|Issue:||Asia-Pacific II 2007|
|Topic:||eBusiness in Asia|
|Organisation:||EU Malaysian Chamber of Commerce and Industry|
David Jones is the Chairman of the EU Malaysian Chamber of Commerce and Industry. Mr Jones runs an independent consultancy offering advice in the fields of marketing strategy, supply chain management, eBusiness and aerospace. Prior to this he worked for more than nine years with Rolls-Royce, latterly as the Regional Director for Malaysia. For 19 years he worked in the transportation sector, primarily in the airline industry, including both Malaysia Airlines and British Airways, and held various engineering, marketing and business roles. Mr Jones has an Honours degree in aeronautical engineering, a postgraduate diploma in management and is a member of the Chartered Institute of Marketing.
Business on the Web has changed considerably since the days of the dot.com bust. Better tools and better understanding of the ways to build online businesses has led many companies to flourish and has expanded the activities of traditional businesses. In parts of Asia, smaller businesses have hesitated to engage in eCommerce due to security issues and cultural preference for face-to-face business. The proven efficiencies of eBusiness and expanded access to markets, however, have encouraged companies to innovate and adopt it.
Customer choice has never been greater or, indeed, easier; given the ever-increasing attack on margins, choice is often a key differentiator. The development of eBusiness tools over the past ten years has witnessed both unprecedented technological development and significant growth. Whilst it is true that much of this has been in the consumer sector, the development of such tools and the increasing ease of back-office integration in business transactions have enabled both large and small enterprises to trade across the Web. During the ‘dot com’ boom the ability to trade with both customers and suppliers through a seamless interface provided by B2B Web portals was seen as the next dawn. Press and experts thought that this form of trade would replace the traditional ‘bricks and mortar’ corporations and that eMarketplaces would be the future. You were either ‘in’ or faced extinction. Clearly, these predictions did not materialize. Nevertheless, as the gimmickry of eCommerce faded and as reality centred on opportunity and customer needs, a new horizon has quietly emerged. The realization has surfaced that eBusiness could work with existing business mechanisms to develop trade by offering customers flexibility, choice and improved efficiency. Web interfaces give companies an opportunity to develop new means of trade. In Europe, the level of such trade has increased significantly over the past five years. The number of companies engaged in this form of business has increased to around 65 per cent according to The European e-Business Market W@tch survey of E-Business in Europe · 2006. In this review, around 80 per cent of large European companies regarded eBusiness as relevant for their day-to-day operations. A third of them, including small- and medium- sized enterprises, stated that it constituted a significant part of their activities. Seventy per cent of those firms that practised e-business confirmed that meeting expectations of their customers was an important reason to commence eBusiness. More than 60 per cent of firms also stated that the opportunity to gain competitive advantage has been an important reason for their engaging in eBusiness. eBusiness in Europe Likewise, Asia has seen increasing activity. Regional governments have offered tax breaks, grants and other incentives to encourage firms to participate in eBusiness, but growth is still far behind expectations. Why is eEnablement so important? As stated, the growth in the consumer Internet trading market has been nothing short of phenomenal. Consumer use of eBusiness services on the Internet is an increasingly accepted practice. This has allowed greater choice and passed more decision-making power and authority to the consumer. The Web sites (portals) are easy to use, intuitive and have tapped into consumers’ unfulfilled needs. The successful sites offer perceived value and are easy to navigate. Sites that have full back-office integration let consumers check stock levels, place orders, book reservations, check shipment details, communicate in their own language, bid, search for relevant information, download documents and receive order updates, etc. These are the same requirements that are essential for business-to-business negotiations, yet many companies are struggling with the concept. Why is this so? What are the issues? In Europe, many corporations both large and small have taken up eEnablement and their customers and suppliers are pleased. Standardization, using XML code, has allowed company Web sites to communicate easily with one another, and the cost of site development has fallen significantly. Globalization of markets, with suppliers and customers negotiating goods and services real time, is now an international reality, bringing together companies that previously could not have traded. Companies that do not participate in the eMarket will lose out to those that do. Customers want quick access to the newest goods and services as well as products and solutions tailored to their needs. Without the Web this would be resource intensive and technologically challenging. The limited budgets of many small- and medium- size organizations have limited the growth of eCommerce in Asia. Governments have offered companies assistance to encourage eCommerce. AFTA, ASEAN Free Trade Area, regulations could be a key enabler. Centralized government policy regarding eBusiness is essential and is likely to be part of the forthcoming EU-ASEAN FTA, European Union-ASEAN Free Trade Agreement, negotiations. The inability of many businesses to gauge the benefits accurately, the return on investment, of eCommerce is also an issue. Placing a real value on eBusiness calls for an evaluation of the results – of the market penetration, sales volume, efficiency, market penetration, changes in customers purchasing habits, needs, and the like – of companies that already engage in eCommerce. In Europe, 70 per cent of the firms entering the electronic marketplace reported turnover growth. In addition, innovative firms were significantly less likely to experience decreased turnover than non-innovators. In 2005, only 44 per cent of firms that did not innovate increased their turnovers. Companies setting up a Web portal need to entice both existing and new customers to use the portal. This calls for marketing the site and the services it offers by means of search engines and sites with directory services and Web links. Chambers of commerce can help with this. In Asia, the security issues that surround eCommerce are a real concern for many. Many feel the Internet diminishes culturally valued personal relationships in trade; today, business is done based first upon personal trust, the company second and the product or service next. For highly complex purchases, and when the quality of the goods or services is critical, this can be an inhibitor. However, when there is an existing, trusted relationship, there is no reason not to simplify transactions by using the Web – complemented as necessary by phone calls or an occasional meeting. Even in Asia, when the goods or services are well understood or commoditised – where only price is in question – trading on the Web enhances efficiency and provides added customer value. In Asia, a hierarchy often controls businesses and the delegation of decision-making power is limited; management must often make all of the marketing, purchasing, production and integration decisions. This is neither good practice nor efficient. Using the tools provided by eCommerce requires managers to relinquish a bit of their hands-on control, but the gains and increased efficiency can be very significant. Since Europe relies increasingly on the Web, developing trade between Asian and European companies calls for the use of the Internet. Asian companies need to innovate and use eBusiness more; the above mentioned European eBusiness survey showed that innovation spurs growth. Many Asian companies are struggling to move up the value chain. As newly developing nations receive more foreign direct investment, and begin to produce a wide range of products more cheaply, companies in other parts of the world need to improve their prices and productivity to compete. To sustain competitiveness, companies need to innovate and improve their products and services, increase their efficiency and provide cost-effective, value-added, aftermarket solutions. The Internet and ‘eEnablement’ can help greatly in this respect. Access to vendors who offer simple Web-based trading solutions for back-office integration cheaply, effectively and easily implemented is important. Flexible, modular, non-perishable and sustainable tools for these purposes are rapidly becoming available. Competition is driving increasing levels of back-office integration to enable more customer choice and transparency, and this is rapidly becoming the norm. Faster technology development, improved content, connectivity for RFID, radio frequency identification, and other technology-based applications, the use of voice-over-IP and mobile eBusiness applications are reaching maturity. These emerging technologies have started to influence eBusiness and are leading to new business models, improved supply chain integration, new partners, new methods of marketing and new customers. The use of eBusiness – not only as a tool to run businesses, but to change businesses – is increasing. In the long run, most business will probably be eEnabled. If Asia is to continue to be successful, it must provide added value or risk losing out. There is no longer any excuse in Asia for not recognising the advantages of the Internet and adopting eBusiness solutions.