Advancing e-commerce: a regional perspective
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Four panelists discussed the adoption of e-business strategies in the Asia-Pacific Region at a key session during the 4th International Conference on Electronic Commerce (ICEC 2002) hosted by CityU in October 2002. Four panelists, from Australia, Korea, Taiwan and Hong Kong, were invited by the moderator, Dr Patrick Chau from the University of Hong Kong, to address five key points: the history of e-commerce; major problems affecting e-commerce in the region; the focus of future research; e-commerce's strengths and weaknesses; an analysis of e-commerce from the multidimensional view point of academics, people in industry and governments.
The impact of e-commerce on SMEs
An Australian academic underscored the importance of e-commerce for the future success of business in the region. "Around 20% of the small and medium size enterprises (SMEs) in Australia will declare bankruptcy if they do not adopt electronic business methods and integrate these practices into their business strategies and processes," said Dr Shirley Bode, from the School of Computer and Information Science at Edith Cowan University.
Currently, Australian SMEs are falling behind larger businesses and corporations in several areas, for example online payment and e-procurement, said Dr Bode. Therefore, it is important that governments train, fund and educate smaller businesses that are keen to strengthen their e-commerce business strategies. "Most SMEs in
In response, both state and federal governments in
At the state level, the government of Victoria has established its first policies that address the e-business needs of SMEs. A government-funded website has been created that includes an FAQ site, a resource centre and access to one-to-one business advice information sharing. In addition, A$10m has been earmarked to help SMEs access the government's electronic purchasing scheme, to fund teams of e-commerce advocates, to help SMEs locate experts in target areas such as technical support and marketing, and to set up meetings and training sessions.
Resources are also used to help SMEs network with consultants experienced in developing e-business practices. Researchers at the Edith Cowan University found that SMEs tend to rely on external consultants for the design of their websites, a practice that outsources their e-business strategy. "Part of my research has been in developing an online training course for SMEs," said Dr Bode. "These training sessions enable them to gain greater control over their e-business development. We help them to plan effective engagement processes, initiate an effective e-business strategy, and locate website designers and e-business planners."
Dr Bode concluded that many SMEs lack sufficient skills or knowledge to adopt e-business techniques. She reiterated that assistance should be government-driven, not vendor-driven, thus enabling SMEs to develop along their own lines, not lines set out by vendors or other third-parties. "Training should encourage SMEs to identify what they need and what they can achieve, and shouldn't focus on the requirements of the vendor or larger companies," she said.
The long road towards full ERP
Professor Jae Kyu Lee, from the Korea Advanced Institute of Science and Technology, argued that although countries such as South Korea have achieved very high levels of Internet usage and online trading, full ERP (Enterprise Resource Planning) is still a long way off. However, Korea has made a strong start towards comprehensive adoption of e-business. "The good news in Korea is that Koreans maintain a very positive attitude towards the Internet and e-commerce in general," said Professor Lee. "Korea has achieved very high market penetration levels, with more than 80% of Koreans using the Internet. Our levels of online trading are second only to the US."
One reason for the high levels of online trade is the increase in the number of female users, suggested Professor Lee. Household goods, accessories, perfumes, and clothing make up a higher percentage of online business than in 2001, a phenomenon that has occurred concurrently with a sharp rise in the number of women using the Internet from home. "In fact, perfume, home wear and groceries constitute the second highest increase in sales since 2001." In addition, Professor Lee's research shows that online trade is allowing people from more remote and less urbanized areas to participate in ever-expanding markets. Agriculture has experienced the highest increase in online trade in Korea, as more and more farmers use the Internet to trade.
However, one of the problems is ERP integration among the smaller companies that are struggling to compete with larger players. ERP attempts to integrate all departments and functions across a company onto a single computer system that serves the needs of different departments. It is less about "planning" and "resource"; it is more about integrating the various functions and features of a business enterprise.
Full ERP is a challenging objective but one that South Korea needs to face and there have already been some significant advances. "One important step towards fuller ERP integration is the i-market run by Korean conglomerates," said Professor Lee. "Previously desktop purchasing meant creating an internal database, but recently groups of companies have made an aggregated marketplace for desktop purchasing-this is the i-market. The i-market integrates companies in terms of payment and logistics, for example, and the e-procurement systems in this system become tightly integrated with the outside e-procurement marketplaces."
As an example, Professor Lee cited what is happening in larger bureaucratic institutions such as large-scale healthcare centres. "Some bureaucratic departments are removing their procurement divisions since this can now take place online. Seoul National University hospital has cut its procurement department and now uses EasyHospital.com to purchase supplies. This process of de-marketing, or Ode-sourcing', means a significant reduction in the number of suppliers as large organizations aim for quantity discounts."
"To help smaller companies develop ERP systems, South Korea is setting up an initiative that will educate and train 200,000 companies over the next two years," said Professor Lee. "One of the major promotions is helping with the installation of ERP packages that will standardize financial and business practices between SMEs and other major companies. A major outcome will be further reductions of costs and better efficiency."
Different expectations of e-business
One of the challenges facing the region is different companies have different uses and expectations for e-business, said Professor T P Liang, from the National Sun Yat-sen University, Taipei. These factors need to be considered as more and more SMEs and larger companies move towards greater adoption of e-business strategies, he said.
The Taiwanese government has acted as a strong advocate for e-commerce over recent years, explained Professor Liang. "It has committed US$100 million in support and development, and as a result
Using statistics from the IDC/ World Times Index, Professor Liang demonstrated that
One card for all: the case of the Octopus card
The next speaker, Mrs Cindy Cheng, Sales and Marketing Director of Octopus Card Limited, Hong Kong, spoke of Hong Kong's achievements in the area of e-business, but she warned that many Hong Kong SMEs still lack the skills and knowledge that will enable them to achieve greater levels of e-commerce adoption. "The e-business situation in
However, the Hong Kong public does not consider e-business to be the only answer to future business developments, Mrs Cheng said. Part of the reason is the general lack of awareness about e-business among SMEs. For this reason, the government has provided HK$300 million to SMEs in the form of grants. SMEs can apply for up to HK$2 million per project and use the money to overcome inhibitors to adopting e-business, such as lack of training and knowledge. The introduction and continuing success of the Octopus card, the electronic charge card used extensively throughout Hong Kong, is an example of the success of e-business in Hong Kong. "The Octopus card has achieved a 95% market penetration rate," said Mrs Cheng. "There are 8.9 million cards in operation and we clear 7.6 million daily transactions. The cards are not only used on buses and the MTR (the Mass Transit Railway), they are also used in fast-food restaurants, convenience stores and the larger supermarkets. We clear US$50 million every day, making us one of the biggest central clearing systems in Hong Kong, second only to the major banks such as HSBC and the Hang Seng Bank. Future applications include use in taxis, parking meters, tunnels, and as access control devices in schools and apartment buildings."
Although the card has been a success, Mrs Cheng did not envisage a time in the near future when the one card would satisfy all our needs. "I don't think we'll see one card that covers everything in my lifetime, but the Octopus card could be used to do a lot more things!"