Asia still faces barriers to e-commerce

Asian companies face a large number of social and legal barriers to adopting electronic commerce and joining the global knowledge economy, according to Bob Hayward, senior vice president of research company Gartner.

Some countries will benefit and others suffer, depending on how they support their own online economic development and how they react to opportunities presented by globalization, Hayward said in his keynote speech at Gartner's Summit 2001 conference here Thursday.

"Those countries will win that embrace the rule of law, have open and transparent government, accept the need for immigration and have the right infrastructure," he said. "And some (countries) are still restrictive societies when it comes to the Web."

Also, several cultural issues are holding back e-commerce development in Asia, according to Hayward.

"Asia prefers face-to-face commerce," he said. "It relies on long-standing business relationships based on trust, family, or other historical relationships. Many autocratic, family-dominated businesses are struggling to change their business methods."

The questions of language and literacy are still a major brake on Internet and e-commerce use, according to Hayward.

"The language of the Internet is English," he said. "This is why India is doing well (in knowledge economy terms) while China is struggling. And it is hard to push Internet development in parts of Asia where 85 percent of the local population can neither read nor write."

The negative attitude of many banks in Asia-Pacific and the low penetration of credit cards are also inhibiting factors, according to Hayward.

"The banks have been slow to embrace e-commerce and if you don't have the banks involved, that has a stifling impact on e-commerce," he said.

There has also been a backlash against the "new economy madness" which has made it hard for companies to get investment for Internet-related developments. Furthermore, many of the vendors who are developing e-commerce products in the U.S. have not even opened distribution offices in Asia, according to Hayward.

But Asia is seeing success stories where infrastructure, government support and a skilled workforce meet, according to Hayward.

"Although GE (General Electric Co.) will let 15,000 workers go this year, it will hire an extra 12,000 in India to run its call centers and handle accounting functions," he said. "There are 1 million staff in India training for call center work now."

The Gartner Summit continues through Friday here in Singapore.

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