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Presentation on
“Impact of ESD on e-Commerce Development in Hong Kong”
Friday December 10 1999
Mrs Jessie TING, Deputy Secretary
for Information Technology and Broadcasting
Potential of e-Commerce
A new wave of economic transformation is coming ...
“… in five years’ time, all companies will be
Internet companies, or they won’t be companies
at all ...”
Andrew Grove, Chairman of Intel
“… the storm that’s arriving is when thousands
and thousands of institutions that exist today seize
the power of this global computing and
communications infrastructure and use it to
transform themselves. That’s the real
revolution ...”
Louis Gerstner, Chairman and CEO of IBM
“… in e-Commerce, the big won’t beat the small but the fast will beat the slow … ”
John Chambers, CEO of Cisco Systems
Potential of e-Commerce
The potential is huge...
Internet Commerce
3.5
3
Global High
2
Global Low
1.5
US total
1
0.5
Year
2003E
2002E
2001E
2000E
1999
0
1998
$trillion
2.5
• No. of Internet users worldwide
has exceeded 171 million, out of
which 27 million are in Asia
• Value of world e-commerce
sales forecast to exceed
US$1,800 billion annually by
2003
• Locally, value of electronic
transactions estimated at
US$142 million in 1999 and
forecast to reach US$ 2.4 billion
by 2003
Characteristics of Successful e-business
An example - Cisco Systems
• Demand chain - comprehensive
customer support, extensive
product information, online
problem solving tools, networked
commerce applications
• Supply chain - allows agents to
handle business online
• Result - 80% of customers and
partners query handled online;
55% of order passed through the
system without manual
handling; 1999 e-Commerce
revenue reaches US$10 billion
Characteristics of Successful e-business
An example - Charles Schwab
• 24-hour access to trading and
investment information
• Full range of services online
• technical infrastructure to
handle volatile transaction
volume
• Result - more than 1 million
online accounts, 39% of trades
are online, 50% market share of
US online brokerage business
• Catalyst to change - Merrill
Lynch to follow suit
Characteristics of Successful e-business
The keys to successes are...
• As a business (Cisco Systems and Charles Schwab)
• Rich and value-added content
• Customer centric provision of service
• As an economy
• A population who understands and accepts the new
technology and the new mode of business
• Excellent telecommunication and IT infrastructure easy channel of access
• Easy means of electronic payment
• Legal certainty and secure environment
Characteristics of Successful e-business
A local example, Netvigator
• Business-to-Consumer portal Full range of services and
information including financial
services, entertainment, news,
technology, sports, travel,
education, shopping, etc.
• Business-to-Business portal full range of services and
information including financial,
trading, insurance, IT,
professional, etc.
• Result - one of the largest portal
site in Hong Kong
Characteristics of Successful e-business
A regional example, Sohu 搜狐網
• A portal for Chinese - Full
range of services and
information targeted for
customers in Mainland
China
• Vision - Huge opportunities
for Chinese Language
Internet Content Providers
• Result - one of the largest
portal sites in Mainland
China, with daily hit rate of
4.5 million
Hong Kong’s Advantage
Core capabilities of Hong Kong in e-Commerce development
Fast acceptance to new technology
Diligent and hardworking
Innovative and adaptive
Pro business environment
Government’s commitment
to IT development
Sound legal system
Low tax rate
Business Environment
Culture
Increasingly IT literate
labour force
Capability
Geographical and
linguistic advantage
Skills
Communication
Infrastructure
World class telecommunication
infrastructure
Information Infrastructure for the conduct
of e-Commerce
Possible Access Means
Content Provider
Certification
Authority
Internet
Appliances
Personal
Computers via
the Internet
ESD Service
Provider
-Government
departments
-Public agencies
-Businesses
Financial
Services
Provider
Public
Information
Kiosk
Smart Phone
(Public Telephone
with Interactive
Interface)
Drivers of ESD
Impact of ESD on e-Commerce development in Hong Kong
What we need
Deliverables of ESD
˙ Infrastructure for the
conduct of e-Commerce
˙ Provide an open and common
infrastructure for the conduct of eCommerce
˙ Quality and efficiency in the delivery
of public services
˙ Seamless delivery of services under a
citizen centric approach
˙ Promote the use of the Internet and
electronic means
˙ Legal framework and certification
services
˙ Internet and other electronic means
to ensure ubiquitous accessibility
˙ Available 24 hours a day 7 days a
week
˙ Rich content for user
˙ Nurture e-commerce
savvy community
˙ Access channels
Why a common infrastructure for e-Commerce?
Problems commonly faced by companies in adopting e-commerce
• Lack of technical expertise
• Huge capital investment
• Problem exists for both large and small organisations
Database
System analysis
Network
Server
Security
Internet Service Provider
Web design
Certification Authority
Data Centre
Management
Technical Issues
Business Issues
Marketing
of web site
Helpdesk
Support
Training
Financial
Institutions
Financial
Institutions
Business Model of ESD
ESD Operator - a provider of e-Commerce services
Core
Capabilities
• Provide the complete information
infrastructure for the conduct of eCommerce
Competitive
Advantage
• Economies of scale (bulk purchase of
hardware, software and manpower,
negotiation power with Financial Institutions
and Certification Authorities)
Deliverables
• Integrated solution
• Value-added services (Directory services,
marketing, help desk support, training)
• User-friendly portal interface to end-user
Business Model of ESD
Content provider - no need to build its own infrastructure
Core
Capabilities
• Its own business - utilities, manufacturing,
trading, education, retail, media, whatever…
• Provision of rich and valuable content
Competitive
Advantage
• Obtain e-Commerce capabilities at
affordable price
Deliverables
• Enrich content of the portal site and arouse
interest of the end customer
Business Model of ESD
Government - Two goals achieved
Government as • Common and open information infrastructure
content
for the Government. Individual departments do
provider
not need to face the same problem as the SMEs
Government as • Common and open information infrastructure
facilitator of efor the whole community, empower the SME to
Commerce
switch to e-Commerce
Objective
• A model for other electronic transaction
intermediaries.
Our ESD Operator
Front end and back end development
• ESD Operator selected from private
sector through open tender
• Contract was awarded to Timbo Star (a
joint venture of Hutchison
Communications Ltd. & Compaq
Computer Ltd.) in November 1999
• Back end system to be developed by
ITSD with outsourced contractors
• Finance Committee has approved
funding of $123 million in December
1998
• Phase I to be launched in October 2000
Our ESD Operator
A consortium with strength in both technical and business arena
Hutchison Whampoa Limited
Hutchison Telecommunications
(Hong Kong) Limited
Compaq Computer Corporation
Compaq Computer Limited
Timbo Star Investment Limited
Strategic Partners:
Financial Institutions:
Our ESD Operator
Financial Infrastructure for the conduct of e-Commerce
Market Share of
Electronic Payment in Hong Kong
Visa
Mastercard
AMEX
Diners
EPSCO
JETCO
• Debit payment
EPS and JETCO
• Credit payment
Visa, MasterCard, Diners
• Smart card payment
Visa Cash
• Additional security features
SET (Secure Electronic Transactions)
SSL (Secure Socket Layer)
• This will capture over 90% of the
electronic payment market in HK
Our ESD Operator
HutchCity and HutchBusiness
• Business-to-Consumer portal Newsline, Financial Centre,
Information Technology, Leisure
World, Entertainment, Sports,
Employment Service
• Business-to-Business portal Facilities Management, Internet
Access, Web Hosting, Web
projects
• Opportunity - Government as one
of the largest content providers
Services of ESD
Phase I of ESD includes a wide range of services of 10 departments
and public agencies.
Services of ESD
• Channel Type approach will be adopted
to provide user friendly services, e.g.
• Citizen Channel
• Business Channel
• Tourist Channel
Services of ESD
Life Event Approach
• Moving home - change of address in one go
• Transport Department
… as a driver or vehicle owner
• Inland Revenue Department
… as a taxpayer
• Registration & Electoral Office … as a registered voter
• Rating & Valuation Department
… as a rate payer
• Reaching 18
• Immigration Department …registration for identity card
• Registration & Electoral Office
…register as a voter
• Transport Department
…obtaining driving license
Wider Access to ESD
Wider access to ESD
• Community Cyber Point
• public computers at District Offices,
community halls/centres, public
libraries
• Access for visually impaired persons
• screen enlarger software, power
braille, voice synthesizer
• Public Information Kiosks
• 100 kiosks at convenient public
locations
ESD Associated Initiatives
• Electronic Transactions Bill
• Public Key Infrastructure
• Common Chinese Language Interface
• Interactive Government Services Directory
Summary
•E-Commerce has huge potential
•ESD as a tool to foster the development of ECommerce in Hong Kong :
– ESD as an infrastructure for the conduct
of e-Commerce
– Government as a content provider and
active participant in e-Commerce
– ESD to provide adequate delivery
channels for access to e-Commerce
– ESD to nurture a e-community
Thank you