Global E-Commerce: Asia - Asian E-commerce Stuck At The Gates

Despite the emerging possibilities, Asian businesses were slow to fully integrate e-commerce strategies into their overall business plans, according to Far Eastern Economic Review. They also were slow to overhaul the physical and network infrastructures necessary for Internet-based business. Though Asia was bursting with firms of all sizes using all manner of e-commerce software, only a tiny minority of Asian firms had radically transformed their internal and external operation to reflect a serious concern with, and involvement in, e-commerce.

Meanwhile, without substantial investment in an online presence, the average Asian business that had set up an online outlet didn't establish an infrastructure capable of actually making sales over the Internet. Rather, Asian business Web sites tended to be little more than electronic brochures where the company and its products were introduced and explained, but without the kind of interactivity that allowed for sales, customer service, and so on.

In Hong Kong, one of the most technologically developed centers in all of Asia, only 40 percent of the local firms conducted business over the Internet, according to Systems Union, a financial systems company based in the United Kingdom. The Boston Consulting Group, meanwhile, conducted a far broader survey of 500 executives in markets throughout Asia and reported that Asian companies were, for the most part, taking their initial steps toward setting up shop online in 2000. As of the early 2000s, only a few markets, including Singapore, South Korea, and Hong Kong had the reliable and advanced telecommunications infrastructure necessary for widespread Internet access. According to International Data Corp., less than one percent of all Asian-Pacific Internet surfers (outside of Japan) engaged in at least one e-commerce transaction in 1998, a figure that was expected to reach 2.6 percent in 2002. In Japan, the most advanced nation in the region when it came to e-commerce, 8.7 percent of Web users shopped online in 1998, and fully 60.8 percent were expected to do so in 2002.

However, Asian business-to-business e-commerce enjoyed a significant boom, beginning with the recovery from the Asian economic crisis of the late-1990s and continuing into the early 2000s. According to New York-based eMarketer Inc., this field of online business in Asia and the Pacific Rim reached $36.2 billion in 2000, exceeding the business-to-business market in Europe by some $10 billion. eMarketer expected the boom to continue through 2002, when it predicted the figure would hit $121.2 billion. By way of comparison, the firm pinned North American business-to-business e-commerce at $159.2 billion in 2000, and expected it to reach $563.9 billion in 2002. Stanford, Connecticut-based research firm Gartner Group was even more optimistic for the Asian business-to-business future, expecting total sales in this sector to reach $995.8 billion by 2004, equal to 13.6 percent of the $1.3 trillion global business-to-business market. One segment of the business-to-business market that was exceptionally healthy in Asia in the early 2000s was the digital marketplace—central Web locations that brought buyers and sellers of supplies together to haggle over prices and build new company relationships.

Despite the lower penetration of dot-coms on the Asian landscape than in the United States, the technology market meltdown of spring 2000 washed up on Asian shores as well, littering the market with dead or dying Internet businesses. Like the United States, this shock was felt most severely by business-to-consumer models and content sites, while business-to-business online firms, although hardly emerging unscathed, were nonetheless able to stay afloat with relative ease. Still, by 2001 many dot-coms that seemed doomed were hanging on and seeking out new models to breathe life into their businesses. Many firms tried to build a constant revenue stream by offering e-business strategies and solutions to firms looking to get their storefronts online.