BEIJING, April 3 -- China has 649 million Internet users, but very few will buy urns or funeral shrouds online.

Most Chinese buy funeral supplies at small stores near hospitals, which have a limited range of products and very high prices. Sometimes, if customers ask for a discount, they are humiliated as "unfilial" by storeowners.

Xu Yi saw an opportunity here. The slightly overweight e-commerce entrepreneur believed the Internet could help people arrange funerals with little hassle.

In 2013, Xu Yi, 40, and partner Wang Dan, 32, started an online company to provide funeral services at fixed prices. Customers could buy funeral supplies on their website, as well as customize memorials, hearses and wakes.

The two founders understood the dark side of the industry through personal experience. In 2012, Xu bought a wooden urn worth thousands of yuan after a relative died. But he found he had been cheated as the inside was made of scrap iron. The same year, Wang Dan' s mother was critically ill in hospital, where he witnessed two nursing workers fighting over the kickbacks instead of caring for their patients. During a year-long investigation in Beijing, they found almost every link in the funeral chain - hospital morgues, funerary stores, ambulances, funeral parlors and graveyards - operated in cartels with windfall profits.

An absence of regulation resulted in market chaos. According to some reports, a shroud can sell for up to 20 times the ex-factory price. Mortuaries at hospitals in northwest China's Shaanxi Province have charged a whopping 5,000 yuan per night; an official report, jointly published on March 25 by the Ministry of Civil Affairs and the Social Sciences Academic Press, said 92 percent of Beijing citizens think public cemeteries are expensive.

"The industry lags far behind society's expectations," says Xu.

Xu was a complete stranger to the death industry when he started the business. He recalls the first time he helped clients put a shroud on a body: "I almost run away."

He started with a modest goal: customers would choose and pay for goods and services online, and his company delivered them. Xu competed on price and continued to do so after opening three conventional stores in Beijing. Urns are priced from 99 yuan and prices can be just a sixth of that of his rivals.

Unlike other providers, he refuses to cooperate with nearby hospitals or care workers. "All of them want commissions and that adds to the expense for ordinary people."

But it cost him anyway. He was threatened by other retailers; his shop window was smashed at night; and others tried to copy his brand.

"We needed something that others couldn't copy," says Xu, acknowledging that the death business must focus on the living.

They added unique services, including memoirs and psychological counselling. Some services are far ahead of the rest of the industry, such as making ashes into diamonds or oil paintings.

"We take advantage of high technology to help clients remember the dead," says Xu.

However, older generations are more conservative. Xu wanted to take a small part of his grandmother's ashes to make a diamond, but his parents said it was unfilial to divide the remains.

Traditionally, Chinese believe the dead should be buried, and filial piety is expressed in the sums spent on a parent's funeral. Tradition has become an ingrained virtue over the centuries. Xu accepts that, but he hopes younger generations, with access to the Internet, can embrace his ideas.

Xu's first forays into social media was disheartening. Almost half his friends stopped following him online. Others warned him not to share anything about death, and some would not contact him at night.

Talking about death is still a taboo for many Chinese, who believe that just mentioning death will bring misfortune.

He was afraid of advertising after one funeral company was subject to complaints for putting posters on buses.

He shared his story on a TV program, but the director feared the ratings would drop if it went to air.

He had trouble hiring staff, so he pleaded with former colleagues to help.

He looked for tailors in Shanghai to design customized shrouds, but none would cooperate.

His family treated him like an outcast, and his father described his business as "low class".

"I thought of giving up, but I persevered with the support of my clients."

Xu recalls a girl whose father died in a traffic accident before her high school entrance exam. She was too depressed to study, Xu learned, when he arranged the funeral. He called in a psychological counsellor and, after several consultations, the girl overcame her grief to succeed in the exam.

"I think I saved a living person," he says.

Xu is content in his business even though the income is modest."When one loses a loved one, they are helpless, and if I lend a hand, we immediately build a mutual dependency."

"Chinese schools teach little about death. That's why many people can't face the reality of losing people," says Xu.

Xu has many ideas to transform the funeral industry. He dreams of writing a movie and a book about it.

His business is cooperating with a NASA company to send ashes out to the outer space. Although no one has ordered a "space funeral", he has had many enquiries. "I have confidence that people will change their minds."

His microblog is receiving "likes" again. He made an online advertisement that unexpectedly received 120,000 hits. Old customers introduce new ones. His company was invited to participate an Asian funeral expo.

Before China's Tomb-Sweeping Day, which falls on April 5, the TV program was approved for broadcast. "We are getting recognition," says Xu.

To his surprise, a 77-year-old woman came to his store in a wheelchair to buy her own shroud and urn.

Xu describes himself as a "life planner", who runs "an Internet company about life and death" for "love and respect".

"People are changing, and we will carry on," says Xu.