E-Commerce Deal Targets Chinese TV Sets

San Francisco, California-based MyWeb, Inc. announced Wednesday that it has forged an agreement with Chinese television channel TVSN China Ltd. to market the TV-based MyWeb Internet service and sell consumer goods advertised on TVSN.

MyWeb, a TV-based Internet portal available to many Asian countries, plans to sell TVSN’s consumer products online, while TVSN, China’s largest TV shopping network, will help create new customers by selling MyWeb’s set-top boxes on the air.

According to MyWeb, China currently has more than four million Internet users, and that number is expected to grow by nearly 600 percent to 27 million in the next four years.

In the meantime, set-top box-based Internet access may be a more viable approach than computer access, whereas the reverse is true in the United States. Web TV, a service primarily owned by Sony Corp., continues to struggle to gain acceptance in the United States as an alternative to using a PC.

It is expected to continue to struggle as PC prices keep dropping.

In China, however, only 2 million of the more than 300 million households in the largest cities own PCs. Therefore, rather than wait for the PC revolution, MyWeb and TVSN are targeting the 95 percent of homes with TVs in those major cities.

MyWeb set-top boxes sell for about $180 (US$), while PCs sell for more than $1,000.

Already Conquered Logistics

TVSN’s experience as a mail order shopping network will help MyWeb overcome logistical hurdles as it enters the e-commerce world. “The Chinese e-commerce market hasn’t really yet taken off yet, due to major problems associated with payment and fulfillment. But by working together, MyWeb and TVSN feel they can solve the biggest problems holding the full scale e-commerce boom back,” MyWeb president T.S. Wong said.

In contrast to the pre-payment world of U.S. online shopping, TVSN and MyWeb will allow shoppers to pay cash on delivery for their purchases. While that process will alleviate the need for secure Internet transactions and credit card processing, the two companies also argue that COD gives the company a customer service advantage from which the TV channel has already benefited.

“TVSN’s existing cash-based model will enable complete customer satisfaction because customers that are dissatisfied with their online purchases can simply reject them when they are delivered,” the companies said. TVSN, which already has an order fulfillment system in place, will handle all processing and shipping for the goods MyWeb sells.

One Piece of Expansion Puzzle

For MyWeb, the TVSN agreement is another move to keep expanding use of its TV-based Internet service in China. The company has an agreement with Beijing Telecom to rent and lease MyWeb set-top boxes for a monthly fee that includes Internet service.

In addition, the company announced plans last week to expand distribution of its set-top boxes to the Shanghai region, along with an Internet portal localized for users in that area.

Shanghai is China’s largest city, with more than 14 million people. The service is already available in Beijing, the nation’s capital, as well as in Hong Kong, Malaysia and Singapore. MyWeb says that its Internet portal is now China’s eighth most visited Web site and fastest growing portal.

Like MyWeb, TVSN has roots in the United States, having been founded four years ago by former executives of QVC, Inc., a home shopping outlet and chief competitor for the Home Shopping Network.

The China-based shopping service has accumulated a member roster of 50,000 consumers, and more than half of them are repeat customers.