Asia set to catch up in B2B sector

Cheap labor and multiple-language adaptability will assist in bridging the 18-month gap between US and Asian B2B systems.
Written by Lydia Zajc, Contributor on
Cheap labor and multiple-language adaptability will assist in bridging the 18-month gap between US and Asian B2B systems.

HONGKONG (SCMP)- It is widely accepted that Asia lags behind the United States in the marathon to implement business-to-business (B2B) systems. But the question is by how much? A panel of company executives at a recent conference generally agreed it might take less than 18 months for the more developed areas of Asia to catch up.

"Only in certain areas we are behind," said Yat Siu, chief executive of Internet infrastructure provider Outblaze.

Mr Siu argued that Asia had strengths, such as cheap labor and the ability to deal with multiple languages.

This gives the region an international edge and could make it a world leader in the B2B industry.

B2B enables companies to connect via the Internet to order goods, auction inventory and do more for less cost and effort than conventional methods.

Poh Mui Hoon, managing director of e-commerce systems provider Sesami.com in Singapore, suggested the B2B market in Asia probably trailed the US by about 18 months. But she felt Asia could catch up quickly for the reasons Mr Siu outlined.

The most outspoken pessimist on the five-person panel was Jeremy Tang, chief executive of online excess-inventory seller Rebound International.

Mr Tang became discouraged after two years of slaving away in the trenches. He said most of Asia was three to five years behind North America in the e-commerce market.

North American companies were first to computerise and theirs was a mostly homogenous market of English speakers. By comparison, Asia was fragmented into many countries which spoke different languages, Mr Tang said.

A report by New York-based Jupiter Research, released in early October, estimated that US B2B commerce would soar to US$6.3 billion in 2005 from US$3.36 billion this year.

Jupiter also predicted online supply chains would dominate the market because online B2B would grow from 3 per cent to 42 per cent of total domestic B2B trade in the next five years.

The catalyst for a successful B2B industry was critical mass, said Leroy Kung, chief executive of e-commerce solutions provider iMerchants. Mr Kung believed large companies would drive the evolution.

Peter Zapf, chief executive of e-commerce investor and enabler AsiaCommerce, said the big risk was that US consortiums would come in if Asian companies did not prepare themselves.

Mr Tang, of Rebound, agreed. "I think now you have the first loser advantage in Asia", instead of the first-mover advantage, he said.

Mr Yat, of Outblaze, said the Internet would not go away and everyone, eventually, would be forced to hook up.

"It's just going to be there, and everybody's going to have to be online, one way or another."

Analyst David Soh, of Merrill Lynch, who was not on the panel but tracks B2B growth, said industry observers generally believed Asia, on average, lagged the US by two to three years.

Mr Soh said Asia could evolve differently from the US buyer-centric model.

"I think it would develop quite differently from the US and European markets because the corporate structure is manufacturing dominant. A lot of suppliers are in very poor countries with limited infrastructure."

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