Analyst gives mixed diagnosis on Asia e-business

E-businesses in the Asia-Pacific will only survive if they overhaul traditional "ego" driven business practices, and adopt more American and "right brain" business philosophies, a senior analyst said yesterday.

In his Internet World 2000 speech on the future of e-business in Asia, Bob Hayward, senior vice president, Gartner Asia-Pacific, was confident that 85 per cent of e-businesses in Asia would fail.

"So what does that really mean?" he mused. "(It means) they will fundamentally need to change their business model."

Routine, process-oriented practices are a "danger" to Asian companies planning to go online, Hayward said.

"There is still an idea in Asian cultures that you have to do it all yourself," Hayward said, referring to the slow uptake of the paperless office concept, bureaucratic environments with scant information sharing, and poor customer focus.

He suggested that outsourcing non-core areas like accounting and administrative functions would give businesses in the "new economy" time to focus on brand marketing and customer satisfaction.

"Most Asian countries don't understand the value of branding," Hayward said, calling this a "crisis".

"Americans are exceptionally good at marketing their brand," he said. "Who wouldn't want to be clicking on a Levi's or Pepsi logo?"

Richard Braddock, director of e-business networking association Sydney Tradepoint, paints an equally unflattering picture of Asia's early dot-coms. They have been predominantly "non-responsive" to customer complaints and have "lacked vision", Braddock said.

However, Hayward admitted he didn't wish to "generalise" on Asian business cultures. Despite a rather "blue collar" style of IT, he acknowledged that Japan is the e-business leader in the region.

Hayward forecast that by 2005 China would dominate its neighbours in internet use, but lag in online buying due to a population with low disposable incomes, and logistical challenges -- as demonstrated in India where online companies struggle to "deliver goods down narrow streets".

However, unlike India, Japanese e-businesses are jumping distribution and geographical hurdles by partnering with convenience store chains such as 7-Eleven to provide a "pick up" point for customers.

"(For the next five years) e-business's focus will not be on product, but on customer satisfaction," Hayward said.

He believes Australia has not exploited market opportunities to partner with potential channel players Shell and Ampol.

Hayward added that the Asia-Pacific region's annual IT expenditure is well below Japan's.

Korea, Singapore, Taiwan, China and Australia would need to triple their combined total IT spend (hardware, software, telecommunications) to match Japan's annual turnover, he said.

Hayward sees Asia's IT growth markets for the next 10 years in e-cash services, wireless data access devices, and voice-activated appliances.

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