FROM BRICs to MEATSE

From BRICs to MEATSE - Review of B2B in Emerging Markets Steve Keifer Vice President Industry and Product Marketing Keifer, Mark Morley, Industry Marketing Director

Infrastructure Challenges in China • Electrical power infrastructure is overloaded • Reliability of the ‘public’ internet • Central and western regions have Beijing poor communications networks • Availability of personnel with prior B2B e-commerce experience • Vendors 24x7 technical support in Shanghai mandarin or Cantonese remains limited li it d Hong Kong • Documentation in Chinese remains limited for technology software and services October 31, 2009 Slide 5 © Copyright 2009, GXS

Three Levels of Technical Capabilities Multi-National Large Chinese Small Chinese Corporations Corporations Corporations – Expertise in ERP, EAI – New to ERP, EAI and B2B – No experience with B2B and B2B e-Commerce e-Commerce e-Commerce – Large programs being – Selected programs being – Very low participation deployed in China today deployed in China today rates today Segmentation helps to identify early adopters October 31, 2009 Slide 6 © Copyright 2009, GXS

E-Commerce Drivers in China – Respond to rapid growth opportunity in market Scale – Automating functions improves throughput Quickly – Eliminates latency from business processes – Improve perfect order fill rates Customer – Minimize shipment delays and errors Experience – Reduce invoice discrepancies – Production forecasts, financial results or key Corporate performance indicators sent to corporate – ERP systems house data, but the source is often Visibility external – customers or suppliers – Become easier to do business with Grow – Meet expectations of foreign MNCs B i Business – I i i lit d t Improving responsiveness, quality and customer experience provide advantage October 31, 2009 Slide 7 © Copyright 2009, GXS

B2B e-Commerce Readiness How secure and reliable is the Multi-National power and network Large & Mid-Size Customers infrastructure? Are technical Suppliers support and consultation available? What level of What are SMBs Enterprise Internet or Internet or access to PCs, Systems exist Private Phone Internet, and for ERP, EAI, Network Network Accounting B2Bi? software? Your Enterprise Systems Which business processes are being automated? What document standards and Large, Domestic network protocols are being Small Customers used? Suppliers October 31, 2009 Slide 8 © Copyright 2009, GXS

B2B Standards in China Joint Automotive Standards Effort to Recommend B2B Standard B2B E-Commerce • One of the most recent studies into Standards used in China B2B usage across China was Other - 5% conducted by JAIF ANSI EDI - 3% • EDI usage in China is relatively low • Fax, email and web forms are the XML - 23% dominant e-Commerce platforms • Microsoft Excel is one of the most widely used business tools • EDI i t i ll used by Joint Venture is typically db J i tV t operations, ie Western OEMs partnering with domestic companies • EDI transactions typically based on OEM HQ standards EDIFACT - 69% • JAIF report recommended use of Source: 2007 Joint Automotive Industry Forum International Position Paper for China B2B p multiple standards, UN/EDIFACT and OAGIS XML BODs October 31, 2009 Slide 9 © Copyright 2009, GXS

Infrastructure Challenges in India • As with China, ICT and power infrastructures vary dramatically across the country • The country is land locked to the north by the Himalayas, exports are via air and sea Himalayas • Moving goods across India is hindered by very poor road / rail network infrastructures • Logistics industry is highly fragmented October 31, 2009 Slide 11 © Copyright 2009, GXS

B2B in India • The automotive industry was one of the first to start using EDI with western OEMs • Government led transportation and logistics related projects are the most advanced users of EDI in the country • Automotive/high tech companies are using western EDI standards, financial organisations are using home grown standards and there is limited use of EDI in the emerging retail sector h i il October 31, 2009 Slide 12 © Copyright 2009, GXS

India eTrade Project • The Indian Government is funding one of the most advanced EDI projects in the country • This project was initiated to help improve the way in which Indian companies trade with international trading partners • The aim is to provide a seamless B2B infrastructure to link 11 sea ports, 7 airports, customs agencies, banks p , g , and logistics providers October 31, 2009 Slide 13 © Copyright 2009, GXS

India Customs EDI System (ICES) India Customs & Excise • 8500 users including air cargo carriers, carriers shipping agents financial agents, institutions and port operators • E-filing services for import, exports, tax payments and license Bills f Entry (Import) Bill of E t (I t) Customs Duty Payments C t D t P t verification Shipping Bills (Exports) Export Quota Information Cargo Manifests Trade Statistics • EDI customs documents processed at 40 different offices B2B Gateway GXS Solution National Import Export Commodity • In partnership with Wipro services to Database ICES Database India Customs EDI perform upgrade of gateway Service • B2B Gateway with traditional EDI mailboxes and XML web services • High performance translation server for 150 message types • Multiple communications options - E- mail, mail Web Portal and Internet based Internet-based DGFT RBI DGCIS Ministry of protocols such as FTP Steel October 31, 2009 Slide 14 © Copyright 2009, GXS

Benefits of ICES • Makes it easier for Indian based companies to conduct business electronically with multi-national organisations and to on-board trading partners in India • Improves the visibility of global shipments • Reduces the amount of counterfeit goods entering the supply chain October 31, 2009 Slide 15 © Copyright 2009, GXS

Europe’s i2010 Strategy Report • The i2010 report was compiled by the European Commission in order to evaluate the B2B readiness of each European Union member country p y • The report reviews the broadband p penetration, ICT usage and e-Business , g adoption levels of each member country • Based on the findings of the report, a g p common strategy is being developed to improve all aspects of ICT and e- Business usage across EU October 31, 2009 Slide 17 © Copyright 2009, GXS

Generate Average Ranking Calculate average ranking of ‘B2B Readiness’ against EU27 CZ C Czech R h Rep. CZ SN SK LT PL ES RM HU LV BU SN Slovenia SK Slovakia LT Lithuania PL Poland ES Estonia RM Romania LV Latvia HU Hungary BU Bulgaria Average ranking of B2B capabilities against EU27 11.50 11.34 12.08 15.58 16.41 17.50 17.72 19.66 21.00 21.16 22.41 Data sourced from research conducted by e-Business Watch - http://www.ebusiness-watch.org/ October 31, 2009 Slide 20 © Copyright 2009, GXS

B2B Readiness of Eastern Europe (Based on the EU27 average ranking of e-Commerce / e-Business processes currently being used across the countries) cu e t y be g ac oss t e cou t es) • The B2B readiness of Eastern European 6 countries varies according to their 9 proximity to Western Europe 4 • Significant numbers of Western European companies have established plants in 5 Czech Republic, Slovakia and Slovenia 1 which has helped to accelerate the 3 adoption of B2B technologies in these 8 particular countries 2 7 • The most recent countries to leave the former Soviet Union are the slowest 10 adopters of B2B technologies October 31, 2009 Slide 21 © Copyright 2009, GXS

Country Review of Key Industries Furniture Machinery Auto Energy / Raw CPG High Tech Textiles Finance Pharma Chemicals Manufac. Manufac. Manufac. Utilities Materials Bulgaria Czech Estonia Hungary Latvia Lithuania Poland Romania R i Slovakia Slovenia In terms of popularity, the 1. Machinery Manufacturing, Consumer Process Goods key industry sectors of 2. Energy / Utilities, Raw Materials, Chemicals, Textiles Eastern European countries can be grouped and ranked 3. Automotive Manufacturing, High Tech, Finance into the following order of 4. Pharmaceuticals, Furniture Manufacturing popularity: October 31, 2009 Slide 22 © Copyright 2009, GXS

Market Attractiveness Based on B2B Readiness & Industry Alignment CZ Czech Rep. High 10 Attractive SN Slovenia eadiness Ranking g CZ SN SK Slovakia Compared with EU27 LT Lithuania 15 SK LT B2B / e-Commerce Re PL P l d Poland ES PL ES Estonia RM RM Romania 20 LV HU LV Latvia BU HU Hungary Less Attractive BU Bulgaria Low 25 0 10 20 30 40 50 60 70 80 Weak Industry Alignment Strong Data sourced from research conducted by e-Business Watch - http://www.ebusiness-watch.org/ e Business http://www ebusiness watch org/ October 31, 2009 Slide 23 © Copyright 2009, GXS

Middle East Market Opportunity Overview

Opportunities for ICT Manufacturers Cisco & Ericsson have already secured government contracts • Broadband growth rate of 90% t f Source: Business Week • Mobile phone growth rate of 46% Size f Saudi A bi ’ Si of S di Arabia’s • Internet service Economy has nearly doubled growth rate of 23% in past in four years p y October 31, 2009 Slide 28 © Copyright 2009, GXS

Saudi EDI - Trade Automation Ocean Air Cargo Freight National Carrier Ca e Carrier Forwarder Labs L b Automotive Importer Ministry of Health ICT & Electronics I El t i Importer t Import Declaration Customs Export Declaration Saudi Department Consumer Products Importer EDI Import Manifest Internet (Crimson Coast Logic) Guard Petrochemicals Exporter Payments Due Ministry of Oil Exporter Agriculture Industrial Goods Exporter Chamber of Commerce Sea Port Air Port Customs Source: D t gathered f S Data th d from htt //http://www.saudiedi.com di di Authority Authority Broker Note Saudi EDI has no affiliation with GXS October 31, 2009 Slide 29 © Copyright 2009, GXS

Africa – Rapidly Growing Networks Less than 20% of Africans have electricity Less than 2% of Africans have Af i h telephones Sub-Saharan Africa is 100X size of the UK, but has fewer roads 2000% Mobile Subscriber Growth in period of 7 years SEACOM – 15 000km Fiber Optic Cable linking 15,000km Source: Af i - Gl b l I S Africa Global Innovation O tl k Report 3.0 ti Outlook R t30 Mainland Europe, East Africa and India October 31, 2009 Slide 31 © Copyright 2009, GXS

South Africa – The Largest Economy 25% of Africa’s GDP, but 40% of Telecom Subscribers Only 5% have Broadband (Pigeons are faster) (Pi f t ) Fast Growing Call Center & BPO Sector EDI Adoption in Retail, Auto and Logistics Major Telecom upgrades are planned for the upcoming 2010 FIFA World Cup October 31, 2009 Slide 32 © Copyright 2009, GXS

Morocco – Supply Chain Visibility Ocean Port Import De-Cons- Distribution Ground Arrival at Invoice Accounts Payment Arrival Processing olidation Center Transit Store Received Payable Issued End-to-End Supply Chain Visibility pp y y Retailer Physical Shipment Manufacturer Automate Order to Cash Cycle Order-to-Cash Order Revision Advanced Ship VAT-Compliance Self-Billing Supplier Performance History Notification E-Invoicing (Evaluated Receipts) Scorecards PO Change & DC & Store Level Supply Chain Supplier P S li Payment t Buyer KPI Order History Inventory Visibility Finance Status Inquiry Tracking October 31, 2009 Slide 34 © Copyright 2009, GXS

Intel’s $1B Semiconductor Plant Vietnam has among the lowest http://www.intel.com/pressroom/archive/releases/20060228corp.htm wages in the world (40% lower than China or India) October 31, 2009 Slide 36 © Copyright 2009, GXS

Thailand Electronics Sector Strong logistics, low cost labor and cheap property are attracting foreign investment Electronics are 30% of Thailand’s exports Hard Disk Drives • #1 HDD and components manufacturing base f t i b • Since 2005, have supplied nearly 50% of world’s HDD October 31, 2009 Slide 37 © Copyright 2009, GXS

Single Window Example Royal Thai Customs y Thailand Philippines Steamship Air Cargo Freight Food & Drug Importer A Carrier Ca e Carrier Forwarder Administration d st at o Department of Importer B Fisheries Importer C Import Declaration Customs Customs Certificate of Origin Department Department E-License Financial Single Internet Window Wi d Institution(s) E-Manifest E-Payments Department of Department of Foreign Trade Foreign Trade Export Declaration Exporter A Department of Exporter B Livestock Exporter C p Department of Sea Port Air Port Customs Agriculture Operator Operator Broker October 31, 2009 Slide 38 © Copyright 2009, GXS

FROM BRICs to MEATSE

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