Asian economies get $440B B2B boost

The business-to-business (B2B) electronic commerce revolution has only just begun in Asia, and the transaction value is expected to reach $S756 billion ($US440 billion) in five years, according to Goldman Sachs Global Equity Research.

In its report titled B2B@sia released last week, the global investment and securities firm projects that Asia-Pacific will generate about 10 percent of the S$7.7 trillion in global B2B e-commerce transactions by 2005.

In addition, the report noted that over the next decade, this increase in B2B activity will boost the economic growth of individual Asian economies by between 0.2 and 0.8 percent per annum.

"This is because B2B boosts efficiency in economic activity," said Kim Sun-Bae, head of economic research, Asia (excluding Japan), Goldman Sachs. "Also, information is valuable and the use of B2B e-commerce will increase access to it."

Because of its high spending in IT services and general e-readiness, Kim expects Singapore to benefit more economically than most countries.

Asia will also benefit from increased demand for Asian exports due to the region's role as a supplier of hardware for the new economy, Goldman Sachs said.

According to the report, although B2B lowers costs and increases market reach, competition will also increase, forcing companies to focus on their core competencies, and reinforce weak links in their value chain with e-markets, collaboration, and outsourcing.

As a result, demand for e-infrastructure services will explode in Asia.

"The first true B2B beneficiaries will be the enablers. Our preferred segments are Web hosting, e-business architects, and ASP (application service provider) enablers," the report said.

However, the report also noted that adoption of B2B in Asia will be uneven, and will trail the US by about 18 months.

"By end-2001, we expect e-commerce to accelerate in developed markets like Australia, South Korea, Hong Kong, Singapore and Taiwan," the report noted. "China's B2B market should begin to accelerate in 2003-2004. We expect the remaining Asean economies to lag further behind -- hurting their competitiveness."

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