U.S. tech giants Facebook, Google and Twitter aren’t the only ones wanting access to consumers in China. PChome Online calls itself the largest e-commerce business in Taiwan, racking up more than $1.1 billion in sales last year, but the Chinese site has been locked out of the world’s largest internet population just across the strait.
“It’s not fair,” says Jan Hung-tze, founder and chairman of PChome. “In Taiwan, you can go on Taobao, but if you’re in mainland China you can’t get on PChome, because the site is blocked.”
Jan’s solution is to expand PChome’s reach around the world outside China through tie-ups with e-commerce giants in other countries. In March, the Taipei-based company signed an agreement with the $9.6 billion Japanese internet services firm Rakuten that gives Taiwanese consumers access to Japan’s e-commerce vendors. On April 20, PChome’s Ruten e-commerce site reached a deal with eBay in the U.S. to co-list goods sold by American vendors.
Those deals give Taiwanese consumers access to 13 million product listings. Some of his tie-ups offshore allow PChome to broker deals between buyers and sellers that aren’t in Taiwan, as well. PChome expects eventually to sign deals with eBay in Canada and Europe to let sellers there reach Taiwanese people, leading to 20 million listings total, Jan says.
Consumers will be able to use Taiwan dollars or Chinese yuan to buy anything sold on Rakuten or eBay in the U.S., and they make up one of Asia’s larger e-commerce markets after China, Japan and South Korea due partly to a population density that makes deliveries easy, Jan says. Taiwan’s e-commerce consumer base tops even that of Southeast Asia where the idea is relatively new, he says.
“My goal is to cooperate with all the major international players so people who want to buy things can get it all, and in Chinese,” Jan says.
Visitors to Jan’s ninth-floor office in Taipei can still see the origins of the business all around them, wall to wall, floor to ceiling shelves filled with Chinese-language nonfiction books. The 63-year-old former book and magazine editor with an undergraduate degree in economics was once a print diehard by his own admission. He was running a home computing magazine in 1995 in Taiwan when he noticed a few publications putting reports on the internet and decided to offer his as well–for free. “I’m an old-school print guy so this was like my new Gutenberg,” he says. “Back then it was a really novel thing.”
Within a year, Jan decided he wanted to put daily content online. He created a text-only newsletter at first, and a year later, he founded a business called e-Paper Network to distribute content from 200 media outlets, including an outlet for winning lottery numbers. The service racked up 10 million users, Jan says, equivalent to more than 40% of Taiwan’s population. The firm was eventually renamed as PCHome Online.
“My traffic was so high I was thinking, ‘what if I had some content? That would be even stronger,’” Jan said during an interview at his office. Around then, the world’s first search engines were taking off–the likes of AOL, Excite and Prodigy. “For me the search engine is kind of like an airport, it’s like a non-place, a strange thing,” he says. “So I got an idea to spin off into a search engine.” That’s what he did in 1998.
Just two years later, the dot-com bubble burst. Jan felt pressure to start using the internet to begin selling merchandise. Out of that pressure Jan fashioned Taiwan’s biggest business-to-consumer platform. Today PChome makes deliveries in as little as six hours and links consumers to more than 5 million items for sale. Sales revenue grew more than 12% in the first four months of 2019, reaching NT$9.2 million ($298 million) compared to the same period last year, according to data from the Taiwan Stock Exchange. Of Taiwan’s total NT$40 billion in e-commerce trade each year, Jan says, PChome has a 40% share of the market.
PChome competes largely now with Singapore-based Shopee, an e-commerce portal with 180 million products from 4 million sellers. Shopee counts Chinese tech giant Tencent as its top shareholder, by absorbing e-commerce delivery transportation costs of about $100 million over the past two years and guaranteeing that customers get their orders within 24 hours. “No other e-commerce company can do that,” he says. “This will give us some growing space.”
Taiwan has become a strong e-commerce market due in part to its consumers having unfettered access to major foreign platforms and unlimited internet use for as little as $15 a month, says Shirley Tsai, research manager with market analysis firm IDC Taiwan. Delivery time guarantees help, too, she says. “Taiwan is the best greater China test market,” she says, referring to a region including Hong Kong and mainland China.
Competition in Asian e-commerce has reached a point where some firms are scaling back, says Song Seng Wun, an economist in the private banking unit of CIMB in Singapore. Survival means name recognition, proper management of technology and deliveries that are so fast they might require drones, he says.
PCHome Online reported a “comprehensive loss” of NT$1.76 billion ($56.8 million) in the fourth quarter last year, more than the NT$388 million loss of the same quarter of 2017, according to its latest available financial report. The biggest operating expense was NT$5.35 billion in “sales fees.”
The company is forging ties with e-commerce operators in overseas markets partly as a buffer against rivals in China. Although Chinese e-commerce firms such as JD.com and those belonging to Alibaba can tap customers across the Strait, Taiwanese platforms can’t go the other way because China blocks many of the websites hosted in Taiwan.