center (CNNIC)’s report- 16th
Statistical Survey Report on the Internet Development in China, which was published in July of
2005.

Table 1. Total Number of “WWW” Website (CNNIC, 2005)

AC COM EDU GOV NET ORG AADN .CN

.CN (.CN) .CN .CN (.CN) (.CN) .CN
Number 392 449421 N/A 11753 77782 23727 4435 109990
Percentage 0.1% 66.3% 1.7% 11.5% 3.5% 0.7% 16.2%

From the table above, we classify the registered domain names into different categories. With the
development of ICT, more and more people will use the Internet. We can see that too many areas
of our life and work, such as education, research, business and government, have been affected
by ICT.

2.2 Telecommunications
China has imported its first mobile phone communications facilities in 1987, and it took a decade
for the number of subscribers to jump to 10 million. China's mobile phone users outnumbered
fixed-line phone subscribers in Oct.2003. The number of the country's mobile phone subscribers
reached a record of 320 million at the end of Oct.2004, which is ranked the first in the world.
Nowadays, the digital data communications network covers 90 percent of the whole country and
China's telecom industry is shared by six operators including China Telecom, China Netcom,
China Mobile, China Unicom, China Sat, and China Railcom. There exists huge competition
among the operators in various telecom fields especially in the field of mobile communication. At
present, China mobile is the largest telecom operator in the market. The revenue from
telecommunication in China is 572.55 billion in the year 2004, with an increase of 11.5% from
2003[Ceiceo.cn, 2005] and the next objective of communication industry in China is
implementation of 3G, which will bring to another campaign in the market of mobile
communication.

3. E-society in China
In this chapter, we analyze the development of E-society in China in four aspects: E-business, E-
government, E-learning and E-health.
Gao, Tong, Rusu IAMOT 2006 4/11

3.1 E-business
Most of people are familiar with E-business, because it has come into our daily life and work
stealthily. People can buy what they want from Internet. But real E-business is much more than
the simply selling and buying online.
3.1.1 The Development of E-business in China
Generally speaking, E-business has three different forms Business-to-Business, Business-to-
Customer, and Consumer-to-Consumer. We could find that all of these three modes provide us a
convenient sale mode than the traditional buying and selling.

D Business
P

B2B

E-BusinessB2C P
D

D Consumer
P

C2C

Figure 2. Components of E-business

The figure above shows the components of E-business and its basic workflow. The arrows in the
above figure mean the relationship between buyers and sellers. The relationship contains payment
and delivery, which is present as P and D in the figure.
3.1.2 Case Study: Taobao Online Shop
Taobao is a very famous C2C websites in China. First, we will talk about the participants of E-
business in Taobao. The participants could be divided as buyers and sellers. The registered users
could play both of the roles. Taobao has its own reputation system to evaluate the reputation of
the registered user buyer and seller. The reputation system could help sellers and buyers to choose
a trustworthily business according to the account of the comments. The reputation system will
decrease the risks and enhance the trust.
The payment is undoubtedly an essential part in E-business. How to make the payment more
secure and how to make the payment more effective are questions that we always think about
when we conduct online auction. On Mar.3rd, 2005, with the collaboration of Industrial and
Commercial Bank of China, Taobao developed a new payment platform, which is named “Zhi Fu
Bao” in Chinese. This platform is similar to “Paypal” of Ebay. No matter “Zhi Fu Bao” or
“Paypal”, the aim of the payment platform is to ensure a safe and fair trade. It decreases cheat in
the business. We describe the process of “Zhi Fu Bao” as following figure 3 [Taobao, 2006].
Gao, Tong, Rusu IAMOT 2006 5/11

Buyer Pay Delivery Zhi Fu

Successful
to Zhi Fu Bao Pay
Bao to Seller
Confirmation
Confirmation

Figure 3. Payment Process of Zhi Fu Bao (Source: [Tabao 2006])

In this context, “Zhi Fu Bao” can make the online transaction more safety. Both seller and buyer
can benefit from it. It will also attract more clients to conduct online business.
3.1.3 The Problems of E-business in China
Although E-business is more and more popular on Chinese market, we also identified following
potential problems.
A. Security& Privacy
In E-business transaction, the users need to provide their names, addresses, mobile phones
numbers, bank account number, and so on. Many people are afraid of that they will get some
troubles if other people or companies see their private information. The security could affect the
order and payment in the E-business. We should pay much attention on this issue to maintain the
database and use suitable software to prevent virus on Internet.
B. Customer Service
Because E-business transaction occurs in the virtual Internet, maybe the customer could be far
away from the seller. In this case, how to provide the services after sale is a big problem now.
C. Government Policy
The E-business should be encouraged and supported in China, because it could decrease the cash
flow in the commerce. And the E-business could also avoid the irregularity in the real market.
But there are also some people do not obey the rules in the E-business market, for example, the
low quality and cheating. So the government should establish related laws for E-business to
ensure a mature market environment.

3.2 E-government
3.2.1 The Development of E-government in China
Chinese government, like the government in other countries around world, has realized the
opportunities and advantages of the utilizing of ICT to provide services to citizens. E-government,
as a new way of delivering services to citizens has become a significant development trend in
China in the past decade. The government has used different information and communication
technology to achieve the goal of developing E-government in China.
In order to improve the efficiency of the government, the Chinese government has carried the
“Government Online Project” (GOP) into execution in 1990s. What is GOP? GOP means using
ICT to build the formal websites to improve the office automation and make the services to
citizens much easier. And the government could manage the politics, economy, society and some
other areas [Bangfan Liu, 2005]. There are three steps to develop GOP. The aim of the first stage
is to connect the government offices and agencies to the Internet. In the second stage, the
government offices should move the information systems into electronic forms. In the last stage,
the work in the government offices could become paperless [Peter Lovelock and John Ure, 2005].
Case Study: Qingdao Government Affairs Online
Gao, Tong, Rusu IAMOT 2006 6/11

Facing the fact and challenges of the globalization, government has recognized the importance of
the construction of E-government. It improves the government capability in managing society
and providing services to citizens.
The launch in April 1998 of the Qingdao Government Affairs Online (www.qingdao.gov.cn) it
could be considered the milestone of the E-government in China. It has great meaning for the
development of E-government. In order to achieve digital government resources, paperless
official work. Qingdao Government set the aim to construct “451” system, which includes four
platforms, five function centers, and one E-government mode. In terms of implementation of the
four platforms and five centers, Qingdao Government could get a universal E-government mode
[Microsoft, 2005]. Microsoft Ltd is the technical partner of Qingdao Government online project.
The services provided to citizens include traffic information, and passports, education, hunting
for a job, paying tax, social insurance and so on. The services provided to business include
human resources services, paying tax, application the business licenses and so on. Traveler can
get some tourism information from the website.
Online application service is another feature involved in the website. The services include the
advertisement application, business license application, change information of companies and so
on. The online application services make the work process much clear. The applicant could fill
the form and send the application forms online, instead of going to the office themselves. And the
government will process the application within the E-government application system.
3.2.2 The Problems of E-government in China
Although Qingdao government as one paradigm of Chinese government has got a lot of
achievements and accelerated the construction of digital China in the recent years, E-government
is still in the initial phase.
In China, the management hierarchy is complicated; it makes the official work in E-government
more complex. The government should reorganize the structure of the government, and make the
work more effective. Be short of information knowledge of government officials is another issue
prevent the E-government develop. From the example of Qingdao government, we could find the
information knowledge level of the officials is not sufficient, so the government built Information
Technology Training Center (ITTC) to provide the training to the officials. That is a good idea to
improve the skills of the officials.

3.3 E-learning
3.3.1 Introduction of E-learning in China
Nowadays, most of organizations in China have recognized the importance of the new type of
training model for enterprise and school---E-learning. It is time for them to accelerate the
execution of E-learning. Along with drive force of globalization and economic development
needs after entering WTO in 2001, enterprises in China tend towards the international economic
arena in full scale. In order to keep up with global economic development, especially for
developed countries, the enterprises in China need to make some strategies in different level for
reformation and innovation. Training is one of significant issues the enterprise would face
everyday. Therefore, most of enterprises want to find a more efficient approach, which could
replace the traditional classroom training program. At this time, E-learning is coming. And most
enterprises of China have implemented the applications of E-learning in real training process. For
instance, bank-of-China, IBM-China branch, Nokia China Branch, PingAn Insurance Company,
Galaxy Stock and other large-scale enterprises take the lead in implementing E-learning. As a big
country with largest population in the world, E-learning in China is still in the infancy stage.
However, we believed that E-learning would be popular in near future.
Gao, Tong, Rusu IAMOT 2006 7/11

3.3.2 Case Study: IBM-China

IBM-China mainly has two sections, IBM China Development Laboratory (CDL) and IBM
China Research Laboratory (CRL). IBM-China has established partnership with more than fifty
famous universities in China. IBM-China is also one of the most popular enterprises that most of
graduate students want to join.
Entry Level Training (ELT) Program is good example reflects the E-learning application. In IBM-
China, there is a tradition opinion, “graduate students are the employee without training, they
don’t understand the products of company, they don’t understand the culture of company as well,
and they couldn’t represent IBM Company.” Therefore, as new employees, IBM-China will
organize an Entry Level Training (ELT) for them. Both the graduates and company can benefit
more from it.
A few years ago, the regulation of E-learning system in IBM-China is not mature, normally; it
needs around four months to conduct the training process, including traditional face-to-face
teaching, E-learning and practice. The feedback of E-learning process is not going on well. So,
after three week’s E-learning study, it needs extra thee week’s classroom teaching to re-study
those knowledge. In general, the skill of the new employee improves obviously through four-
month training program. However, the managers from some departments often encounter a
dilemma to the training program. They thought four month is a little bit long for training.
The training center of IBM-China is also aware of this problem. They decided to rebuild the
application of E-learning systems to improve its efficiency. After adopting the updated E-learning
system, the situation per training program is changed. The period for training program is reduced
to two months. In this manner, most of time, the new employee can do the E-learning study in
their own department. The updated E-learning procedure is as follows: first learning all of the
knowledge about products through CD, then studying workflow of department through web-
lecture, finally taking the exam through Lotus management system (LMS) [IBM.com, 2005].
Compared to the previous ELT program, less time it costs, better effectiveness it gets.
The return on establishing E-learning system is visible. It has huge efficacy in variety aspects,
like, bringing the great progress of working system efficiency, and transformation of holistic
attribute of enterprise, etc.
There are also other E-learning applications in IBM, for example, E-learning training program for
managers, and sharing knowledge in “round-the-world” university of IBM.
3.3.3 Current Problems of E-learning in China
IBM-China is pioneer in E-learning application, which can be a good model for other enterprises
to study. Most of large and medium enterprises have already adopted the application of E-
learning in daily work. However, not all of the enterprise is suitable for E-learning system. There
are three potential conditions for the enterprise to implement E-learning.
A. The scale of the enterprise
Due to the financial issue, only large and medium scale enterprises possess the strength to invest
on E-learning. Secondly, as the branch of large size enterprises decentralized in the whole region
of China, it has this kind of demand.
B. IT-based infrastructure
If the enterprise wants to establish the E-learning system, it must have correspondent
prerequisite---the basic construction of IT-based infrastructure. It is incredible to image how to
built E-learning system for the enterprise even doesn’t implement ERP.
Gao, Tong, Rusu IAMOT 2006 8/11

3.4 E-health
3.4.1 Development of E-health in China
The Chinese government adopted a developmental policy of ‘information driven issues’ in 1992,
actively promoting ICT development in the major industries, including the healthcare sector.
From 1994, Hospital Information Systems (HIS) was enforced as a major criterion in the hospital
ranking system, resulting in the national-scale implementation of HIS. Most of these systems
were simple financial billing systems, due to the shortage of competent information systems
providers in China (in contrast to the thriving off-the-shelf software industry). HIS diffusion has
also been pushed by the healthcare reform since 1997, under which public hospitals have been
slowly losing government protection and facing market competition. ICT adoption became
symbolized as part of a modernized and competent image of the health provider. Consequently,
many hospitals have invested heavily in adopting HIS, which in some hospitals have gradually
evolved from simple financial systems to integrated management information systems capable of
capturing considerable amount of patient information. There had been hardly any construction of
regional and national health information network until the SARS epidemic outbreak in year 2003.
Although SARS brought a lot disease and damage to China, it also acts as a turning point for the
Chinese E-health development, which will undoubtedly in turn contribute the progress of
information freedom and government transparency.
The main application of E-health in China is Hospital Information Systems (HIS). Both of
utilizing computer technology, network technology, communication technology and database
technology to mange the information of general hospital daily affair, medical care, medicine
transaction and research, and realizing the computer application software system enabled
information resource sharing between hospitals, are indispensable basic infrastructure and
technical support environment to achieve the electrical evolvement of hospital.
Through the development trend of E-health in China, we believed the E-health application would
be prosperous in near future.
3.4.2 Case study: Development of Electronic Medical Record in China
Since popularization driven organization of Electronic Medical Record (EMR) formed in 1990 in
US, it gained plenty of achievement during these years, especially in developed countries. For
example, in United State, hospital can utilize EMR to forecast the death of precancerous patients.
Compared to developed countries, the introduction of EMR is a little bit later in China. The
practical application of EMR is implemented in some hospital from 1999.
As our observation of construction of EMR systems in some large-size hospitals in China, we get
following shortage involved in the development of EMR:
A. Duplication phenomenon
The duplication phenomenon of medical record is more and more obvious in the application of
EMR. As the establishing of record module, the writing task of medical record is simplified. At
the same time, the problem is turning up. Some of doctors don’t ask the information of patients
seriously. They misuse the copy and paste function of computer software.
B. Disjointing between doctor and nurse
In the view of currant application of EMR system in China, its designing is mainly focus on the
application of clinical doctor, which is ignoring the consideration of nurse’s application. Most of
information in EMR couldn’t be shared by accessing through a terminal in the workstation of
nurse.
C. Security
The medical record that is original record of patients in the hospital has strict privacy. However,
some doctors reveal that information by accident. This also has some relationship with legislation
Gao, Tong, Rusu IAMOT 2006 9/11

in China. The Chinese government is intent to establish legislation regarding the electronic issues,
which will strengthen the information property consciousness of citizens.
Another important issue is signature in EMR. Along with the application of EMR, doctors ignore
the importance of signature in the medical record. Without the doctor’s signature, the electronic
medical record will lose legal effect in the practical implementation. Nowadays, a new concept
was proposed in the field of EMR--- electronic signature, which is designed to solve this problem.
Some hospital has adopted this new technology in their daily work.
Through these two incidents, we get that strengthening the law knowledge of citizens is also
indispensable in the construction of EMR system.
According to our investigation in some hospitals, we think that the development trends of next
generation of EMR would concentrate on the following aspects:
A. Intelligence work: In the field of intelligent, EMR has large potential space to develop. It can
utilize the artificial intelligence technology---expert system and inference machine.
B. Networking: Try to implement EMR systems on the platform of Wide Area Network (WAN).
Integration: EMR system will integrate other systems like, Hospital Information Systems (HIS),
Decision Support Systems (DSS), Picture Archiving and Communication system (PACS),
Radiology Information System (RIS), etc.
3.4.3. Future Development of E-health in China
At present, most of large-size hospitals in China have established basic infrastructure of HIS, and
finished the integration of PACS and RIS. In addition, the application of EMR systems is more
and more popular in most of hospitals in China. The next direction of E-health project in China is
in two aspects: telemedicine and medical data development and application.

4. Scenarios for Future E-society Development in China

The development of technology, from telephones to mobile phones, from Intranet to Internet, all
of them have great meaning to people. ICT is quite related with the development of economy, too.
Effective information and communication technology could increase the economy growth.
The government also perceived ICT as a powerful tool that can contribute to the country’s
continuing economic development. Ministry of Information Industry of China had made a serial
of planning and policies to accelerate the development of ICT industry. As China entering WTO
at 2001, it provides another opportunity for ICT development in China. Beijing is the host for
Olympic in 2008. The theme of this Olympic is “Digital Olympic games”, which is the biggest
difference from pervious Olympic Games. Much more ICT applications will be adopted in this
Olympic, which will attract eyes from all over the world. This also regards as another drive force
for development of ICT in China.
However, these factors only reflect some scenes in China. Most of our case study is based on the
urban cities. The implementation of ICT application in urban area is better than the rural area. In
most rural area in China, most people only heard about ICT. The ICT development in these
regions is not going well. In order to make the balance between urban and rural areas,
government also proposed some development polices, like “west area development”. And most
talents and graduate in China have the intention to contribute to ICT development in rural areas.
According to our understanding of Chinese ICT development and survey in China, we estimate
the future development of E-society and ICT. The primary development trends are as follows:
Trend 1. Development will be more user-driven: The requirement of customer will become the
guide to the development direction.
Trend 2. More E-application issues: In order to construct the well-foundation E-society, it needs
to work on more electronic related issues, like E-bank, E-parking, etc.
Gao, Tong, Rusu IAMOT 2006 10/11

Trend 3. Wireless industry will be popular: We can see the great potential of wireless industry.
We believed 3G would be implemented in near future.
Trend 4. Security will be improved: Along with the ICT development, people recognized the
importance of security and privacy. However, security issue is still the bottleneck for the
development of ICT and E-society currently. With the realization of some newly technology, the
security of information system will be guaranteed in some days.
Trend 5. More people accept the conceptual of E-society: Along with the development of
education in China, more people will understand the principal of high technology. Along with
advancement of society, the hindrance of history and culture problems will also be alleviated.
More people will accept the conceptual of E-society.
Our view regarding the future development of E-society and ICT for urban regions and rural
regions is shown in the Table 2, respectively.

Table 2. E-society and ICT development trend in the next five years in China

ICT
E-society development trend 2006-2010 development
trend 2006-
E-business E- E-learning E-health 2010
government
E-business Government Most Implementation Most people
will be more will pay enterprise of become mobile
Urban secure. more have mature telemedicine. subscribers
Area And it could attention on training The guarantee Implementation
integrate the information the security ofof 3G
with SCM Interaction. systems EMR system More and more
and CRM. digital device
E-business The Most of Establish EMR People use
services will government enterprise system in most basic ICT
Rural cover the agencies in can realize of hospital application
Area rural area. local, rural the basic (like Internet)
People in area will application More and more
rural area have their of E- mobile
could also own E- learning subscribers.
use it. government
system.

5. Conclusions
Nowadays, E-society is not mature in China. There are still many aspects that should be
improved. On one hand, without the emergence and development of ICT, the society could not
get into E-society. On the other hand, E-society also affects the ICT development. We also find
some culture obstacle involved in development of E-society in China. Some older people in
China don’t want to accept the conceptual of E-society. They don’t want to change their mind to
accommodate with the new issues of Chinese society development. In our opinion this issue has a
link with the situation coming from long history of China regarding thousands of years of federal
and paternalistic governance and endorsement of power hierarchy of Confucius doctrines that
Gao, Tong, Rusu IAMOT 2006 11/11

have left a strong component of power hierarchy in Chinese culture, which entails a respect to
superiority, in social place and community. For young people, although majority of them accept
the conceptual of E-society but they don’t trust the electronic transaction online. Most of them
trust paper-based or face-to-face transaction. In our opinion, Chinese government and legislation
system is a latent reason that leads to this situation. The correspondent legislation to protect the
online transaction and privacy problems is essential for the development of E-society in China.
Therefore, the adoption of application of E-society related issues it hasn’t been straightforward. It
encountered some culture obstacles in his development. The construction of E-society it will need
to include the task of changing citizen’s culture opinions and the Chinese government has
recognized the importance of this issue. Under the development trend of E-society around the
world the Chinese government felt that the success of information society it maybe determines
the fate of the country and the E-society could also change the governance into rule-based
management. Therefore the Chinese government planned to make some strategies to alleviate the
affect of culture problems. In our opinion the enhancement of information culture study is an
approach to be manage it and with the rapid development of ICT in China over the last decade we
believe that Chinese government will make effective some policies to manage the culture
obstacles.

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