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WIRED WISDOM Asia's F2F Hurdle It's not just low net penetration or technology illiteracy that's holding up e-commerce in Asia. It's the inter-personal way business is done here: Face-To-Face or F2F. We believe that all forms of e-business will grow rapidly in Asia, just as in the rest of the world, during the next several years. Even b2c commerce, which many feel has died a quick death, is destined to grow from regional revenue of $17.5 billion (2001 estimated) to over $81 billion by 2004. However, the utilisation of the net for commerce is beset by a number of unique challenges in the Asian continent.
Asians are tech-savvy... Asia has many things going for it in the uptake of new technology and for future growth. It boasts a rapid rate of growth in people, wealth, and economies. The net is more widely available (especially through mobile devices) and access costs are falling. Anyone who has travelled through Asia can also testify to the desire by the middle class to possess the latest brands and tech gizmos. In addition, many Asian governments have invested huge sums in technology infrastructure. There are cities and regions in Asia that can boast world-beating levels of broadband use, or mobile net access. Most important, the merchant- and trading-culture that is pervasive across Asia means the region has several technology clusters actively involved in the global supply chain of it products and services. Japan, Korea, Taiwan, and Singapore are all major producers of technology hardware, while India is emerging as a global force in the provision of software and services. And looming on the horizon as a major player is China. But, here's the catch Asia is yet to see much in the way of businesses using the internet to improve procurement, partake in global e-marketplaces or automate supply chains. Most of the attention around the use of the web in Asia has been focused on mobile applications, or the incredible roll out of broadband to homes (in Korea). Even in these situations, actual sale of traditional products and services over these networks has been slow to take off with applications such as games, dating and location-assistance services being the main drivers of usage. There are many reasons why the use of the web in Asia does not follow the same pattern observed in the US or other developed economies. Regional disparities: There is more polarity in race, religion, language, wealth, political systems, history, weather, topography and culture within Asia than in any other part of the world. Consequently, while we get excited about wireless in Taiwan, or broadband in Singapore, hundreds of millions of people in Asia cannot read or write, have never made a phone call, and are nowhere near a point of internet access. Teledensity: There are islands of high teledensity (access to telecom services of various types) within Asia, but these are surrounded by vast oceans of extremely low teledensity. Monitoring: Many Asian countries have constraints in how they might use the web for government control and harassment. More than 2,000 cyber cafes were closed down across China in early July alone. Business size: The electronics industry in Taiwan consists of over 14,000 companies, which are small and medium-sized enterprises (SMEs). And like the rest of the world, the ability of SMEs to transform themselves to use the web is far less compared to the larger trading companies or multinationals. It has become a huge challenge throughout Asia to educate these companies and provide them with mentoring services to help them make the necessary adjustments. To compound the dilemma, large trading companies as well as SMEs rarely have a recognisable brand, outside that of a particular niche industry or small national market. As commerce becomes more globalised, global brands will continue to dominate at the expense of local companies and products. Lifestyle: A large number of people live in dense urban locations, where the concept of personal shopping is more prevalent. In fact, there is no catalogue culture to tap in Asia. Meanwhile, many regional banks have been very slow to support b2c merchants or enable b2b payment systems, and the level of credit card penetration across all of Asia is still very low. Enter F2F Commerce Fundamentally, there is one major difference between Asian and Western culture. Asians are hesitant to adopt the concept of b2b commerce. Business and commerce in Asia is conducted on a far more personal level. It is based on Face-To-Face commerce (F2F)! Consumers buy from the same local shops their parents bought from. They buy from people they know and trust. They are not easily going to abandon these practices for some online service. In any business, commerce is also conducted across a region on the basis of long-standing relationships. These relationships may be due to a common heritage (all emigrants are from the same region of China), common education or military service, membership of the same extended family or because of common links to a holding company, or bank. There is nothing wrong with any of these factors, but organisations need to understand them. Indeed, many Asian companies could leverage these differences to gain global advantage. For example, the long train commutes that the Japanese suffer have opened up major opportunities for mobile-commerce. And the low level of credit card penetration in Asia has forced companies to explore novel ways of handling e-payments-most notably through the use of the telecom/mobile carriers' billing system. 'Pay for a coke from a vending machine in Tokyo using your mobile phone, get $1 added to your phone bill'-nothing could be simpler. This model has many advantages over the credit card system used elsewhere in the world. In India, localised innovations such as mobile billing systems or those that attempt to sell offline leverage a VSAT-based order-supply system and the good-old cash-on-delivery model, will work. As Asia continues to grow, and the next web-literate generation takes its place in the management suite, the changes it will need to cope with will not just be radical, but also very different from the rest of the world. Reader's views, comments, and experiences are welcome at gartnermktg@ggindia.com. |
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