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E-business Watch
Tracking the
online media to bring you the key e-business trends
January 28, 2000
Asia's
Internet growth shifts the e-business landscape
Amid the daily hype surrounding the Internet, it is easy to
forget the global nature of the changes taking place. While North America presently leads the world in Internet use and
e-commerce, growth is significantly faster in other parts of the world.
Perhaps the most dynamic region
is Asia-Pacific. Although per capita Internet usage is currently low by
comparison to North America, the number of
users is expected to more than double over the next five years, growing
from 72.1 million in 2000 to almost 190 million by the end of 2005. While
over half of all Asian Internet users are presently based in Japan, growth in
the rest of the region is rapidly accelerating. Among the fastest growing
countries is China, which the London-based Philips
Group predicts will contain the largest number of Asian Internet users by
2005.
If North America is any
indication, Asian Internet growth will be quickly followed by a surge in online
transactions and e-commerce revenues. The Gartner Group
believes that online revenues in the region will grow from $6.6 billion in 1999
to $340 billion by 2003, 80% of which will be business-to-business
revenues. “There's a big myth that Asia is light years behind the
U.S. But I don't think we're behind at all, “ the Gartner Group’s Hong
Kong-based research director told the E-Commerce Times. “ We're moving in
different directions in Asia and it's B2B that has the most potential.”
In the key Japanese market, a
recent survey by Andersen Consulting and the Japanese Ministry of
International Trade and Industry found that business-to-consumer electronic
commerce grew by 400% during 1999, and they predicted that Japanese
business-to-business e-commerce would grow by an incredible 20,000% between 1999
and 2003.
Can North American companies
compete?
While American Internet leaders
such as Yahoo, Lycos and AOL have already turned their
sights to Asia, there are some doubts that U.S.-based companies will be
able to compete successfully in the Asian market. Goldman Sachs analysts recently suggested
that U.S. based companies do not have an adequate understanding of Asian
markets and are too narrowly focused on gaining dominance in the North American
market to be successful in Asia. And indeed, many of the major U.S. leaders have
teamed up with local Asian partners.
U.S.-based companies will face
stiff competition from a new generation of what the Far
Eastern Economic Review referred to as “Asia’s Internet investment
giants.” Companies such as Softbank, Hikari Tsushin, Pacific Century
Cyberworks, Creative Technology and Chinadotcom are rapidly staking out
the key e-business terrain in the region, investing in start-ups and building
powerful networks that reach across all aspects of e-business and the
Internet.
The most high-profile of these
new giants, Softbank, has translated its early investments in over 100
Internet-related companies – including stakes in such stars as E*Trade, US Web
and Yahoo (of which Softbank owns 28%) – into an empire now valued at more
than $30 billion. Business Week
recently named Softbank’s CEO and founder, Masayoshi Son as one of its 25
Managers of the Year. “Son's frenetic empire-building has dragged Japan
out of the Web Dark Ages,” Business Week observed. ”From online trading to
wireless technologies, he has ventures in virtually every segment of Japan's
Internet economy, with stakes in 70% of the country's publicly traded Internet
companies.”
Wireless wildcard
Unlike the North American market,
where the Internet is delivered almost exclusively over “wired” connections,
the use of wireless devices to access the Internet is accelerating at a
tremendous pace within Asia, and creating an entirely new range of e-business
opportunities. The most popular of the new Internet wireless services is
“i-mode”, offered by Japanese telecommunication giant NTT DoCoMo. The
service, which delivers banking, news, weather and other data over mobile
phones, now boasts over 3 million Japanese subscribers and is adding 15,000 new
subscribers per day. Wireless Internet services have also driven
Hikari Tsushin, a Japanese wireless phone vendor and investor in a wide range of
Internet start-ups, into the ranks of Japan’s most capitalized
companies. “”The merger between the Internet and mobile
communications is creating a once-in-a-century opportunity that I will take full
advantage of,” the company’s founder and CEO Yasumitsu Shigeta recently told Forbes magazine.
Asian
Internet growth is creating mammoth new e-business opportunities outside
of North America, accelerating the globalization
of communication and commerce, and leading the way in wireless innovation.
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