Here is an article from xinhuanet today on the Bitcoin usage in Taobao - the Ebay of China.
http://big5.xinhuanet.com/gate/big5/news.xinhuanet.com/info/2013-05/07/c_132363788.htm(You may need a proxy to view the original page)
Here are the key points concerning Taobao:
1. 淘寶網店也是兌換的主要場所。在淘寶網上輸入關鍵詞“比特幣”,能搜索到近240家做“比特幣兌換”生意的店鋪,同時也有少量店鋪開始接受用比特幣支付。
Some Taobao shops are also important Bitcoin exchanges. If you search for "Bitcoin" on Taobao, you can find nearly 240 shops doing business in Bitcoin exchange, also a small number of shops are accepting payments in Bitcoins.
2. 這些店鋪有的位于北京、上海等一線城市,有的位于山東泰安、廣西玉林、江蘇淮安等二、三線城市。記者注意到,淘寶一家專門出售古董首飾的“5R——古董”小店就接受比特幣支付,店主表示他很看好比特幣,相信未來會有更多的人加入使用比特幣。
These shops are located in Beijing, Shanghai and top cities alike and also in some 2nd or 3rd tier cities in ShanDong, GuangXi and Jiangsu. The reporter has also noticed that one of them is a vintage jewelry shop called 5R Antique, its owner said he saw the potential of Bitcoin and believed that there would be more and more people using Bitcoin.
You can buy things with Bitcoins on Taobao as of today (This list is compiled by me, not cited from the article)
1. Shoes
2. pesticides
3. microphones
4. phone protection coat
5. cds/ dvds
6. backpack
7. wall decorations
8. outdoor blankets
9. spectacles
10. shirts
11. underwears
12. mobile phone(crappy one though)
13. astronomical telescope
14. Toys
15. LED bulbs
(This list is compiled from the first 5 out of the 20 result pages, I don't have the patience to check each page, please forgive me
)
The shops as seen are mostly mid-size and small shops.
There are also numerous shops selling mining rigs, MtGox coupons and Bitcoin-related stuff.
Whether you interpret this as an hype or a good news is entirely up to you.
But personally, I don't regard something real and existing as hype.
How do they protect themselves from the fluctuations in value of bitcoins?
About how they manage the fluctuation in price, I would also want to know too, maybe as the shop owner in that article said, they see the true potential and a long-term uptrend of Bitcoin, so they might be comfortable with the short-term price fluctuation.
Do they have a price in bitcoins and one in CNY?
Yes, both.