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| Asia's e-commerce puzzle |
July 1, 2001 |
By Peter Wolchak
"It's difficult to talk about Asia [as a homogeneous group]," says Eric Manning, the Nortel Networks/new media professor of network performance at the University of Victoria in B.C.
Manning also consults with the government of Vietnam on information technology.
"First you have to separate Japan, because it's completely anomalous. The Chinese economy is growing at a mad rate while the Japanese economy is imploding. Also, even if you just look at South Asia you can't really compare Vietnam to Thailand."
According to Forrester Research Inc. of Cambridge, Mass., Japan is an e-commerce success story, amassing US$31.9 billion in B2B and B2C e-commerce sales in 2000. Forrester projects that number will rise to US$64.4 billion in 2001 and US$880.3 billion in 2004. Taiwan will also do well, according to Forrester, going from US$4.1 billion in 2000 e-com sales to US$175.8 billion in 2004. Gartner Group is similarly optimistic. The research firm pegs Asia/Pacific's B2B sales at US$96.8 billion in 2000, a whopping 22 per cent of the world's total B2B transactions. By 2005, Gartner says Asia/Pacific will account for 28 per cent of the worldwide US$8.5 trillion B2B market.
But behind these numbers lie significant regional differences. For example, the availability of Internet access, a bellwether indicator of e-com health, is highest in Singapore, with a penetration rate of 36.2 per cent in 2000, according to statistics service eMarketer Inc. of New York. But the firm puts China's access at 0.9 per cent of the population and India sits at only 0.3 per cent.
Those numbers underscore the fragmented status of Asian e-commerce, says Lane Leskela, Asia/Pacific research director for Internet commerce at Gartner Group in Hong Kong.
"The big story has to do with productivity increases, cost savings, faster distribution cycles and increased competitiveness in the global market for big companies in Japan, Korea and China. Southeast Asia is still muddling through both political and economic messes, and the low value-added manufacturing and agricultural sectors that sustain economies in Thailand, the Philippines and Indonesia, in particular, are late, low-end adopters of e-business.
"The IT sector [where it exists] is leading on comprehensive electronic commerce use, and a few other design-intensive industries in manufacturing-driven markets are close followers."
The view that e-commerce activity will often first occur as B2B manufacturing sector transactions is shared by Manning, but he says Vietnam's Communist government has been slow to pursue the electronic infrastructure that would enable this type of interchange.
"Suppose Vietnam wants to do a deal with a large international clothier. The first thing they're going to discover is that the company is not interested in sending little bits of paper through the post, so the Vietnamese have to get going on business-to-business e-commerce.
"In another example, Toyota might be interested in getting the Vietnamese to do something really low-tech like alloy wheels, and Toyota will expect Vietnam to deal with electronic forms."
Another stumbling block for Vietnam and other Asian countries is that agriculture-based societies do not produce goods that are easy to sell online. However, one commodity Vietnam could sell is tourism. "There is beautiful scenery, the food is terrific, the people are friendly, it's cheap and they have some resorts," says Manning. Yet the infrastructure needed to post travel information and manage online inquiries and reservations simply does not exist.
But some Asian countries are taking definite steps. Lim Swee Say, Singapore's minister of communications and information technology, says his country has attracted US$7 billion in venture capital over the last two years. "The dot-com hype has not occurred in vain," the minister says. "It is now time to focus and proceed with the next stage of development here in Asia."
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