Report: Asia-Pacific B2B Will Top $60B Next Year

Despite a recent hesitancy on the part of e-business investors to get involved in the Asia-Pacific market, a report released Friday by IDC predicted that B2B e-commerce in the region will sell more than US$61 billion indirect and indirect materials by the end of 2002, compared to $12.8billion spent in 2000.

In addition, the report said that of the $500 billion in B2B the region expects to generate by 2005, 45 percent will occur through heavilyconsolidated e-marketplaces. Currently, e-distribution and e-procurementaccount for the majority of B2B e-commerce transactions in the Asia-Pacific region.

Richard Jacobson, the author of the report, said that it is the traditionalbrick-and-mortar companies who will provide the major impetus behind the B2Bgrowth in the Asia-Pacific region.

“Asia’s largest conglomerates are already investing in B2B solutions, which are radically changing the structure of many industries,” Jacobson said. “Amidst a backdropof sidelined investors and cautious venture capital funds, here we have theB2B e-commerce market poised to grow at a tremendous rate.”

Two-Stage Process

According to the report, massive growth in the Asia-Pacific area will takeplace over two different stages of B2B adoption.

Early adoption will be ledby large multinational corporations with operations in Asia, as well as bycompanies in the technology, manufacturing and commodities sectors.

The second evolution will consist of small and mid-sized businesses jumping into the B2B market, as well asthe increased use of e-marketplaces, the study said.

The report also said that China and South Korea are expected to bypassAustralia as the biggest B2B leaders, accounting for just under half thetotal B2B in the region by 2005, excluding Japan.

Primary Drivers

“The biggest driver of B2B adoption is the lowering of administrative costsfor buying and selling activities,” Jacobson said. “One of the key benefitsin driving the adoption of B2B is the need to reduce the cost of doing business.”

Jacobson also cited strong manufacturing and export-oriented economies askey accelerators of B2B adoption in the region.

Before the B2B boom can truly take hold, however, e-businesses in the Asia-Pacific region will have to overcome the current negative sentiment for all things”dot-com,” the report said.

Barrier Jumping

Security issues also remain a concern for Asianbusiness jumping online, and a lack of e-commerce standards could alsoinhibit the adoption rate.

In addition, Jacobson said that B2B in the region will also have to overcomepossible antitrust issues in the monopolization of e-marketplaces, as wellas the short supply of skilled IT workers in the region.

Ultimately, however, these inhibitors will be overcome to boost the region’sworldwide share of the B2B e-commerce market from 5 percent in 2000 to 12percent in 2005.

“Technology providers who ignore this market potential because of the gloomypicture painted by various merchants of doom could end up missing the boat,”Jacobson said.