Buoyed by a combination of regional strengths, Forrester Research, Inc. (Nasdaq: FORR), predicts that eCommerce in Asia-Pacific will surge to $1.6 trillion in 2004. The region’s countries will benefit from local eCommerce development efforts and tight links to international supply chains in a number of key industries. These factors will make Asia-Pacific an important player in the global Internet economy, which Forrester estimates will reach $6.8 trillion in 2004.
“Asia-Pacific enjoys a number of advantages that will accelerate its development as a major contributor to worldwide eCommerce,” said Stuart D. Woodring, Forrester’s vice president of research for emerging Internet economies. “The combination of pressure from global trading partners, falling trade barriers, and government enthusiasm for eCommerce will aggressively push the region into the Internet economy.”
Deep links to global supply chains will accelerate the region’s adoption of eCommerce as industry leaders pull their trading partners online. Eighty-six percent of Singapore’s exports to the US, for example, are sold into the computing and electronics industries at the leading edge of online business trade. Meanwhile, national commitments to infrastructure development and economic growth will create new opportunities throughout the region. The resulting eCommerce gains will be tightly linked to business-to-business (B2B) trade in Asia-Pacific, with more than $1.5 trillion of the region’s total online sales linked to the B2B sectors.
Despite these advantages, eCommerce will not develop uniformly across the region. Online trade requires public policy support — low barriers to trade, stable currencies, and flexible capital markets — as well as a technology infrastructure to reach its full potential. These contributing factors are not equally present in the region’s countries. In Hong Kong, low trade barriers are accelerating online trade, while India’s substantial tariffs are delaying its development. Meanwhile, China’s role in the Internet economy will be hindered by its weak infrastructure. This disparity will make Asia-Pacific one of the last regions to reach full eCommerce maturity.
“Asia-Pacific will benefit greatly from the efforts of several eCommerce leaders,” said Matthew R. Sanders, associate analyst. “While Japan will dominate the region with $880 billion in online sales in 2004, Australia, Korea, and Taiwan will each see more than 16% of their total sales conducted online.”
Global Outlook For eCommerce
Forrester estimates that eCommerce will account for 8.6% of worldwide sales of goods and services in 2004. The expansion of online trade, however, will be highly concentrated, with 12 countries representing nearly 85% of worldwide Net sales. The US will continue to be the global eCommerce leader with online sales reaching $3.2 trillion in 2004. Western Europe will hit $1.5 trillion with stronger business-to-consumer (B2C) sales than Asia-Pacific. Plagued by infrastructure deficiencies, eCommerce will reach $82 billion in Latin America while Eastern Europe, Africa, and the Middle East will contribute a combined $68.6 billion in 2004.
For the Brief “Global eCommerce Approaches Hypergrowth,” Forrester examined the conditions underlying eCommerce growth in 52 countries. These conditions include the regulatory environment, technology infrastructure, connection to international supply chains, and existence of regional trading blocs.