SYDNEY (03/30/2000) - The Asian market is fast getting to grips with its internet endeavors. Our special report looks at who's doing what, and the implications for local online business.
Part 2 - Tiger, Tiger, Burning Bright
Some Asian countries are experiencing a higher level of internet acceptance than others, but there's an overall willingness to take to the net throughout the region.
"Although the web is a global phenomenon, the rate of adoption and market demographics differ radically from country to country, even in the same region," says Anthony Bertini, CEO of BMCMedia.com, an aggressive player in the Asian online marketing and media space.
Bertini says Japan is without doubt one of the most explosive online markets today, with latest reports placing the online population at 18 million -- double the estimated online usage for 1998 and putting Japan in the number two spot, trailing only the US.
"Although the usage figure represents minimal penetration -- a low 14 per cent of the population with internet access -- this illustrates the massive potential for growth in the region, especially in light of Japanese willingness to adopt new technologies," says Bertini. "International Data Corp believes Japan will have some 32 million users by 2003; and ecommerce is expected to generate more than $US44 billion in revenue in the same year, representing a 50-fold increase from 1998. The travel industry, followed by the car and personal computer industries, are expected to lead."
But perhaps what's most exciting about the Japanese market, according to Bertini, is the emergence of mobile phones with internet capability. "NTT Mobile Communications Network recorded two million subscribers in their first eight months of operation," he says. "Bearing in mind that conversion of existing internet content into mobile-compatible content is relatively simple and there is increasing consumer demand for this wireless internet access, this is a market that is set to rise dramatically in the next three years in Japan."
It comes as no surprise that Japan is already playing a significant role in the expansion of online advertising in the Asia-Pacific Rim, and its online advertising market is expected to experience exponential growth in the next five years.
However, while Japan is likely to be responsible for 56 per cent of the Asia-Pacific's online advertising revenue, Bertini says its strength does not overshadow the fact that South Korea, Taiwan, Hong Kong and Singapore combined will make up 11 per cent of spending in the region by 2004. "In fact, the Asia-Pacific region will be responsible for 32 per cent of the non-US global online ad spend within four years," he says. "As more consumers head online, the advertising dollars will follow. Publishers and advertising agencies in the region need to develop plans now to take full advantage of this unprecedented growth."
Meanwhile, the domestic online advertising market in South Korea, the other current Asian leader in the online market, is capable of generating $US18.3 million in revenue in 2000, according to the nation's major advertising agencies. Forrester is equally optimistic, predicting a compound growth rate of some 1.7 per cent over the next four years.
"The number of South Korean internet users has increased 10-fold in the past three years and is currently estimated to be around 5.68 million," says Bertini. "The rapid growth in the internet user population has largely been attributed to the current boom in online gaming, as well as to the enthusiasm for online shopping and online broking. Online transactions are estimated to be in excess of $US23 million for 1999. Given the energetic growth rates of the South Korean online population and its affinity for shopping, it comes as no surprise that internet-based businesses in Korea are predicted to generate $US1.7 billion by the year 2005."
But South Korea, it seems, will be no easy nut to crack. Winning goodwill and developing mindshare are two of the most important factors for success, according to internet research and consulting group www.consult's principal, Ramin Marzbani. "Care should be exercised when evaluating the Korean online market because payment preferences for online shopping and a number of other key ecommerce drivers are very different from other countries in the region," he warns.
While other Asian markets like Singapore, Malaysia, Hong Kong, Taiwan and, indeed, India, are still trailing the big two, they are all expected to ultimately become online forces to be reckoned with.
Meanwhile, in the shorter term, all eyes are keenly focused on the awakening Chinese giant, with 2000 dubbed the year that will mark the beginning of energetic online growth. Now boasting the tenth largest internet population, it is expected to surpass Japan and take the number two spot in the next five years.
Although it has a number of barriers to overcome, including an inadequate delivery network, analysts expect China to register some big growth rates, particularly in the business-to-business segment. International Data Corp, for example, predicts that China's ecommerce transactions will reach $US220.6 million in 2000, and $11.7 billion by 2004. As China's internet user population increases to around 33.1 million by 2004, business-to-consumer transactions are expected to become more widespread. www.consult recently expanded its research coverage in the country to give marketers detailed insight into the demand for internet and ecommerce services.
"We are committed to providing business managers with broad coverage and consistent, reliable information about developing internet markets," says www.consult's director of electronic commerce and China research, Chiko Wong.
"Chinese-speaking internet users are going to be one of the fastest-growing, most receptive and dynamic groups of internet consumers in the next five years.
And we are establishing partnerships with Chinese internet pioneers to measure market activities and identify opportunities for growth."
Indeed, while the road ahead is not without stones -- many experts believe that the development of ecommerce will be slowed by cultural factors like the general preference to do deals face-to-face and the reliance in Japan on the notion of the middleman -- the tigers will not be out of the race for very long.