Without a doubt, e-business can thrive in Hong Kong. However, a wholesale import of the North American e-business model will not succeed in the city. A successful e-business strategy requires a thorough understanding of physical environment and consumer behaviors in Hong Kong. The potential USD 70-billion transactions of e-business will concentrate on the B2B sector and the traditional sectors that shape the trade-orientated Hong Kong economy.
Analysis
A research indicates that the value of e-business transactions will grow from USD 2 billion in 2000 to USD 70 billion in 2004 in Hong Kong. The major portals in Hong Kong are AOL, Chinatone channel, Hong Kong Enterprise Directory, Hong Kong Internet Directory, Hongkong.com, Microsoft Network, Search Union, Sina, Timway, Tom.com and Yahoo. (23)
The July 2002 Economist Information Unit ranks readiness for e-commerce in the Pacific Rim Countries Country Index:
Australia
8.30
Singapore
8.17
Hong Kong
8.13
New Zealand
7.67
Taiwan
7.26
Korea
7.11
Japan
6.86
Thailand
3.86
China
3.64
Philippines
3.72
Indonesia
3.29
Vietnam
2.96
Hong Kong B2C eCommerce
Profile
June 2002
Percentage of total population
who are Internet users
Year 2000 = 42%
Year 2001 = 43%
Year 2002 = 50%
Male = 54%
Female = 46%
Most popular place of
use
At home
Online Shoppers
4% of total population
8% of Internet Users
Products bought Online
- Top 3
1st Tickets to theatre
2nd Books
3rd Music CDs
Main reason for not buying
online
Do not want to give credit
card details online
77% of respondents total
online purchases or orders made in the last 4 weeks are between USD$1 and
USD$100
Source: TNS Interactive
Around three quarters of the Hong Kong adult population own at least one credit card; credit cards hence form the backbone B2C e-commerce payment mechanism. While the forecast for B2B e-commerce growth in Hong Kong appears to be optimistic, there are several obstacles to the growth of B2C e-commerce in Hong Kong due to the demographic and cultural make-up of the city. Only 10 percent of the USD 601 million spent online was spent in the B2C sector in 2000. In the densely populated urban environment of Hong Kong, web shopping simply cannot compete with the physical proximity and long business hours of retail shops. (24) Brick-and-mortar businesses habitually offer speedy and often free delivery services. High property price will create tremendous pressuring on warehousing costs.
Such physical environment, on the other hand, promotes the popularity of Octopus e-cash in Hong Kong. The 8.6 million cards in circulation generate annual transactions of USD 2.2 billion in 2001. Meanwhile, many small & medium companies in Hong Kong still treat the Internet as a sole marketing channel. In sum, the physical environment, rather than other factors, such as the regulatory regimes, hinders the growth of the overall e-commerce sector. Notwithstanding, the prospect of online grocery shopping, brokerage, gambling and auction can be promising because the Hong Kong population’s obsession with timesaving, bargain-hunting and gambling. (25)
The specialty of major B2B websites from Hong Kong represents sectors important to the economy of the city. Alibaba.com, busytrade.com, asiamaterials.com, jewellerynetasia.com and shuion.com are specialized in manufacturing, jewelry and construction materials. (26)
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