True, China lacks reputable online business to business (B2B) companies and the largest Chinese B2B websites like alibaba.com lags behind US counterparts in the opinion of global sourcing agents. Business to business requires a huge inventory backup without loosing market appeal. The basic truth is not all established companies facilitate online B2B transactions including import/export, except for serving as quotation points.

PRC, on its part, organizes business to business fairs which facilitate domestic B2B and global sourcing companies interact before getting engaged in import and export contracts. Unlike the direct import/export, online B2B is doing a learning curve with traditional import and export goods.

Trade fairs are organized by both PRC and local governments catering to different sectors of import/export and B2B seeking interaction with global sourcing agents among domestic and import and export companies. The growing interest by global sourcing community is proving that opportunities for Chinese business to business (B2B) are unlimited provided domestic import/export companies build upon their offline reputation.

-Impediments to Online B2B and Import/Export Transactions in China

Online business to business (B2B) transaction thrives on seamless integration of payment processing, e-banking, supply chain network and security concerns unlike in traditional import/export transactions. In addition, online business to business (B2B), either domestic or import/export, has obstacles in preferential patterns of Chinese customers that want to touch and feel besides tasting products reinforcing the feel that indirect is unsafe. The mass dealing format of online B2B doesn't gel well with the Chinese psyche, if you forget global sourcing and import/export customers for a while.

No doubt China enjoys pretty positions in global sourcing circles but as the world shifts to global sourcing through internet import/export transactions, China needs to put in additional efforts. sourcing destination, thanks to bold steps with regards to import licensing. Pre-reform import/export policies regarded foreign trade as necessary evil and global sourcing, a strict taboo, regulated by a few FTCs. Trade reforms are linked to broader economic reforms and have two major components:

1. Decentralization of policy making authority

2. Price rationalization supported by market forces As a result, prices are determined by market forces, which is great news for business to business (B2B) which trades in the now deregulated foreign exchange.

The scope of import & export as well as global sourcing now falls with local authorities without having to go through the rigid FTCs, which as of now have become efficient. The mandatory policy planning had changed protocol into more liberal, non-binding guidance boosting increased business to business (B2B) and global sourcing activities. -Incentives to Import/Export and Overseas B2B

Reforms to foreign exchange systems reinforced the much awaited boost to overseas business to business and import and export transactions. Regulated foreign exchange rates and tabooed imports presented little incentive to Chinese B2B and import/export operators in the pre- reforms era rendering earnings on par with domestic regardless of overseas trading; worst- B2B companies did not enjoy freedom to retain foreign exchange earned by them. Regulated RMB also meant global sourcing companies paid unnecessary rates. The real boost to international business to business came by in three phases through foreign exchange reforms.

1. Reforms with planning framework (1979-86) allowed for foreign exchange retention by B2B and devaluation of RMB

2. Dual foreign exchange system (1987-93) allowed market controlled currency swapping which resulted in significant devaluation of RMB, welcomed by both global sourcing and business to business community

3. Foreign exchange rate re-unification (1994 onwards) more or less stabilized RMB on the basis of stupendous reserves