eCommerce
Background Electronic commerce (e-commerce) is going to have a profound effect on the Government, the industry and the community on the way people live and work. The Internet offers a convenient means for e-commerce activities as transactions can be conducted almost anywhere and at anytime the user wants. E-commerce can occur at any stage of the supply chain, whether within an organisation, between businesses, and between businesses and consumers. The major barrier for the wider adoption of e-commerce is on the concerns about security and the protection of personal data when transactions are conducted over the Internet. The presence of supporting infrastructures is extremely important to address the identities of the parties involved, the integrity and confidentiality of the information transmitted, and the non-repudiation and legal status of the electronic transactions. The Government has built an Electronic Service Delivery (ESD) Infrastructure to enable the community to obtain public services through the Internet and other electronic means. Private companies can also make use of the Infrastructure for the conduct of e-commerce. To instill public's confidence on the use of electronic transactions, the Government has taken the lead to establish a public Certification Authority through the Hongkong Post. The Hongkong Post has established a Public Key Infrastructure. Through the use of digital certificates and the public/private keys mechanism, security and integrity of transactions conducted over the Internet can be ensured. The Government is also providing a legal framework through the Electronic Transactions Ordinance to enhance certainty and security in the conduct of electronic transactions. The Ordinance seeks to give electronic records and digital signatures used in electronic transactions the same legal status as that of their paper-based counterparts. The other main objective of the Ordinance is to establish a framework which will promote and facilitate the establishment and operation of Certification Authorities in Hong Kong. A whole series of promotion and educational programmes have been launched to enhance the awareness of the public and local enterprises on the use of e-commerce. The Government has been promoting ESD through roving shows, exhibitions and the launching of a simulation software to provide hands-on experience for the public.
Industry support organisations such as the Hong Kong Productivity Council (HKPC), the Hong Kong Trade Development Council (HKTDC), the Hong Kong Article Numbering Association (HKANA) are actively helping SMEs through organising seminars, training and workshops as well as providing business and technical advisory services and e-commerce solutions. Please also visit our SME Corner for the services provided by these organisations. E-Commerce Introduction Preparation for setting up E-Commerce Setting up E-Commerce through Internet Related Information Introduction How does E-Commerce create business opportunities In the 21st century, the rapid development of information technology and the rapid increase in information exchange have brought new drives and innovative ideas to the whole society. The wide adoption of information technology by the community has led to great changes. These changes are not simply in the context of data processing or computing. They are changes which affect how we communicate with each other, how we organise our daily activities, how we educate the younger generation, and how we run business. The development and wide adoption of information technology, computer network and Internet have transformed the mode of operation of many businesses, and at the same time have brought along unprecedented business opportunities. Businesses are now able to conduct transactions across geographical boundaries, across time zones and at a high efficiency. E-Commerce has become the market trend of the Century. What's E-Commerce? E-Commerce is doing business through electronic media. It means using simple, fast and low-cost electronic communications to transact, without face to face meeting between the two parties of the transaction. Now, it is mainly done through Internet and Electronic Data Interchange (EDI). E-Commerce was first developed in the 1960s. With the wide use of computer, the maturity and the wide adoption of Internet, the permeation of credit cards, the establishment of secure transaction agreement and the support and promotion by governments, the development of ECommerce is becoming prosperous, with people starting to use electronic means as the media of doing business.
Benefits of E-Commerce As computer network facilitates information exchange in a speedy and inexpensive way, Internet now penetrates into almost every corner of the world. Small and medium sized enterprises (SMEs) can forge global relationships with their trading partners everywhere in the world. High-speed network makes geographical distance insignificant. Businesses can sell goods to customers outside traditional markets, explore new markets and realize business opportunities more easily. SMEs who cannot afford establishing overseas offices and strongholds can now increase their exposure to every corner of the world. Businesses can gather information on products, buyers and competitors through Internet so as to increase their own competitiveness. Businesses can maintain their competitive advantage by establishing close contact with their customers and consumers at anytime through Internet by providing the latest information on products and services round the clock. On the other hand, data can be updated at anytime, eliminating the problem of out-dated information. Internet provides companies with many markets in the cyber world and numerous chances for product promotion. Besides, relationships with buyers can also be enhanced. By the use of multi-media capabilities, corporate image, product and service brand names can be established effectively through the Internet. Detailed and accurate sales data can help to reduce stock level and thus the operating cost. Detailed client information such as mode of consumption, personal preferences and purchasing power, etc. can help businesses to set their marketing strategies more effectively. Types of E-Commerce Electronic network within the company: through Intranet, people can exchange and handle business information internally. Business-to-Business (B2B) E-Commerce: amongst all other types of E-Commerce, this way of doing business electronically through Internet or Electronic Data Interchange is the one deserves the most attention. As estimated by Forrester Research, B2B E-Commerce will
grow at a rate three times that of Business-toConsumer E-Commerce and thus has the greatest potential for growth. Business-to-Consumer: businesses provide consumers with online shopping through Internet, allowing consumers to shop and pay their bills online. This type of offering saves time for both retailers and consumers. Consumer-to-Consumer: consumers can post their own products online through some agent websites for other consumers to bid. Government-to-Citizen: among various kinds of services provided by governments, many of them can be done through electronic media. Providing public services electronically not only provides citizens time-saving and high-quality services, but also improves efficiency and cost effectiveness. Besides, the move can also promote the development of E-Commerce. The Government of the Hong Kong Special Administrative Region has launched the Electronic Service Delivery (ESD) Scheme on Internet in December 2000, providing more than 60 kinds of services round the clock. These services include payment of government bills, filing of tax return, voter registration, renewal of driving and vehicle license, change of personal address etc. For details, please visit http://www.esd.gov.hk. Government-to-Business: this mode of trading often describes the way in which government purchases goods and services through electronic media such as Internet. The Government of the Hong Kong Special Administrative Region has launched the Electronic Tendering System (ETS) in April 2000. This system is an infrastructure to provide online services such as registration of suppliers, tender notification, download facility for tender documents, enquiries handling, submission of tender proposals and announcement of tender results. For details, please visit http://www.ets.com.hk.
Preparation for setting up E-Commerce Questions to ask before you go for E-Commerce What is your objective of setting up E-Commerce? The objective of setting up E-Commerce in your company directly affects the scope and investment of developing an E-Commerce solution. Normally, you want to setup E-Commerce in your company for the following reasons: To build up corporate image
To advertise and promote your products and services To enhance your customer relationship by providing latest information and enquiries services To receive orders in electronic form To make online transactions through Internet To establish electronic connection with your business partners in order to streamline the business flow To what extent do you want your company to adopt E-Commerce? Have e-mail accounts for your company and staff You can receive general enquiries and orders electronically. Have a website for your company You can promote your company image and products through Internet. Have a website and process online transactions and payments You should consider much more thoroughly on your ECommerce solution, e.g. you should consider the payment method of online transactions, the security control mechanisms etc. To establish electronic connections with your business partners by the use of Electronic Data Interchange (EDI) You can employ electronic means for ordering, purchasing and administration using EDI with other companies. How much you have to invest? How much will you invest on E-Commerce initially Regardless on whether you do it in-house or outsource the project to an IT contractor, the initial investment will include purchasing hardware and software, leasing a communication line and building a computer network, applying for a domain name, development costs for designing your website, integration services etc. Recurrent cost for your E-Commerce system Other than communication line cost and maintenance costs for hardware and software, you have to prepare for the cost involved in maintaining your website and computer systems. Besides, you need to prepare for paying your technical staff or outsourced IT contractor. How to establish security control mechanisms? The level of security is also a consideration. You should protect your system against hacking and virus attack. Firewalls, intrusion detection systems, virus scanning software can be used. Besides, some security measures such as keeping your user IDs and passwords secret, changing your password regularly, etc. should also be adopted.
Higher level of security is expected for payment transactions. If you want to obtain customers' personal information online, secure transfer and storage of data should be ensured. A data privacy statement should also be published. What kind of technical issue you have to consider? The existing hardware in your company The existing software in your company Do you know the technology required for setting up ECommerce? Does your company have sufficient technical staff to support the setting up and maintenance of E-Commerce? If you don't have the necessary technical staff in your company, outsourcing the implementation to an IT contractor will be a good choice. Setting up E-Commerce through Internet Connecting to Internet To get connected to Internet, you need to acquire the service from an Internet Service Provider (ISP). You can choose an ISP with service plan best suiting your needs. In terms of connection method, you can choose either dial-up or broadband connection. Dial-up connection is slower but costs you less money. In any case, your ISP will provide the necessary facilities for you to connect to Internet. ISPs will also provide you with a number of e-mail accounts to enable you to communicate with your clients and/or business partners through e-mail. Where will you host your website? If you need to setup a website to promote and/or run your business on Internet, you can host your website in the following ways: Choose a web hosting service provider: if you don't want to purchase, install, customise and take care of all the necessary hardware and software for running a website, you can outsource the task to web hosting companies. Other than the hosting services, some companies also provide a one-stop shop solution such as ISP service, web design and implementation, domain name application, etc. You run your own web server: you can also host your website using your own server provided that you have the necessary technical staff to plan and take care of all the necessary hardware and software. Apply for a domain name A domain name is an easy-to-remember name through which your company can be located easily on Internet. A good and
easy to remember domain name increases the exposure of your company on Internet and thus has better promotional effect. Design your website Being informative is one of the successful factors for running a website. Besides, you have to organise your content in such a way that your potential customers can locate their favours easily. A site-map, a good search engine and personalization capability will help. You have to keep your contents updated on a regular basis in order to retain visitors. Interactive elements in your website will attract visitors and bring in more business for you. It is advised that the website should provide a text version and/or incorporate accessibility considerations in order to cater for the needs of the visually impaired or those with slow connection to Internet. You should also consider various means of promoting your website, e.g. registering your website with Search Engines and web directories, putting banners on popular websites, and other traditional advertisement means. One final but important point: you have to respect the intellectual property rights of software. Infringement of intellectual property rights could be a criminal offense. Related Information Hong Kong Productivity Council (HKPC) The Institute of Information and Media Industries has set up the DigiHall 21 (website: http://www.digihall21.org) under which there are several specialized centres. DigiHall 21 is designed to serve the IT needs of various industries so as to enhance their ability in adopting E-Commerce. Its content and objectives are as follows: E-Commerce Centre: the centre assists industries to promote their products through E-Commerce. In addition to providing chances for local industries to meet overseas buyers, it also provides the latest market and technology information. Besides, it has set up two websites, namely Hong Kong Product On-Line (HKPOL) and Hong Kong Industry On-Line (HKIOL). HKPOL provides businesses with secure electronic transactions and fast delivery service while HKIOL provides technological development on E-Commerce and information on market trends and trade laws. Business Intelligence Centre: the centre demonstrates
how to analyse vast and complicated business data and turn them into intelligence information for better decision making and productivity enhancement. Enterprise Resource Planning Centre: enables SMEs who have joined the programme to use the computer facilities in the centre. It helps SMEs to save investment costs on computers, thus reaching the goals of cost saving and enhancement of operation efficiency. New Media Centre: serves to promote compact disc usage and digital printing and publishing. It also helps companies to promote their business more effectively. Besides, this centre also utilises its Cyber Training Studio to conduct real-time interactive cyber training. Software Industry Information Centre: provides software industry with support and market information. E-Community Centre: promotes the understanding and knowledge on information technology. Vocational Training Council (VTC) The New Technology Training Scheme, administered by the Vocational Training Council, provides assistance to companies that wish to have their staff trained in a new technology that would be useful to their business. These technologies include website design and development, local and wide area network implementation, Chinese search engine technology, etc. It is funded by interest income generated from a New Technology Training Fund established for the purpose. Hong Kong Trade Development Council (HKTDC) The objectives of HKTDC are to explore new markets for Hong Kong companies, to promote Hong Kong's products and services in the world market, to promote Hong Kong's leading role as an international business, services and information hub and to enhance Hong Kong's standing as a partner in global business and supporter of free trade. HKTDC also helps industries to use Internet to explore both local and overseas markets. HKTDC helps local companies by offering services and activities to increase sourcing and selling between Hong Kong and the world. One of its main offerings is to design services for small and medium-sized enterprises (SMEs) so as to help them to stay abreast of the latest business techniques, technologies and trends. HKTDC launched its tdctrade.com (website: http://www.tdctrade.com) with a totally new interface
in February 2000. It uses Internet and information technology to provide SMEs with market information, trade links, E-Commerce services, and online information on buyers and suppliers in the global market. It also enables users to find business links on web. Besides, it facilitates overseas companies to meet Hong Kong industries, to look for business opportunities to get into the markets in China and Asia. There are some 12,000 Hong Kong companies promoting their products and services through the online product catalog provided by TDC. Small and Medium Enterprises (SME) Information Centre This SME Information Centre is administered by the Small and Medium Enterprises Office (SMEO) of the Trade and Industry Department of the Government of the Hong Kong Special Administrative Region. The establishment of this Centre is part of the ongoing efforts of the Government to support the SMEs in Hong Kong. SMEs are provided with useful business related information including the services and facilities offered by various government departments and major industry support organisations. The ultimate goal is to help SMEs improve in competitiveness and enable them to exploit fully the benefits of the wide range of supporting services. Hongkong Post Provide digital certificate for businesses and consumers to perform transactions online. The use of Digital Certificates enables both parties of the transaction to identify one another. Boost business and consumer's confidence on electronic transaction. The HKSAR Government encourages business sector to set up its own Certification Authority and apply for voluntary recognition. Hong Kong Article Numbering Association (HKANA) HKANA provides professional support for Hong Kong industry in the areas of global electronic identification of goods and services and of open standard end-to-end supply chain communication. It encourages all sectors of industry to adopt and to benefit from E-Commerce technologies through the following supporting services: Barcode Quality Control Program: the program guarantees barcodes used by HKANA's members meet both international standards and the criteria of overseas buyers and importers. EZ*TRADE Service: it is a one-stop-shop, standard-
based electronic commerce service. It was initiated to offer a simple, low cost solution for EDI implementation Supply Chain Management Resource Centre: the centre provides library facilities, solutions seminars, etc. Useful links related to E-Commerce: Doing Business in Hong Kong - http://www.business.gov.hk Digital 21 - http://www.digital21.gov.hk/ Hong Kong Article Numbering Association (HKANA) http://www.hkana.org Hong Kong Industry Internet - http://www.hkindustry.org Hong Kong Industry On-Line - http://www.hkiol.org Hong Kong Productivity Council (HKPC) - http://www.hkpc.org/ Hongkong Post - http://www.hongkongpost.gov.hk/ Small & Medium Enterprises (SME) Information Centre http://www.sme.gcn.gov.hk Hong Kong Trade Development Council (HKTDC) http://www.tdctrade.com/ Vocational Training Council (VTC) - http://www.vtc.edu.hk/ APEC E-commerce Readiness Assessment Guide A Self-assessment on Hong Kong's Readiness for E-commerce Introduction This paper summaries the results of a self-assessment on Hong Kong's readiness in developing e-commerce by using the Asia Pacific Economic Co-operation (APEC) E-commerce Readiness Assessment Guide. Background 2. The APEC E-commerce Readiness Assessment Guide is a private sector led initiative. It is a self-assessment tool that can be used by economies, cities or communities to assess their readiness to participate in the digital economy. The assessment results will not only help governments identify actions that may need to be taken to improve their environment for e-commerce. It will also facilitate the dialogue between governments and businesses on the relevant e-commerce policies. 3. The APEC E-commerce Steering Group, which is a standing committee responsible for the implementation of the APEC Blueprint for Action on E-commerce, strongly supports this self-assessment initiative. It actively encourages its member economies to make use of the Guide on a voluntary basis to carry out the self-assessment.
4. It should be noted that the Guide provides a general framework for analysis within the economies which utilise the Guide. Its purpose is not for comparison between economies and that the results are not intended to be scored. Readiness Assessment 5. Readiness is assessed by determining the standing of the economy in the areas that are most critical for e-commerce development. The Guide contains six broad indicators of readiness for e-
commerce. They are (a) basic infrastructure and technology; (b) access to necessary services; (c) current level and type of use of the Internet; (d) promotion and facilitation activities; (e) skill and human resources; and (f) positioning for the digital economy. In the Guide, these indicators are developed into a series of questions that provide direction as to desirable policies that will promote e-commerce and remove barriers to electronic trade. Assessment Results of Hong Kong 6. Hong Kong has conducted a self-assessment on the basis of the Guide. The assessment results are set out in the Annex
. (a) Basic Infrastructure and Technology
7. The results in respect of basic infrastructure and technology confirmed that Hong Kong has an advanced telecommunications infrastructure. With the progressive liberalisation in the last few years, our telecommunications market is now characterised by open and effective competition, voluntary and industry led standards and wide consumer choices. In respect of basic telecommunications infrastructure, our network has been fully digitised since 1995. The teledensity in Hong Kong has already exceeded 55%, while over 50% of the population has access to cable. Currently, about one third of the population in Hong Kong have access to the Internet. 8. In respect of the speed and functionality of our infrastructure, broadband access is widely available. At present, our broadband network covers over 90% of the households and all commercial buildings in Hong Kong. The maximum connection speed supported by our infrastructure is 1 Gbps and the average connection speed available is 1.5 Mbps. 9. In terms of terminal equipment, our mobile phone penetration rate, currently at 69%, up from 54% a year earlier, is amongst the highest in the world. The number of personal computers at home also increased significantly over the last two years, with the penetration rate increasing from 34% in 1998 to 50% now. In addition, over 99% of our population have a television at home. (b) Access to Necessary Services 10. Internet Service Providers (ISPs) play a critical role in the provision of access to the basic infrastructure and services for content hosting. The affordability of their services has a direct effect on the penetration of the Internet. In Hong Kong, the ISP market is very competitive. There are now around 190 ISPs in operation in Hong Kong. Consumers here enjoy the choice of a wide and sophisticated range of services at competitive prices. 11. A possible area for improvement, however, is related to customs clearance of shipments entering and leaving Hong Kong. At present, the customs environment is not fully paperless. Only air cargo can be pre-cleared by electronic data interchange (EDI) through the Customs' Air Cargo Clearing System. To improve the efficiency of customs clearance of all cargo, the Customs and Excise Department is examining the feasibility of expanding the use of EDI in pre-clearance of sea and land cargo as well. (c) Current Level and Type of Use of the Internet 12. The use of the Internet has become an integral part of our daily lives in Hong Kong over the last few years. The number of Internet users has grown in leaps and bounds and the Internet is also used for a wide variety of purposes. Nowadays, consumers in Hong Kong are making use of the Internet to send e-mails, surf the cyberspace, carry out research and conduct low-value transactions. We have yet to see many consumers making high-value purchases over the
Internet in Hong Kong. This may mean that consumers have not built up sufficient confidence to conduct major transactions electronically. Businesses in Hong Kong, on the other hand, are comparatively more aggressive in the use of the Internet. According to an industry study, over 35% of the companies in Hong Kong are using the Internet in their operation, from marketing, providing online customer support, enhancing efficiency and conducting transactions electronically. According to industry estimates, the total value of transactions (both business-tobusiness and business-to-consumer) conducted via the Internet in Hong Kong amounted to US$2 billion in 1999. That figure is expected to grow to over US$70 billion by 2004. 13. To encourage the wider use of the Internet and e-commerce, the Government is committed to becoming a model user of information technology and to transforming itself into an electronic Government. In addition to the provision of information through the various Government web sites, we have launched the Electronic Tendering System in April 2000, to provide a secure electronic means for handling tender and related matters to support Government electronic procurement. We will also be launching the Electronic Service Delivery (ESD) Scheme shortly to provide a wide range of public services to the community through the Internet and other electronic means. Examples of these online services include the submission of tax return, renewal of driving and vehicle licenses, payment of Government bills, and registration as a voter, etc. Our long-term goal is to include all public services which are amenable to the electronic mode of delivery under the Scheme. (d) Promotion and Facilitation Activities 14. It is important to carry out promotion and facilitation activities so as to encourage the wide adoption of e-commerce across the community. The Government has been implementing a comprehensive programme to enhance public awareness in and understanding of e-commerce. The major focus of our promotion programme is the local business community, especially the small and medium sized enterprises (SMEs). 15. The Government works closely with industry support bodies (such as the Hong Kong Trade Development Council, the Hong Kong Productivity Council and the Hong Kong Information Technology Federation, etc.) and chambers of commerce in implementing our promotion programme. Major initiatives under the programme include:(a) the organisation of seminars for SMEs to enhance their understanding of and awareness in ecommerce; (b) the development of practical and readily affordable e-commerce solutions for use by SMEs; (c) promoting e-commerce through large scale exhibitions (such as the Information Infrastructure Expo held in Hong Kong each year) and roving shows at convenient public locations; (d) preparation of reference material on e-commerce, such as success stories and simulation software, for distribution to SMEs; (e) production of publicity material (e.g. Announcement of Public Interest on e-commerce) for broadcast on television and radio to promote e-commerce to the general public; and (f) establishment of a telephone enquiry hotline to answer questions from SMEs which are interested in adopting e-commerce and to provide information on the various support services available from the relevant industry support organisations. (e) Skill and Human Resources 16. According to the IT manpower study commissioned by the Government, there are currently 44,000 IT practitioners in Hong Kong. However, by the year 2000 there will be a demand for 57,000 IT practitioners, which will further rise to 85,000 by 2005 and 130,000 by 2010. In order to meet the projected demand and to ensure that we will have the necessary technical expertise for the development of e-commerce applications and systems, the Government is committed to strengthening education and professional training in information technology. 17. In respect of basic education, we launched the five-year strategy on "Information Technology for Learning in a New Era" in November 1998. Under the strategy, we will use IT to turn our schools into dynamic and innovative learning institutions to develop the capabilities of our students in processing information effectively and efficiently.
18. Manpower training is another critical factor for the development of e-commerce. In terms of professional training, our local tertiary institutions are offering around 19,000 full-time degreelevel places in IT-related fields annually. Over 30 new programmes at the diploma, graduate or post-graduate levels on e-commerce and related subjects have been offered or planned to be introduced shortly. In terms of vocational training and retraining, the Vocational Training Council is offering around 17,000 sub-degree level IT places annually, while the Employees Retraining Board is providing over 44,000 IT related training places each year. (f) Positioning for the Digital Economy 19. The assessment results indicate that Hong Kong has positioned itself well for the digital economy in a number of areas, including neutral tax system, support to the extension of the World Trade Organisation standstill on e-commerce tariffs, the establishment of a clear legal framework for electronic transactions and the policy in the use of encryption technology. Although Hong Kong is not a signatory in respect of the World Intellectual Property Organisation Treaties (WIPO) on copyright and related rights, we have already incorporated in our Copyright Ordinance the essential provisions on the protection of copyright in the digital environment. 20. In respect of privacy, we are committed to promoting the development of industry selfregulation in the forms of codes of practice and seal programmes. 21. The same is true for consumer protection. Hong Kong has started to develop self-regulatory mechanisms such as the Web Trust programme of the Hong Kong Society of Accountants. Consumer protection for e-commerce in Hong Kong can be further improved if such selfregulatory mechanisms gain wide acceptance in the industry. 22. The Hong Kong Productivity Council, the Consumer Council and the Office of the Privacy Commissioner for Personal Data recently jointly developed a guide on best practices for consumer and privacy protection in web site operation. We have distributed the guide to all ISPs in Hong Kong and have asked them to further distribute them to their clients, i.e. web site operators, for reference.
