Electronic commerce, the driving force for economic growth

October 8, 1999

The potential market that electronic commerce can generate in cyberspace is enormous and there is little doubt that it will be the driving force for Hong Kong's future economic growth. Businesses that ignore this trend risk obsolescence.

This view was aired by the Secretary for Information Technology and Broadcasting, Mr K C Kwong, when addressing the "Symposium on Applied Research and Development : Enhancing Global Competitiveness in the Next Millennium" at the City University of Hong Kong today (Friday).

Mr Kwong said the rapid development of electronic commerce had been spurred by the exponential growth in the use of the Internet, and was transforming the way in which business was conducted.

He said, "By leveraging on the latest advances in information technology, telecommunications and multi-media content creation, electronic commerce enables businesses to become more adaptive and responsive to changes in market conditions.

"It also allows them to develop markets globally and more effectively, facilitates their targeting of customers on a localised or even individualised basis, and helps them to improve their management of the entire value chain.

"This means that direct purchases from suppliers or direct marketing of products and services to end consumers is now a lot easier and simpler through electronic commerce over the Internet."

Looking at the issue from a global perspective, Mr Kwong said Internet users worldwide had grown from 40 million in 1996 to more than 100 million in 1997, and are expected to increase further to 150 million by the end of 1999.

And according to industry estimates, the total value of business conducted over the Internet will increase from US$200 billion in 1998 to US$1 trillion by 2002/3, representing a growth rate 40 times that of the global GDP.

"The potential market that electronic commerce can tap in cyberspace is thus enormous," Mr Kwong said, citing the successful stories of many companies, most notably those in the USA, which were quick to capture the new business opportunities in electronic commerce. They include Yahoo!, Amazon.com and eBay which have emerged from practically nothing to become well known household names in a matter of a few years. Dell Computers, the first to establish itself firmly in cyberspace as a supplier of computers, is now the world leader in that market.

This new mode of business operation has also been usefully adopted by some conventional companies, such as Pitney Bowes, the world's largest manufacturer of postage meters, Boeing and Federal Express.

Turning to Hong Kong, Mr Kwong said the number of Internet users had now exceeded one million and the number of Internet users making purchases on-line increased by 50% during the past 12 months. Industry estimate also suggests that the total value of products and services transacted over the Internet in Hong Kong will increase from US$60 million in 1998 to US$1.3 billion in 2002, and to US$2.4 billion in 2003.

The forecast growth in electronic commerce in the Mainland of China is equally impressive - from a minuscule US$8.1 million in 1998 to US$3.8 billion by 2003.

He said the Government, fully recognizing the importance of electronic commerce in driving Hong Kong's future economic growth, had a firm and committed policy to provide a favourable environment for this development to thrive and flourish in the territory.

In this respect, the Government has taken a number of initiatives to promote electronic commerce -

* establishment of a public certification authority through the Hongkong Post to provide a safe and secure environment for the conduct of electronic transactions;

* introduction of an Electronic Transactions Bill into the Legislative Council in July 1999 to give electronic records and digital signatures used in electronic transactions the same legal status as that of their paper-based counterparts;

* launching of the Electronic Service Delivery Scheme which aims not only to provide more efficient and better quality public services to the community, but also to encourage the community to accept electronic commerce as an integral part of their daily lives; and

* working with various trade and industry support bodies and professional organizations to stage various promotional and publicity programs to enhance public awareness of the importance of electronic commerce.

"All these are part of our efforts in promoting electronic commerce, and you can look forward to the Government further stepping up its efforts in this important area in the year ahead," Mr Kwong pledged.

As he sees it, the development of electronic commerce offers a clear opportunity, not a threat, to businesses.

He called on the community, businesses and academia to work hand in hand with the Government to ensure that Hong Kong could take full advantage of what the development of electronic commerce would bring.

- END -