HONG KONG — The new economy taking shape in Asia is growing more rapidly than it is in Europe but will be dominated by old capital — established bricks-and-mortar companies taking their wares to the Web.
That’s the consensus of American and European on-the-ground researchers from Deutsche Bank, IDC, the Gartner Group and Arthur Andersen who keep an eye on e-commerce developments in the region.
Singapore-based Sidney Lim, an Arthur Andersen director, expects e-commerce to grow 154 percent in Asia this year compared to 66 percent in the US, and while percentages don’t reflect gross numbers he said Singapore and Hong Kong were already growing faster than Europe.
But he warned that e-commerce is developing on a different track in terms of business models, logistics and payment modalities, and that established conglomerates would be pulling Asia’s e-commerce strings.
Dot.com start-ups grew like mushrooms across Asia last year in an effort to profit from the IPO fever on leading stock exchanges. Too many business models, however, were “soft as wax,” Lim said.
The Gartner Group agreed, predicting in a recent study that within three years 85 percent of all pure dot-com companies would go bankrupt or be bought up by multinationals.
Antonio Tambunan, who runs Internet research for Deutsche Bank, Germany’s largest and a global financial player, said traditional enterprises with established brands and a solid client base were best prepared for the Web. He called them, half in jest, “dot-corps.”
Internet sales to consumers, Tambunan and other analysts agree, will grow much more slowly than Web-based BTB due to lack of massive purchasing power, fragmented markets, a babble of languages and logistics and payments problems.
Credit card penetration is still low and Asians are even more reluctant than Europeans to give out credit card information online. Concerns about Web security are a major reason online banking in Asia hasn’t gotten off the ground.
Tambunan also argues that Asia does not have a mail order buying tradition, largely because shopping with friends is a favorite leisure-time activity. Even worse, he said, was the frequent impossibility of delivering goods to outlying areas.
He predicted that consumer sales of goods and services in the Far East, excluding Japan, would total $30 billion in 2004 compared to $1.2 billion that were sold last year.
BTB is more promising, largely because many large Asian enterprises have proved amazingly adaptable to the new technology, Tambunan said. “Some companies are adapting faster to the digital future than Western competitors,” he said.
Still, even if the Gartner Group’s prediction of BTB sales in Asia over the next five years — more than $1 trillion by 2004 — proves correct, Asia’s share of BTB Web sales would only be 14 percent of the total.
That might change once populous Southeast Asian markets get on line, specifically Indonesia, Thailand and the Philippines. But that’s not likely in the near future. Prospects are best in Japan, Korea, Taiwan, and Hong Kong.