Opening Address by Mrs. Carrie YAU, J.P., Secretary for Information Technology and Broadcasting at the Global SCM Enabling Technology Conference "Embracing Technologies for Supply Chain Efficiency" on 26 June 2002

"E-SCM developments in Hong Kong"

June 26, 2002

Mr. Au, Distinguished Guests, Ladies and Gentlemen,

I am delighted to deliver the opening address at the Global SCM Enabling Technology Conference. Electronic supply chain management, or e-SCM in short, is a key development in Hong Kong both now and in the coming years. I am glad that we have the valuable opportunity this morning to learn more from our expert speakers and to exchange ideas about this fascinating area of e-commerce development.

2. E-SCM is becoming a "hot" subject in the business community. It is not just about technicalities, but about how we smartly use information technology to conduct business with our partners and customers along the supply chains of goods and services. Businesses using this new mode of operation can reap concrete benefits which I can put as the five "E"s:

• Exposure - promoting goods and services online to get wider market exposure and to develop new business opportunities;
  
  
• Efficiency - integrating production and other business processes using web technology to drive efficiency;
  
  
• Enhancement - providing faster and innovative services to enhance quality and standard;
  
  
• Ensuring - monitoring production cycles to ensure that targets, timetables and performance pledges are met; and
  
  
• Expansion - connecting to enterprises and customers all over the world to expand business networks.

3. Businesses in Hong Kong have great potential to ride on this e-SCM revolution. Hong Kong, with our strong service culture and world-class business environment, is best placed to become a key enabler in the global supply chain. But how do we achieve these goals? What we need are an advanced infrastructure, a clear strategy and a dynamic business sector. And I would like to give you an overview of where we stand in Hong Kong which supports our drive forward.

4. In terms of infrastructure, Hong Kong is one of the leaders in the world. We are also an early adopter and mature user of IT:

• 60% of our households have installed personal computers;
  
  
• 50% of our households are connected to the Internet;
  
  
• Our broadband network reaches all commercial buildings and over 95% of households. One third of our households are using broadband service;
  
  
• Nearly 40% of our businesses use Internet in their operations, of which over 30% are using broadband.
  
  
• There are over 2.6 million Internet accounts for a population of around 6.8 million;
  
  
• Our Internet services are among the cheapest in the world. For dial up service, it costs less than HK$1.6 per hour; and for broadband service, it can be less than HK$200 per month for unlimited usage;
  
  
• Our external connectivity is amongst the highest in Asia, at 900 Gbps, a 20-fold increase since 2000;
  
  
• 86% of people aged 15 or above have used e-business services;
  
  
• 85% of our population have mobile phones;
  
  
• We are one of the first in Asia to introduce GPRS service. We have also issued 4 licences for the third generation mobile services which are expected to be rolled out in 2003;
  
  
• E-payment is widely adopted in Hong Kong. There are over 8.5 million e-payment smart cards in circulation. This means more than one smart card per person on average; and
  
  
• Over 600, 000 citizens are online banking service users.

5. Our world-class information infrastructure provides the crucial support for IT adoption in business operations. The increasing diffusion of IT in our community also creates the drive and market for businesses to roll out value-added services online.

6. Apart from building the necessary infrastructure, we also need to adopt the right policies to drive our IT development. We promulgated the 2001 Digital 21 IT Strategy last year to position Hong Kong as a leading e-business community and digital city in the globally connected world. The Strategy sets out five key result areas which we will focus on:

• enhancing the world class e-business environment;
  
  
• building E-government;
  
  
• developing our IT workforce to sustain the growth of the economy;
  
  
• building a digitally inclusive society; and
  
  
• exploiting enabling technologies.

7. Under the Strategy, we have made significant achievements which contribute to driving the development of e-SCM in Hong Kong.

8. On legal infrastructure, we enacted the Electronic Transactions Ordinance in January 2000 to give legal recognition to electronic records and digital signatures, thereby providing a clear legal framework for the conduct of electronic transactions. We are now reviewing the Ordinance to ensure that Hong Kong has the most up-to-date legal framework for the conduct of e-business.

9. Security is a major concern in electronic transactions. We have established a local public key infrastructure. There are now four certification authorities recognised under the Electronic Transactions Ordinance in Hong Kong, providing authentication services for the conduct of secure electronic transactions. We are also the first economy in the world to issue mobile digital certificates for community wide adoption. We can now make use of our PDAs (personal digital assistants) for wireless stock trading in a secure manner. Other applications in the pipeline include mobile banking and wireless betting, and the use of mobile digital certificates will soon be extended to cover mobile phones as well.

10. The Hong Kong Government itself is an enterprise with great potential for adoption of IT and e-SCM technologies. We have promulgated a comprehensive E-government strategy and embarked on various E-government initiatives. At present, over 70% of the public services amenable to the electronic mode of service delivery have already provided an e-option. Our target is to raise this level to 90% by end 2003. Our major E-government flagship project is the Electronic Service Delivery Scheme, which is a one-stop portal providing integrated public and commercial services online. It has won the internationally acclaimed Stockholm Challenge Award which clearly demonstrates international recognition of our achievement in driving E-government. Hong Kong is also ranked amongst the top in the world as well as in Asia in terms of E-government development.

11. Some major E-government projects are good examples of adoption of e-SCM technologies. For instance, we have developed one of the world's first ever web-based electronic tendering systems which enables us to issue Government tenders and receive bids securely via the Internet. According to the "State of the Internet Report 2001" issued by the United States Internet Council, Hong Kong is leading Asia in terms of online procurement. We have also declared the target to carry out 80% of Government procurement by electronic means by end 2003.

12. Our dynamic business sector is very responsive to all these new service developments. Riding on the solid foundation we have built for e-business development, our businesses, be they conventional or uprising, manufacturing or service-oriented, big or small, have started to explore the adoption of e-SCM technologies. Major players in the market have already developed portals for providing online trading and logistics services. At the same time, we also witnessed successful adoption of IT by small and traditional businesses. For instance, small food shops have established websites to receive take-away orders and promote their service. Traditional vegetable wholesalers in the Cheung Sha Wan Vegetables Wholesale Market now receive purchase orders and issue payment requisitions over the Internet. Small photo finishing shops at the street corner receive digital photo images from their clients through the Internet and deliver customised photo finishing service online. The public now enjoy more choices and convenience through the use of technologies, and businesses can reduce cost and enhance efficiency. This is all about better services and more innovation and creativity through the supply chain.

13. Looking ahead, Hong Kong will have a strategic role to play in the global supply chain. With our excellent connectivity with the Mainland of China and the rest of the world and our competitive edges in providing business support services, Hong Kong is best placed to be an e-entrepot for online services along the global supply chains. With China's entry to the World Trade Organization, there is great potential for Hong Kong to provide value-added e-services to enhance the efficiency of goods and service delivery to and from the Mainland.

14. In respect of goods delivery, one of our focuses is to drive e-logistics development. Various E-government projects have been launched in this area. Major kinds of trade-related documents can now be submitted electronically. Within this year, we will be able to go complete paperless for the submission of manifests for air, sea and rail cargo. We are studying a similar system for road cargo. Our business sector is also responding very quickly by developing e-logistics services which aim not just to integrate internal operations, but link up with supply chains of partners in the Mainland and overseas.

15. Convergence of media and technology will be key to future e-SCM developments. Effective exchange and sharing of information through interoperable networks over a wide range of devices will free supply chain operation from all traditional barriers. Our advantages in having an advanced mobile telecommunications network, including the third generation mobile service soon to be rolled out, will make Hong Kong a potential global leader in this area.

16. Furthermore, the Government is actively helping SMEs to adopt IT and to use e-SCM to enhance their operation. Recently, the SME Development Fund has disbursed over $21 million to fund various industry support projects to help SMEs move up the technology ladder. This no doubt helps drive the adoption of IT and development of e-SCM in Hong Kong.

17. In conclusion, the Government is firmly committed to driving e-SCM development in Hong Kong. We will continue to work with support organizations like the Hong Kong Article Numbering Association, so that e-SCM adoption can flourish in Hong Kong. But we need the concerted efforts of all stakeholders to make this successful, and today's conference represents a major step forward in this important initiative. Finally, I would like to take this opportunity to thank our host and speakers today for organising this conference and for providing us with such a valuable opportunity for exchange of ideas and experience. Thank you.

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