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The Institutional Diversity of Online E-commerce Platforms in China

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Living Better Together

Part of the book series: Mercatus Studies in Political and Social Economy ((MSPSE))

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Abstract

How do different types of social network function on e-commerce platforms with different governance structure and therefore facilitate online exchange especially when formal legal infrastructure is inadequate to protect property rights. Resorting to the theoretical concepts of bridging and bonding social capital, this chapter examines and compares the network structures of two popular e-commerce platforms in China: Alibaba and WeChat. Equipped with such mechanisms as a feedback-based reputation system, an escrow system, dispute-resolution system, Alibaba provides private but centralized legal structure and effectively promote the exchange of lots of commodities. Nonetheless, the function of the mechanisms significantly associates with the accumulation and cultivation of bridging social capital. People, especially (potential) buyers, with weak and impersonal ties voluntarily share their information and knowledge concerning the quality of commodities, service, and credibility of sellers, which reduces uncertainty in the marketplace and helps to deter moral hazard behaviors. The norm of reciprocity is observable and obvious on this platform. WeChat, which was designated as social media tool, also emerges to be an untypical online trading platform. It is much more decentralized than Alibaba in the sense that it does not provide institutionalized mechanisms for deterring moral hazard or resolving disputes; rather, it relies on bonding social capital, specially, a high level of trust underpinned by an acquaintance-based network. The marketing and sale of two types of commodities are well adapted to WeChat: (1) fresh agricultural products (vegetable and fruits), meat, and wild seafood, often called “green products” or “organic products”; and (2) health products whose marketing and management are organized on the direct-selling model. The multiple functions of WeChat—communication and group conversation (resembling Facebook Messenger), posting (resembling Twitter), and online payment service—helps to reduce the transaction costs among people with strong and close ties.

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  1. The University of Hong Kong, Pok Fu Lam, Hong Kong

    Minjun Yuan & Wanlin Lin

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Table 13.2 Interview list of e-commerce fieldwork 2021
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Yuan, M., Lin, W. (2023). The Institutional Diversity of Online E-commerce Platforms in China. In: Haeffele, S., Storr, V.H. (eds) Living Better Together. Mercatus Studies in Political and Social Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-17127-7_13

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