Report: Asia-Pacific E-Commerce Poised for Boom

A surge in Asia-Pacific e-commerce will culminate with $1.6 trillion (US$) in transactions taking place in 2004, according to a new study by Forrester Research.

The $1.6 trillion figure will make the region a powerhouse in the overall global Internet economy, said Stuart D. Woodring, vice president of research for emerging Internet economies at Forrester. The study forecasts that worldwide online spending will reach $6.9 trillion in 2004 — giving the Asia-Pacific market more than 20 percent of total sales.

“Asia-Pacific enjoys a number of advantages that will accelerate its development as a major contributor to worldwide e-commerce,” Woodring commented, citing localized development efforts and “tight links to supply chains” in several major industries as key factors.

Already a Force

One advantage enjoyed by the region is a solid position in the supply chain that feeds the global economy, especially in the high-tech arena. For example, Forrester cites the fact that 86 percent of Singapore’s exports feed the electronics and computing industries.

As e-commerce expands, those countries supplying the raw materials for the growth will benefit. Forrester also noted increased enthusiasm among some Asia-Pacific governments to support e-commerce initiatives through infrastructure improvements.

The lion’s share of the growth will be in the business-to-business (B2B) marketplace, with $1.5 billion of the sales linked to that sector, according to the report.

Regional Disparities

The study points out, however, that development will not be strong everywhere in the region. Hong Kong is in the forefront, with low trade barriers, while India’s high taxes and China’s “weak infrastructure” are hindering the growth of e-commerce.

Still, the whole region will “benefit greatly from the efforts of several leaders,” said Forrester analyst Matthew R. Sanders.

Japan will continue to dominate the region with $880 billion in online sales in 2004, while Australia, Korea, and Taiwan will each see more than 16 percent of their total sales conducted online by that time, the report says.

Global View

Worldwide, e-commerce will make up 8.6 percent of sales of goods and services in 2004, according to the report. Just 12 countries, however, will account for 85 percent of e-business.

The United States, with online sales of $3.2 trillion, will be the leader in 2004, Forrester said, followed by Western Europe with $1.5 trillion. Latin America, which is “plagued by infrastructure deficiencies,” will see sales of $82 billion conducted online, and Eastern Europe, Africa and the Middle East will account for a combined $68.6 billion in 2004.

E-tailers Go Global

Scores of online firms have recognized the value of having a presence in the rapidly expanding Asian marketplace.

Priceline.com, for instance, announced in January that it had formed a partnership with a Hong Kong-based telecommunications company that would give it a presence in several Asian countries, including China, India, and Korea.

Also, Internet incubator CMGI sealed a deal with Pacific Century Cyber Works (PCCW) to create and run a network of Internet businesses in the Asia-Pacific region. In announcing that deal, CMGI CEO David Wetherell described Asia as “the hottest emerging market for the growing Internet economy.”

On Monday, Merrill Lynch & Co. said it would join with HSBC Holdings in a $1 billion deal to form an online financial firm that will reach into Japan and other Asian markets by next year.

Forrester Expands in Europe

Forrester itself is banking on strong Internet growth in Europe. The firm announced plans Tuesday to quadruple its European research over the next six months. Research will focus on Internet commerce, corporate technology and “technographics,” the company said.