Asia E-Commerce Deals Tap Into Big Market

A string of Asian electronic commerce initiatives kicked off in recent weeks will tap into a market headed for phenomenal growth over the next several years, according a recent International Data Corp. (IDC) report.

Cooperative efforts between U.S. and Asian companies, such as a deal announced yesterday by Hong Kong-based 'Net portal operator China.com Corp. and TheBigStore.com, may be the key to success in that market, analysts said. Other Asian e-commerce deals have been announced this week by eCommerce.com Inc., Tianrong Internet Products and Services, Xin Net, and ChinaMallUSA.com. [See "ChinaMallUSA.com Signs Up Chinese Cities," Jan. 5.]Market research company IDC expects Asian consumers to flock to e-commerce over the coming four years, projecting last year's 21.7 million users to grow to 95 million by 2004. Revenue will grow from US$2.1 billion to $86.9 billion over the same period, the recent IDC report said.

"It's almost impossible to comprehend the limits of this market," said Matthew McGarvey, an analyst at IDC Asia-Pacific, in Hong Kong.

With its venture with TheBigStore.com, a large U.S. online marketer, China.com hopes to get into that market in its early stages.

The Hong Kong-based company will jointly invest with TheBigStore and the China Commerce Development Group in a venture to set up retail e-commerce sites across Asia, Australia and New Zealand. In Mainland China, the State Administration of Internal Trade also will participate, China.com said today.

Consumers initially will reach the retail Web sites, which will carry the name TheBigStore.com Asia, through China.com's existing portals, such as China.com, HongKong.com and Taiwan.com. Together with TheBigStore, China.com gradually will roll out retail sites for many countries across the region, in local languages, the company said.

China.com will own 20 percent of TheBigStore.com Asia. According to China.com, the retail sites will be built jointly by TheBigStore.com and China.com's Web development business, The Web Connection.

Ian Henry, president of China.com's international unit, acknowledged today that the market is in its early stages and vendors will face many challenges.

"The important thing is, we are reaching a level of critical mass that will make e-commerce a reality," Henry said. "It's a long way off before we reach something like a 1999 U.S. Christmas."

The biggest potential market, Mainland China, presents a big challenge for fulfillment -- delivery and collection -- according to Henry and industry observers.

Henry said TheBigStore.com Asia will use new fulfillment methods on the Mainland, which he would not discuss in detail.

IDC's McGarvey said the company is moving in the right direction.

"It's going to take something innovative," McGarvey said, adding, "China.com has the capability to come up with something like this. They have the resources."

Such innovation is likely to be richly rewarded in China, McGarvey said. IDC's study shows e-commerce users growing to 33 million in 2004 up from 3.7 million in 1999, and revenue to $11.7 billion from 42 million in 1999.

Industry observers said cooperative ventures between U.S. and Asian companies may be the best way to serve the market. Each can play a crucial role, they added.

"Because the U.S. market is at a much more developed state, the business model there should be more mature and more functional," said Stephen McKeever, an analyst at Lehman Brothers in Hong Kong.

With U.S. partners, "Asian companies should be able to roll out their businesses more quickly than would be the case if they had to work from the ground up," McKeever said.

American vendors likewise need a helping hand in the new market in Asia, IDC's McGarvey said.

"The model being used in the U.S. can't just be imported and immediately be successful," McGarvey said. "Strategic alliances with companies on the ground here will help U.S. companies create a culturally compatible product."

U.S. vendor eCommerce.com Inc. last weekend announced it intends to join with Hong Kong-based Extant-Asia Ltd. to set up China.eCommerce.com. The multilingual portal will be focused on business-to-business and business-to-consumer transactions in Greater China, the companies said.

Also this week, Tianrong Internet Products and Services Inc. (TIPS), based in New York, announced that its Mainland China ISP (Internet service provider), Chongqing Word Technology Co. Ltd., has launched a Web site to promote businesses participating in Tianrong's Wordtech Chinese e-commerce venture. The site, http://www.cge.com.cn/, will be home to Wordtech's Mainland China merchant customers.

China.com Corp. is based in Hong Kong and can be reached at http://www.china.com/. TheBigStore.com, in Newport Beach, California, is on the Web at http://www.thebigstore.com/.

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