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Am chamtaipei sept2004

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  • 1. E-Commerce Trends in AsiaKurt CavanoChairman and CEO, TradeCardSeptember 2004Presented at American Chamber ofCommerce Taipei
  • 2. Ensuring Asia’s Competitive Advantage• Low cost labour is not enough to maintain Asia’s success as workshop of the world; buyers move on to the cheapest location when production costs go up in Asia• Asia’s traders need real-time information to fulfill their buyers’ growing demands for faster turnaround and shorter lead-times• Greater visibility helps to reduce cost and credit risk• Paperless trade through automation ensures better relationships with overseas trading partners• Overseas buyers are only willing to purchase from those vendors that can meet electronic/automated service requirements 2
  • 3. B2B eCommerce Trends• In 2004, US$992 billion, or 13% of all B2B transactions globally will happen in Asia/Pacific (Gartner Group)• However, security concerns are still a serious impediment to the growth of e-commerce• Pan-regional efforts on the implementation of a secure e- commerce infrastructure for trade, such as the Pan Asian Alliance and APEC’s efforts show, getting rid of paper is key in maintaining a competitive edge in the Asia-Pacific region. 3
  • 4. What the Analysts areSaying
  • 5. How Ready is Asia for E-Business?The Economist Intelligence Unit produces “E-business readiness rankings” every year whereby countries are assessed according to the following criteria:• Technology infrastructure• General business environment• Degree to which e-business is adopted by consumers and companies• Social and culture conditions that influence Internet usage• Availability of services to support e-businesses 5
  • 6. Economist Intelligence Unit E-Readiness Survey – Ranking Globally 2004 e-readiness score (of 10) out of 70 countries 8.4 The annual EIU survey 8.2 assesses countries’: 8 -technology infrastructure - general business 7.8 environmentScore 7.6 - degree to which e- business is being 7.4 adopted by consumers and companies 7.2 - social and culture conditions that influence 7 Internet usage 6.8 - the availability of South Korea Taiwan France New Zealand Switzerland Australia Singapore Netherlands Ireland Canada Sweden UK Denmark Hong Kong Finland US Austria Belgium Germany Norway services to support e- businesses 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Country & ranking 6
  • 7. Economist Intelligence Unit E-Readiness Survey – Ranking of Asian Countries 2004 e-readiness score (of 10) out of 16 countries 9 The annual EIU survey 8 assesses countries’: 7 -technology infrastructure 6 - general business 5 environmentE-readiness Score 4 - degree to which e- business is being 3 adopted by consumers 2 and companies 1 - social and culture conditions that influence 0 Internet usage New Zealand South Korea Hong Kong Philippines Singapore Indonesia Australia Malaysia Pakistan Taiwan Vietnam Thailand Sri Lanka China Japan India - the availability of services to support e- businesses 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Country & ranking 7
  • 8. Asian Countries are Catching Up*• After Western Europe,Asia-Pacific is the next-best represented region in the 2004 e- readiness rankings. Singapore (7th) and Hong Kong (9th) are in the top ten, followed by Australia (12th), South Korea (14th), New Zealand (19th),Taiwan (20th) and Japan (25th).• Asian governments are intimately familiar with each other ’s e-development practices and increasingly, there is cooperation at both the national and the industrial level.• Despite the rapid growth of e-trading platforms, particularly in the regional finance and trading hubs of Singapore and Hong Kong, enabling technologies such as digital signatures and digital rights management remain under-utilised by businesses.• This is not for lack of legal infrastructure; even Thailand has passed legislation recognising the legitimacy of digital signatures. But Asian banks, a key link in the e-commerce chain, have not adopted them in their own transactions, let alone mandated them in their clients. *Source: Economist Intelligence Unit, E-readiness rankings 2004 8
  • 9. Forrester Research’s eCommerce Predictions Global eCommerce Predictions for 2004 (Forrester Research) 3.5 3 2.5 Total (USD) trillionRegion Total (USD) trillion 2North America 3.5Asia Pacific 1.6Western Europe 1.5 1.5Latin America 0.816Rest of World 0.686 1 0.5 0 North Asia America Western Pacific Latin Europe Rest of America World 9
  • 10. Gartner Group’s Predictions for B2BTransactions 2000-2004 Transactions Transactions in Region in 1999 2004 World 145 billion 7.29 trillion US 63% of above 39% of above Europe 31.8 billion 2.34 trillion Asia-Pacific 9.2 billion 992 billion Japan 11.1 billion 861 billion Latin America 1 billion 124 billion 10
  • 11. Electronic Trade Initiativesin Asia
  • 12. Electronic Trade Initiatives in Asia: Overview - many regional and national e-commerce ABCDE Plan DTTNinitiatives in planning and (Taiwan) (Hong Kong) implementation stages APEC e-commerce PAA Initiative E-ASEAN Singapore Trade- net 12
  • 13. Taiwan: ABCDE Plan• 1999: implementation of the Industrial Automation and Electronic Business Program (iAeB Program) under the Ministry of Economic Affairs (MOEA)• Aim: help companies in the information industry to establish electronic supply chain systems, as well as to encourage thousands of Taiwanese small and medium enterprises (SMEs) to acquire the basic capabilities needed for business-to-business (B2B) e-commerce.• 2001: implementation of Projects C, D and E, building on existing electronic supply chain system as the foundation for further integration of money flow, materials flow and R&D and design• Aim: to provide companies in all segments of the supply chain with e-services for cash flow, delivery system and uniform engineering collaboration, and to strengthen their logistics management capability. 13
  • 14. Hong Kong: DTTN• The Digital Trade and Transportation network is an initiative by the HK government and electronic trade services provider Tradelink (42% government- owned) to help smooth trade flows• DTTN seeks to provide a shared electronic infrastructure to enable the exploration, development, and delivery of innovative value-added services to improve competitiveness in trade and logistics• DTTN will facilitate 10 major processes, from creating sales/purchase contracts and insurance to arrangement/execution of transporation and submission of trade declarations and other licenses. 14
  • 15. Asia: Pan Asia e-Commerce Alliance• Aim: Create a regional electronic trade infrastructure for secure e-commerce between traders in PAA member countries or economies which include Hong Kong, Taiwan, Japan, Korea, China, Singapore, Malaysia and Macau. Thailand and Indonesia send observers and are potential members.• Activities include – creation of a Secure Cross Border Transaction Service, with a set of electronic trade documents – Pan-Asian Trade Portal• PAA members use PKI (Public Key Infrastructure) for e-commerce security, and are using digital certificates issued by Certificate Authorities under a mutual recognition scheme operated under PAA.• Current PAA cross-border electronic trade chains are claimed to provide cost savings of 40% or more compared with manual methods 15
  • 16. Singapore: Trade-net• Nationwide electronic trade documentation system that approves permit applications almost instantaneously• Allows electronic submission of permit applications to multiple government bodies for processing of import, export, and transshipment documentation.• When an application is approved, a permit message will be returned electronically to the sender• Singapores success in e-government, coupled with its citizens acceptance of this program, demonstrates yet again their willingness to accept new technology 16
  • 17. e-ASEAN Information Infrastructure• Establishment of e-ASEAN information infrastructure and growth of electronic commerce• ASEAN governments commit themselves to foster a favorable legal and policy environment for the development and use of Information and Communication technologies (ICT)• e-ASEAN aims for the liberalization of trade in products and services and the promotion of investments in the production of ICT products and in the provision of ICT services.• Establishment of a system of mutual recognition of digital signatures; secure electronic transactions, payments and settlements; protection of intellectual property rights arising from e-commerce; measures to promote personal data protection and consumer privacy; and dispute settlement mechanisms.• Aim: to reduce the digital divide between developed and developing nations 17
  • 18. APEC E-Commerce Steering Committee• APEC member countries are working towards a cross-border paperless trading environment• Through the 1998 APEC Blueprint for Action on e-Commerce, member economies are committed to a goal of achieving “Paperless Trading,” where possible, by 2005 for developed economies and 2010 for developing economies.• Sixteen economies have now prepared Paperless Trading Individual Action Plans. These outline the steps APEC economies are taking to meet APECs target to reduce or eliminate the requirement for paper documents needed for customs and other cross-border trade administration and other documents and messages relevant to international sea, air and land transport. 18
  • 19. Trends in Global Trade
  • 20. Trends in Global Trade Dictate the Use of e- Commerce Technology• Increased sourcing from lower cost regions• Decrease in use of Letters of Credit and increase in open account transactions as payment method• New government programs in the US to ensure security and secure supply of goods (24-hour manifest rule, C-TPAT etc)• Increasing demand for vendor managed inventory• Increasing demand for more frequent and smaller shipments• Continued adoption of supply chain and payment technologies by overseas buyers• Quota systems demands flexibility 20
  • 21. A Unique Opportunity: Financial Supply Chain Management• Asian governments understand the necessity for automating documents, but connecting the physical flow of goods with the financial processes revolutionizes the whole concept of global trade.• “The good news is that $260 billion in cash is concealed in the financial supply chains (of the Global 2000) and it will not be that difficult to liberate.” (Source: Killen and Associates) 21
  • 22. What Is the Financial Supply Chain?“ Financial Supply Chain parallels the physical or materials supply chain and represents all transaction activities related to the flow of cash from the customer’s initial order through reconciliation and payment to the seller.” Killen and Associates, Inc.• Financial Supply Chain Management consists of automating and optimizing the order-to-cash cycle for suppliers and the procure-to-pay cycle for customers. – Purchase order – Cash management – Invoice and EIPP – Dispute resolution – Credit protection – Payment – Financing – Analysis 22
  • 23. How the Supply Chain is Completed: The Financial Supply Chain Movement of Movement of Documents Documents Data Data & & Physical Goods Money Raw Retailer / Goods Manufacturer Customer Distributor Supplier Physical Supply Chain Questions Financial Supply Chain Questions Currently beingOptimized over last 10 years What to buy? What and how to pay? optimized When to buy? When to pay? How much to buy? How much to pay? From whom to buy? Who to pay? Just-in-time-manufacturing Just-in-time-cash 23
  • 24. A Complete FSC Solution is Flexible and Paperless TRADING PARTNER AP/AR MANAGEMENT TRANSACTION SOLUTIONS FINANCIAL MANAGEMENT MANAGEMENTWorkflow and Event Management Patented Automated Compliance Money MovementMove tasks within and among Checking Platform automatically initiatesenterprises on a common platform, Electronically compare electronic payment to suppliers withwith real-time notification of supply procurement and fulfillment automated wire transfers and ACHchain events. documents to make or support transactions.Purchase Order Management payment decisions. Credit ProtectionManage the delivery, negotiation and Payment Decisioning and Have access for suppliers toamendments of purchase orders. Payment Scheduling payment assurance, without tyingElectronic Invoicing Decide when and how payments up credit lines, and to electronicPresent invoices electronically. should be made, whether upon Letters of Credit. compliance or triggered by the Supply Chain Finance ProgramsDocument Management customer.Route, store, and organize electronic Optimize credit availability anddocuments. Discrepancy Management and usage across the supply chain with Dispute Resolution innovative programs, includingShipping/Logistics Documents Identify and resolve discrepancies terms extension program.Have access to transaction data, between procurement andincluding proof of delivery. Financing fulfillment documents to enable Electronically apply for pre-andIntegration Module payment. post-export financing online.Connect to ERP systems, EDIinterfaces, and other services orsolutions. 24
  • 25. TradeCard AP/AR Management Solutions Management Financial Trading Partner Management 1 1 2 2 Purchase Order Purchase Order CAPABILITIES CUSTOMER Create Purchase Order Create Purchase Order Purchase Order Advised, Advised, Approved, and Advised, Approved, and SUPPLIER (UI, EDI, ERP interfaces) (UI, EDI, ERP interfaces) Approved, and Stored Stored Stored TRADING PARTNER MGMT Workflow Management Purchase Order Management Electronic Invoicing AP/AR MANAGEMENT FINANCIAL MANAGEMENT TRADING PARTNER MGMT 7 7 3 3 Document Management Send Commercial Send Commercial Discrepancy Resolution; Discrepancy Resolution; Shipping/Logistics Payment Decision Invoice and/or Invoice and/or Payment Decision Packing List Packing List Documents Integration Module AP/AR MANAGEMENT AP/AR MANAGEMENT 5 4 4 5 Payment Approval and/or Payment Approval and/or Patented Automated Patented Automated Proof of Delivery (optional) Proof of Delivery (optional) Inspection Certificate Inspection Certificate Compliance Checking Compliance Checking 6 6 Payment Decisioning Payment Decisioning Patented Electronic Compliance: Patented Electronic Compliance: and Payment Scheduling and Payment Scheduling Logistics Service Logistics Service Compares Procurement and Compares Procurement and Buying Office Buying Office Discrepancy Management Discrepancy Management Provider Provider Fulfillment Data/Documents Fulfillment Data/Documents or Agent or Agent and Dispute Resolution and Dispute Resolution 8 8 FINANCIAL MANAGEMENT FINANCIAL MANAGEMENT Determine Value Date; Determine Value Date; A/P Visibility A/P Visibility A/R Visibility A/R Visibility Money Movement Money Movement Schedule Funds Transfer Schedule Funds Transfer Credit Protection Credit Protection Supply Chain Financing Supply Chain Financing Money Movement: Money Movement: Credit Protection: Credit Protection: Financing Banks: Financing Banks: Supply Chain Finance Supply Chain Finance Programs: Programs: •• JP Morgan Chase JP Morgan Chase •• Coface Coface  eLC  eLC •• Cathay United Cathay United ChinaTrust ChinaTrust Programs Programs •• Various Various •• CIT CIT •• Bank of Communications Bank of Communications Bank of East Asia  Others •• Bank of East Asia  Others Financing Financing 25
  • 26. Summary• In order to cope with growing global trade volumes, businesses will need to employ new technologies• Web-based technologies offer the most promising prospects in managing the many challenges in today’s trading environment• Asian economies are catching up as their governments provide better national e-commerce infrastructures as well as engaging in regional initiatives• Automated financial supply chain management provides a huge opportunity for businesses and whole economies to save costs and improve their competitiveness 26
  • 27. About TradeCard• TradeCard is recognized as the leading web-based platform that enables the global supply chain to conduct trade transactions from purchase order to financial settlement.• More than 800 corporate members have realized value from the TradeCard platform including Staples, JC Penney, Linens N’ Things, Wolverine Worldwide, Hurley International (a division of Nike), Columbia Sportswear, TAL Apparel, Phillips Van Heusen and Vans.• These customers enjoy access to a suite of innovative financial services offered by our partners JP Morgan Chase, Coface (largest provider of credit insurance), CIT and over 100 logistics firms, to move money, obtain financing, and secure credit protection.• TradeCard holds a patent for its data compliance engine which enables payment decisions by comparing electronic documents.• Backed by Warburg Pincus, Mitsui & Co., Mitsubishi Corporation and the World Trade Centers Association, TradeCard is headquartered in New York with offices in Hong Kong, Taipei, Brussels, Tokyo, Seoul, San Francisco and Shenzhen.• TradeCard is sustaining double-digit growth every month. 27
  • 28. Global Companies Using TradeCard FOOTWEAR APPAREL RETAIL 28