Human Systems Management 26 (2007) 193–198 193

IOS Press

Exploring online shoppers’ e-trust in China

Chuan Pang a , David C. Yen b and J. Michael Tarn c,∗
a Faculty of Management and Administration, Macao University of Science and Technology, Macao, P.R. China
Tel.: +853-897-2057; Fax: +853-880022; E-mail: [email protected]
b Department of Decision Sciences and MIS, RTF School of Business, Miami University, Oxford, Ohio 45056, USA

Tel.: (513) 529-4827; Fax: (513) 529-9689; E-mail: [email protected]

c Department of Business Information Systems, Haworth College of Business, Western Michigan University,

Kalamazoo, MI 49008-5412, USA

Tel.: (269) 387-5428; Fax: (269) 387-5710; E-mail: [email protected]

Abstract. B2C e-commerce in China is surprisingly not as prosperous as people expect in the current stage. The lacking of
consumers’ trust is believed to be one of the major handicaps for further development and growth of B2C e-commerce in China.
This study segmented online shoppers with different e-trust levels based on their past online purchasing experience and income.
This study proves that online shoppers in China with higher e-trust levels are more likely to have higher purchasing power. It
is suggested that the most effective marketing strategy for an e-commerce firm targeting the shoppers in China is to attract and
promote their first online purchasing experience. Further, China’s middle class has proven to be major online purchasers. E-firms
who could gain their trust eventually will be more profitable in the cyberspace.
Keywords: e-trust, B2C, e-commerce, online purchasing, shoppers, China

gement, International Journal of Information Management, Informa-

Chuan Pang is an Assistant Professor tion Sciences, Journal of Computer Information Systems, Interfaces,
of Information Systems at Faculty of Telematics and Informatics, Computer Standards and Interfaces, In-
Management and Administration, Ma- formation Society, Omega, International Journal of Organizational
cao University of Science and Technol- Computing and Electronic Commerce, Communications of AIS, and
ogy. He received his Ph.D. in Manage- Internet Research among others.
ment Information Systems from Fudan
University, Shanghai, China in 2003. His
research interests focus on E-Commerce J. Michael Tarn is an Associate Profes-
Trust Building, E-Business Modeling, sor of Business Information Systems at
Knowledge Management, and Decision Western Michigan University. He holds
Support Systems. Dr. Pang has pub- a Ph.D. and an MS in Information Sys-
lished various articles in professional tems from Virginia Commonwealth Uni-
journals, book chapters, and conference versity. Dr. Tarn specializes in multidis-
proceedings. His areas of expertise are ciplinary research, involving ICT, EC,
Internet research and business intelli- and strategic management. He has pub-
gence. lished various articles in professional
journals, book chapters, and refereed
conference proceedings. His areas of ex-
pertise are information security man-
David C. Yen is a Raymond E. Glos agement, data communications manage-
Professor in Business and Professors ment, Internet research, international
of MIS of the Department of Decision MIS, and critical systems management. Professor Tarn coauthored
Sciences and Management Information the first scholarly book in ES education, Enterprise Systems Edu-
Systems at Miami University, Oxford, cation in the 21st Century. He is Managing Editor of International
Ohio. He received a Ph.D. in MIS and Journal of Management Theory and Practices.
Master of Sciences in Computer Sci-
ence from the University of Nebraska-
Lincoln. Professor Yen is active in re-
search, he has published three books and
many articles which have appeared in
Communications of the ACM, Decision
Support Systems, Information & Mana- 1. Introduction

Since its appearance nearly the end of the 20th Cen-

* Corresponding author. tury, B2C (Business-to-Consumer) e-commerce has

0167-2533/07/$17.00  2007 – IOS Press and the authors. All rights reserved
194 C. Pang et al. / Exploring online shoppers’ e-trust in China

made great progress in China. Surprisingly, it is not – Question 1: Does the online purchasing experi-
as prosperous as people expected. According to the ence of a shopper in China have an effect on his
Chinese E-Commerce Yearbook (2005), the total trade or her e-trust level?
volume of e-commerce in 2005 was about 650 bil- – Question 2: Does the income of an online shopper
lion RMB (approx. 81.3 billion USD), in which B2C in China have an effect on his or her e-trust level?
e-commerce trade volume only amounted for 0.6%, – Question 3: Does the e-trust level of an online
which is equal to 4.13 billion RMB (about 0.52 billion shopper in China have an effect on his or her pur-
USD). Much research has revealed that lacking con- chasing power?
sumers’ trust may be one of the major handicaps for the
further progress and development of B2C e-commerce
[2–4,15,17,36,38]. Moreover, China in general is con-
2. Literature review
sidered a low trust society, which may be one of the
reasons that almost 41.5% of the Internet users in
China did not purchase online [14]. Some research Many previous studies have examined the factors
studies define initial online trust as the trust when leading to trust in e-commerce; e.g., Serva, et al. [33],
the customer has no prior experience with the online Grabner-Krauter, et al. [16], McKnight, et al. [29];
vender [23,28]. In this context, the initial online trust Shankar, et al. [34], Yoon [40], Lee, et al. [25], and
of Chinese Internet users is relatively low because of Jarvenpaa, et al. [19]. Generally speaking, studies in
their low trust in online vendors in general. e-trust have been done in different categories but have
However, e-trust is considered as one of the most im- normally fallen into such areas as technology, social
portant prerequisites for e-commerce success [19,29, and economical institutions, and psychology.
34,37]. Online transactions and exchange relationships In technology, trust is typically associated with se-
are not only characterized by uncertainty, but also by curity. It is a reasonable observation that people tend
anonymity, lack of control and potential opportunism, to seek assistance from the discipline of network secu-
making risk and trust crucial elements of electronic rity technologies to deal with the growing number of
commerce [16]. Online transactions often do not in- frauds that occur in the area of e-commerce. A number
volve simultaneous exchange of goods and money be- of previous studies and research employed certain se-
cause the spatial and temporal separation between ex- curity technology to prevent fraud transactions in cy-
change partners is common. When a customer chooses berspace [1,11,13,21,22,31,39,40]. These studies lim-
to trust an online store, he or she may then proceed ited the object of trust in cyberspace to network tech-
to provide personal information, buy the product, and nologies including hardware and software, which make
utilize the service offered by a vendor located in dif- up the Internet. Schneider’s study [32] explained trust
ferent parts of the country or even in other countries, in cyberspace from the perspective of technology, al-
while having limited history of prior online transac-
though some attention was also paid to related eco-
tions. As stated in Zeleny [42], e-phenomenon itself is
nomic and political issues. The same study also ren-
still poorly understood. It is difficult to imagine that
dered recommendations to such areas as protecting the
consumers would desire these activities without hav-
evolving public telephone network and the Internet,
ing put their basic trust in a specific vendor. Neverthe-
less, the customer is the strategy because the customer meeting the urgent need for software that will improve
determines and drives the strategy of the whole enter- the trustworthiness and social and economic factors
prise [42]. that contribute to the deployment of trustworthy tech-
Because online shoppers’ e-trust is essential to nology. In an e-commerce trust study by Cheskin Re-
e-commerce success, it is worthwhile to examine the search and Studio Archetype/Sapient [7], technologi-
factors that will affect consumers’ e-trust levels and cal factors affecting e-trust were discussed in further
how e-trust levels will affect the purchasing power of detail. Website stability, information download speed,
online shoppers. Taking this aspect, this research fo- webpage design, and advanced technology usage, were
cuses on two online shoppers’ key attributes, online considered to have an effect on building consumers’
purchasing experience and income, and examine their e-trust. In addition, Bauer, et al. [6] and Chou [8]
relationships with the online shoppers’ e-trust level. reached similar conclusions.
The authors further examine the effect of e-trust on an On the other hand, sociologists, economists, and
online shopper’s purchasing power. The research ques- psychologists have found that a number of factors such
tions are summarized as follows: as institution, third-party, capability, familiarity, and
 C. Pang et al. / Exploring online shoppers’ e-trust in China 195

income can affect the amount of trust a person places Accordingly, the focus of this study is on the an-
in e-commerce [9,10,12,19,25]. tecedents and consequences of Chinese consumer trust
Modern social and economical institutions build over Internet vendors. This leads to the authors’ re-
important foundations in terms of trust related mat- search interest in examining what psychological effects
ters. One example is that trust amends the defi- will have on online shoppers’ e-trust level, specifically
ciency of formal control mechanisms such as contract- for the key online shopper’s attributes; i.e., a shop-
ing [10,14,30,35]. As a bottom line, laws undoubtedly per’s online purchasing experience and his or her in-
play a critical, protective role in trust building. Cur- come. Nevertheless, the authors do not reject the sig-
rent e-commerce related legal systems cannot meet the nificance of other factors discussed above but believe
requirements of online transaction protection [26], es- the psychological perspective can explain Chinese con-
pecially privacy protection, which is widely consid- sumers’ trust in online purchasing as it focuses on
ered as one of the most important factors in building transactions.
e-trust [17,20,27,34]. Coleman [9] indicated that pres- Based on the above discussion, a research model is
ence of a third-party can make two involved transac- constructed as shown in Fig. 1.
tion parties trust each other. In e-commerce, a third- The four hypotheses in Fig. 1 include H1 and H2
party can act a more significant role since two involved which are used to answer Question 1, H3 to answer
parties cannot do face to face transactions. Question 2, and H4 to answer Question 3.
Online shoppers can learn the capability of an In-
ternet vendor from past online purchasing experi- – H1: Those who have online purchasing experi-
ences. Capability is believed as one of the sources of ences have a higher e-trust level than those who
trust [5,12,18]. The most important capability in an do not have.
e-commerce enterprise is no doubt fulfillment [38]. – H2: Those who have more online purchasing ex-
Fulfillment includes types of products provided, prod- periences have a higher e-trust level than those
uct quality, price advantages, payment channels, lo- who have less experience in online purchasing.
gistics, and after sales services. These aforementioned – H3: Those who have a high income (>3000
factors are proved to have a significant effect on build- RMB/month) have a higher e-trust level than
ing customers’ e-trust [7,38]. those who have a low income (<2000 RMB/
For online shoppers, past online purchasing experi- month).
ences also mean familiarity with certain virtual ven- – H4: Those who have a higher e-trust level will pay
dors. Past experiences can help people to overcome un- more (buy more products or buy more expensive
certainty [26]. Gefen [15] concluded that a customer goods) in online purchasing.
tends to trust a website (more inquiries and purchases)
if he or she is more familiar with it.
Luhmann [26] states that trust does not mean the 3. Research methodology
elimination of uncertainty or risk, but a customer’s
willingness to bear uncertainty or take risk. Accord- To test the above hypotheses, a survey was con-
ing to this observation, it will be interesting to observe ducted for this study. Based on the research model,
what type of role income plays in the e-trust level of an questionnaires containing the measurements of a shop-
online shopper; e.g., buying a $10 CD does not mean per’s online purchasing experience, income, purchas-
the same risk for those who earn $5000 per month and ing power and e-trust level were developed. All sam-
those who just earn $1000 per month. ples collected were from Internet users. They either

Fig. 1. Research model for online shopper’s e-trust.

196 C. Pang et al. / Exploring online shoppers’ e-trust in China

showed their interest in online shopping or prior on- tween at least two groups. It is interesting to note that
line purchasing experience. Because Internet users are the e-trust levels of Groups 2, 3, 4, 5 were signifi-
widely dispersed in China, this study used a quota sam- cantly different from that of Group 1, but there were
pling method defined by CNNIC (China Network In- no significant differences between Groups 2, 3, 4, 5.
formation Center) (http://www.cnnic.org) rather than This finding means H2 should be rejected. It can be
the random sampling approach. 400 surveys were explained that there is a trust threshold between those
mailed out, and 224 completed and valid ones were re- who have online purchasing experience and those who
turned. When all the data was collected, a reliability do not have similar experiences. Since the e-trust level
test was conducted. The validity of the data was shown is higher than the threshold, there will, consequently,
because the value of Cronbach α for all variables were be no significant difference. The research by Tan and
larger than 0.7 (the least coefficient is 0.7711, the Thoen [36] also concluded that a trust threshold exists.
largest is 0.8058).
4.3. Findings related to Hypothesis 3

4. Data analysis Grouping the respondents who have an income less

than 2000 RMB per month in Group 1, and the re-
4.1. Findings related to Hypothesis 1 spondents who have an income more than 3000 RMB
per month in Group 2, this study can analyze the find-
224 respondents were divided into two groups ac- ings related to Hypothesis 3. An Independent-Samples
cording to whether they have or have not had prior T Test was then performed. The result showed that a
online purchasing experience. Further, the variable significant difference between the e-trust levels of the
“trust” was used to represent their e-trust level (i.e., two groups (sig. = 0.037 < 0.05) exists. Therefore,
trust = 1 means the lowest e-trust level, and trust = the e-trust levels between Group 1 and Group 2 are sig-
4 means the highest e-trust level). An Independent- nificantly different. Because the average e-trust level
Samples T Test was performed and the result is sig- (2.69) of Group 2 is higher than that of Group 1, H3 or
nificant (sig. = 0 < 0.05). Hence, it indicates that “those who have a high income (>3000 RMB/month)
the e-trust levels between group 1 (those who have no have a higher e-trust level than those who have a low
online purchasing experience) and group 2 (those who income (<2000 RMB/month)”, is supported.
have online purchasing experience) are significantly
different. Since the average e-trust level (2.91) of group 4.4. Findings related to Hypothesis 4
2 is higher than that of group 1 (2.22), hypothesis one,
which states that “those who have online purchasing In this test, all 224 respondents were divided into
experiences have a higher e-trust level than those who two groups according to their e-trust level – the lower
do not have”, should not be rejected. trust level group (trust_1 = 0) and the higher trust
level group (trust_1). The variable “pay” was used to
4.2. Findings related to Hypothesis 2 represent a shopper’s purchasing power; i.e., (pay = 1
means their purchasing power is less than 100 RMB in
In this test, all 224 respondents were divided into one online purchase, pay = 2 means their purchasing
five groups according to their online purchase times. power is between 101 to 200 RMB in one online pur-
The five groups included the following types: times = chase, pay = 3 means their purchasing power is be-
1 (never purchased online), times = 2 (average less tween 201 to 300 RMB in one online purchase, pay =
than once per two months), times = 3 (average less 4 means their purchasing power is between 301 to 400
than once per month), times = 4 (average less than RMB in one online purchase, pay = 5 means their pur-
twice per month), times = 5 (average more than twice chasing power is more than 400 RMB in one online
per month). First, the One-Way ANOVA was applied purchase). Similarly, another Independent-Samples T
to test whether or not there was a significant difference Test was performed to test this hypothesis. The result
between at least two groups. Then, Post Hoc Tests were shows that there is a significant difference between
performed to find which groups were significantly dif- the purchasing powers of the two groups. Hence, the
ferent from the others. purchasing power between Group 1 and Group 2 are
In ANOVA, F is significant (sig. = 0 < 0.05), significantly different. Because the average purchasing
which means that there is a significant difference be- power level (2.97) of Group 2 is higher than that of
 C. Pang et al. / Exploring online shoppers’ e-trust in China 197

Group 1 (1.92), H4 or “those who have a higher e-trust are very similar to Shanghai. According to the statis-
level will pay more (buy more products or buy more tics published by the China Network Information Cen-
expensive goods) in online purchasing”, should not be ter, these mentioned areas house about half of the total
rejected. Internet users in China Therefore, the data collected in
this study is assumed to represent and characterize the
majority of Chinese Internet users.
5. Conclusion and future research Finally, there are two future research studies are
planned. First, the authors will conduct a comparison
The objective of this research is to segment online study to observe the e-trust levels and financial perfor-
shoppers in China based on their e-trust levels. Ac- mance of an e-commerce enterprise before and after
cording to the findings, this study will provide some certain actions that were uncovered in this study are
useful suggestions for e-enterprises and government to taken. This extended study will help test out whether
improve online shopper’s e-trust in China. or not there will be a significant difference between the
In this study, the authors found that 41.5% of Chi- consumers’ e-trust levels before and after making some
nese Internet users did not have online purchasing ex- improvement efforts according to the findings obtained
perience. According to the finding obtained in Hypoth- from this study, and whether or not a higher e-trust
esis 1, these respondents had a relatively low e-trust level can bring a better financial performance. In an-
level. If they could be attracted or promoted to do their other ongoing research, the authors plan to conduct a
first online purchasing rather than just surfing the In- comparative study between China and the US in terms
ternet, they would tend to have a higher e-trust level. In of the factors affecting online shopper’s e-trust. It is as-
other words, it is suggested that the most effective mar- sumed that because the cultural and managerial differ-
keting strategy for an e-commerce firm targeting shop- ences, consumers’ e-trust in different countries is also
pers in China is to promote, attract, and convince shop- affected by different factors to some extent.
pers to make their first online purchase. However, it is
important to understand that customers may not want
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