Unfortunately, the explosion of e-commerce in the west, particularly in the United States, coincided fairly closely with the Asian economic crisis, which began in 1997 and continued for about two years. When one country after another saw its currency plummet and other economic cracks widened into gaping holes, foreign investors divested from the region in a hurry. In turn, this accelerated the economic hardships. As a result, during e-commerce's developmental stage, most of the Asian region was too busy trying to hold existing economies together than to take the time or money to open up whole new business and technological strategies.
Timing was a factor in slowing Asia's e-commerce acceptance in another way as well. With the pace of e-commerce in the region trailing that of the United States, the dramatic stock market letdowns that affected the U.S. Internet market in 2000 and 2001 hit Asian e-commerce when the latter was in a far more precarious state of development. By the 2000s, e-commerce was a more or less established shopping medium in the United States. However, Asian companies and governments were only beginning to seriously dive in and reorganize business and technological infrastructures to accommodate e-commerce. When the boom in funding was pulled out from under the dot-com market, the Asian Internet economy couldn't recover as easily, and many Asian investors thought it was wise to pull back on their e-commerce ambitions, at least for the time being. In this way, the tech market bust was more devastating to the nascent "Asian New Economy" than it was to the more advanced Internet economy of the United States.
Similarly, Asia suffered from a shortage of venture capitalists—the lifeblood of the dot-com boom—compared with North America and Europe. According to The Economist, high-tech startups have never enjoyed strong financial support throughout Asia. However, this problem was meeting some remediation among Asian tigers such as Hong Kong, Malaysia, and Singapore, where businesses and governments were coordinating efforts to pool funds and expertise in order to help innovative Internet companies get on their feet.
Asia was relatively susceptible to trends in the international economy, particularly in the United States. With severe financial shocks rocking the country in the late 1990s, largely due to unstable currencies and international investment, Asian businesses kept a close eye on the economic health of the most developed nations, from which international investment is most vibrant. In the early 2000s, when many Asian businesses were dusting themselves off from the economic crisis and seriously considered adopting e-business strategies, the slowing U.S. economy gave pause to many business leaders. With declining U.S. investment in Asia and diminishing demand for Asian manufactured goods by U.S. consumers, the prospects for e-commerce were held in check.
There were also cultural barriers to the mass proliferation of e-business, according to Far Eastern Economic Review. Throughout many regions of Asia, established, personal relationships confer a value of their own, something that is simply not accounted for in the purely cost-and efficiency-driven world of e-business. Meanwhile, credit card use in Asia remains relatively light, and those who do use plastic to shop were largely uncomfortable using it online, much as many U.S. consumers were. Additionally, many consumers didn't see the utility in shopping on the Internet, particularly in regions of bustling economic activity in which everything shoppers needed was available in a nearby store. Compounded with lingering security fears, such apprehension among consumers severely hindered the growth of e-commerce in the region.
Within Asia, the borderless world of the Internet didn't translate well into the real world, where physical products still had to be shipped. With complex and rapidly fluctuating currency conversions, exorbitant shipping costs, and excessive delays in delivery, the added costs of shopping online at international business sites tended to be prohibitive. As a result, the majority of Internet businesses in Asia trafficked only within their own countries.
Retaining quality high-tech and information-technology (IT) professionals was an additional problem for the development of sound IT infrastructures in many Asian countries. Far Eastern Economic Review indicated that many of the leaders in these fields, particularly in countries such as China and India, leave their home countries for positions in Silicon Valley. However, this didn't always culminate in the negative effects associated with a brain drain. Particularly in the late 1990s, many of these individuals capitalized on the skyrocketing venture capital industry in Silicon Valley to start their own businesses and pour investment back into their home countries. Still, in the aftermath of the dot-com shakeout that began in early 2000 when the market for technology stocks went bust, the level of venture capital spending tailed off.
International Data Corp. (IDC) concluded that a key to bringing Asia into competitive parity with Europe and North America was the harmonization of interregional legal and technological standards. However, IDC remarked that varying cultural patterns and conflicting legal frameworks likely would impede progress toward such harmonization. Moreover, the lack of pan-regionalism often made it difficult for Asian firms to compete with larger firms, such as Amazon.com, in established e-commerce market sectors. With its tremendous reach and economy of scale, Amazon.com was among the major international e-commerce outfits to strike a resonant chord with Asian consumers, and had begun to build a significant brand name and customer loyalty in the region. In this light, Amazon.com 's expansion past its original bookstore foundation and into a more comprehensive online superstore posed a danger to Asian e-commerce firms. This was something they would need to address in order to capture market share when the business-to-consumer market in Asia finally explodes, as it was expected to.
User Comments Add a comment…