E-commerce faces backlash in Hong Kong

Two-thirds of internet users in Hong Kong are uncomfortable with electronic commerce, according to survey results unveiled last week by a research company that studies internet users in Hong Kong, China and Taiwan.

          Two-thirds of internet users in Hong Kong are uncomfortable with electronic commerce, according to survey results for the fourth quarter of 2000 unveiled last week by Internet Audience Measurement Asia (Iamasia), a research company that studies internet users in Hong Kong, China and Taiwan.

          Negative responses to e-commerce soared from 36% in the company's previous survey in the second quarter of 2000.

          A similar backlash has occurred in mainland China, where the negative responses grew to 41% from 20% in the second quarter, Iamasia says.

          Iamasia executives blame the backlash partly on heavy promotion of e-commerce last year in Hong Kong that built up expectations which were not fulfilled. A flurry of e-commerce startups sprang up in the territory in late 1999 and early 2000 with bold expansion plans, but the services or products they offered appear not to have been as compelling as expected. Many have ended up cutting back operations as local high-tech stocks followed the downward trend seen on the US Nasdaq exchange since April 2000.

          "There's been a huge amount of hype," said Kevin Tan, chief executive officer of Iamasia, at a news conference last Thursday in Hong Kong. "At the end of the day, the average consumer hasn't seen a reason why they should shop online."

          For e-commerce companies to nurture usage in Hong Kong, the key will be to convince new users to try it out, the researchers say. The recent expansion of online banking in Hong Kong may be a way to introduce more internet users to e-commerce.

          Some 66% of internet users in Hong Kong are either "uncomfortable" or "very uncomfortable" with e-commerce, Iamasia found. In the same period, 41% of internet users in urban mainland China gave those responses. Figures from the third quarter of 2000 in Taiwan showed 35% expressed these negative opinions.

          In fact, 73% of all Hong Kong internet users say they are not likely to use e-commerce in 2001.

          However, most users who have tried e-commerce have not been permanently turned off by the experience, the researchers say. Previous e-commerce users are far more likely than other internet users to use e-commerce during the coming year -- 58% say they are "likely" or "very likely" to make online purchases in 2001, Iamasia says.

          Among other results unveiled, Iamasia estimated there were 15.2 million internet users in urban mainland China in the fourth quarter, and approximately 2.2 million in Hong Kong.

          The number of internet users grew an estimated 15.4% in mainland China's cities in the quarter, a robust rate but markedly lower than growth rates claimed in some other reports. The official China Internet Network Information Center, for example, estimated in July 2000 that the number of internet users had grown 89.8% in the first six months of the year.

          However, in China's largest cities, the percentage of internet users is now in the same range found in most of Europe's large cities, says Louis Boswell, chief operating officer of Iamasia. In Beijing, for example, 23% of residents were internet users during the quarter. Internet penetration in Hong Kong was 34% in the survey, and Taipei had reached 39% in a third-quarter 2000 survey.

          Meanwhile, the penetration of e-commerce in China reached 10% in the quarter, an impressive number considering barriers to fulfillment in the country such as the small percentage of Chinese with credit cards, says Boswell.

          "The fact we have 10% in China is, to be quite honest, very encouraging," Boswell says. Figures from Taiwan in the third quarter showed the same percentage of use. By contrast, the 13% rate of e-commerce use in Hong Kong is less encouraging considering the number of e-commerce sites here and the less formidable barriers to use, he addsd.

          According to the same survey, the rapid growth of broadband availability in Hong Kong has made it the second-largest site for broadband use in Asia, behind South Korea. In the fourth quarter, 28% of internet users in Hong Kong used broadband access, Iamasia reports.

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