Digital MarketingStrategiesAsian B2B E-Commerce Approaches Quarter of World’s Total

Asian B2B E-Commerce Approaches Quarter of World's Total

B2B Internet commerce in the Asia/Pacific region reached $96.8 billion in 2000, which was 22 percent of the worldwide total of $433.3 billion, according to Gartner Group, Inc.

B2B Internet commerce in the Asia/Pacific region (including Japan) reached $96.8 billion in 2000, which was 22 percent of the worldwide total of $433.3 billion, according to Gartner Group, Inc., and in 2001 it is on pace to reach $220 billion, or 24 percent of the total.

By 2005, Asia/Pacific will account for 28 percent of the worldwide total, with B2B Internet commerce transactions of $2.4 trillion.

“Businesses in Asia/Pacific will use this opportunity to reduce exposure to overseas markets impacted by the economic downturn and focus on building private regional marketplaces with familiar partners,” said Lane Leskela, research director covering Asia/Pacific Internet commerce for Gartner’s e-Business group. “The first wave of e-marketplace development in Asia/Pacific was pushed by overseas buyers’ e-procurement initiatives. The next cycle is characterized by private investment and consortia-funded supplier marketplaces working to shorten manufacturing and delivery time and aggregate total market demand on a global scale.”

Gartner defines B2B Internet commerce as the sales of goods and services for which the order-taking process was completed via the Internet. This includes purchases via Internet EDI, e-marketplaces, extranets and other sell-side initiatives, but excludes activity over proprietary networks. Gartner’s forecast is based on the value of B2B nonfinancial goods and services sold, resold and brokered over the Internet through establishments every time they are turned over.

A report by The Boston Consulting Group (BCG) warns Asian companies not to put e-commerce on the back burner just because the dot-com craze has subsided. According to the report, e-commerce is changing the basis of business competition around the world, and if Asian companies continue to lag their Western counterparts in adopting it, they put their fundamental competitive advantage at risk.

BCG’s report estimates the value of B2B transactions in Asia by 2003 is expected to be as much as $430 billion.

“While we see a handful of Asian companies starting to think about e-commerce more strategically, the majority of those doing anything at all are simply implementing ‘made in the U.S.’ strategies. This won’t work in Asia-Pacific, because the competitive landscape is emerging quite differently than in the U.S.,” said BCG vice president Jim Hemerling.

The prospects for the region’s e-marketplaces is far from rosy. BCG predicts that most of the more than 750 horizontal and vertical e-marketplaces that have sprung up in Asia-Pacific over the past year (compared with about 1,100 in the United States) will not survive.

“Our experience in the market tells us that companies are in two camps in Asia-Pacific,” Hemerling said. “There are those that have put their e-commerce plans on hold because the opportunities they once saw for capital gains appear to have gone away — which is concerning. There are others who have made major e-commerce investments that continue to struggle with the multiple challenges of implementation, in an environment where both internal and external support is often waning.”

At greatest risk, according to BCG’s report, are Asian companies serving global markets. E-commerce is shifting comparative economics globally, and although Western companies that have embraced B2B e-commerce are already driving down their costs (with average productivity gains of 6 percent estimated by 2010) Asian companies lag in implementation. At risk is Asia’s fundamental basis of competitive advantage-cost.

The BCG report is based on 500 interviews and questionnaires conducted in 10 countries across the region.

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