Playing the e-commerce game

Playing the e-commerce game

Although IT analyst GartnerGroup has warned prospective investors in Asia of several inhibitors to the uptake of e-commerce in the region, it argues against gross generalisations of the market.

Gartner insists that the industry perception of Asia as several years behind North America in terms of its e-commerce capabilities is not only inaccurate but too broad an assumption. "We strongly disagree with the concept that Asia is x years behind the US in regard to e-commerce," said Joe Sweeny, research director for GartnerGroup Asia-Pacific. "This is not only a generalisation for many areas outside of IT, but also wildly inaccurate. The reality is that Asian markets are different from each other and each country's Internet industry and e-commerce have developed from different sources," Sweeny added.

GartnerGroup anticipates that Australia, New Zealand, Singapore and Taiwan will experience the fastest uptake of e-commerce due to economic stability and in Singapore's case Government policy. The Philippines and India will be strong markets for content development and programming respectively. Hong Kong is on the verge of falling into the third-tier category along with China and the ASEAN countries but could maintain its second-tier position.

Yet GartnerGroup not only disagrees with the assumption that Asia is inferior to other markets - it stresses that the concepts used to measure success are not transposable between the various geographies. According to the analyst, China, Taiwan, Hong Kong and the ASEAN states are comprised of 85 to 95 per cent small and medium businesses of fewer than 500 staff. The majority of these firms are in the primary or secondary industry, making the market a much more low-end equation than the services industries of North America and Europe. "This factor makes Asia-Pacific a totally different demographic, which results in technologies being used in very different ways to the more advanced markets," said Sweeny.

With these differences in mind, Sweeny recommends that companies planning to enter the Asian e-commerce arena need to adopt their solutions to the individual market conditions.

Businesses wanting to establish a presence in the region also need to be aware that Internet projects in the area have largely been a secondary priority in the last couple of years due to the Asian economic crisis. GartnerGroup estimates that 60 per cent of companies with an IT budget of over $5 million have either cut back or cancelled Internet projects.

Instead, Asian companies are focusing limited resources on Y2K initiatives, according to GartnerGroup, with 85 per cent of large IT users accelerating Y2K projects instead of e-commerce solutions.

And with IT experience and skills in the region so rare, businesses have been forced to decide which projects they need to most dedicate their resources to.

The high cost of network infrastructure has made many shy away from e-commerce and the lack of examples set by major institutions in the region, such as banks, has inspired a cautionary attitude, GartnerGroup suggested.

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