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B2B or
Die
By Michael Alan Hamlin
January 12, 2004
According to the International Trade
Center (ITC) - founded and supported by the United Nations and the
World Trade Organization - the benefits of Internet technology in
"improving the effectiveness and efficiency of international
trade are now so compelling that developing economies may no longer
be able to sustain a competitive edge." In other words, B2B
or die.
For decades the economies of Southeast Asia have relied on cheap
labor and material for competitive advantage. But the relentless
march of productivity means that low input costs are no longer enough.
And while that may be apparent for Asia's largest firms, it is increasingly
so for medium- and small-size firms as well. If a company can't
do business over the Internet, then it may no longer meet the minimum
standards necessary to sustain its business.
ITC's role, therefore, "is to ensure that developing country
businesses can compete in the new digital economy." That verbiage
is a little tired, but ITC's role in helping Asia's small- and medium-scale
enterprises (SMEs) leverage appears to be expanding because of its
strength in four areas. First, ITC has developed a deep understanding
of the practical needs of Asian SMEs.
Second, ITC's institutional relationships in both the public and
private sectors should facilitate the development of standards for
e-trade and supply chain management (SCM). Next, ITC can leverage
its network of educational and training organizations to disseminate
information and build the capacity of SMEs for conducting business
over the Internet. And finally, ITC believes its knowledge bank
of specific industry and service sectors makes it uniquely positioned
to help market Asian SMEs to the world.
What ITC lacked until recently, however, was actual, significant
Asian e-commerce experience. Which is why BayanTrade vice chairman
Carol E. Carreon recently keynoted ITC conferences in Asia and Europe
(Full Disclosure: BayanTrade is a client of my firm.). Ms. Carreon's
role has been to share the experiences of BayanTrade in developing
SME supplier communities within the Philippines.
Approximately 2,000 suppliers currently service 200 buyer organizations
that do business on BayanTrade. ITC's interest in BayanTrade has
principally, I'm told, to do with the 2,000 suppliers that BayanTrade
has helped to leverage the benefits of Internet commerce by providing
technical infrastructure and training. In fact, although most suppliers
of course do, suppliers don't even need to own a computer to participate
in Internet commerce with BayanTrade. They can do so from any Internet
café.
BayanTrade's own interests are naturally served by developing the
capacity of suppliers to engage in Internet commerce. The more companies
selling on BayanTrade's infrastructure, the better the company does.
In a typical month, BayanTrade processes approximately P1.3 billion
in transactions. Most take the form of an eBidding event, in which
a number of suppliers compete for a buyer's business. eProcurement,
or purchasing from online catalogues, accounts for the rest.
While other e-marketplaces have folded up across the region and
the world, BayanTrade has continued to grow and evolve. Indeed,
the company no longer uses the ".com" that used to follow
BayanTrade, and doesn't use terms like e-commerce much either. Instead,
it call itself a company that offers sourcing and procurement services
- online bidding, catalog procurement, purchasing management, and
systems integration services. It is already providing procurement
services to companies in Australia, Taiwan, China, and New Zealand,
and is expanding into Indonesia, Malaysia, Singapore, and Thailand
according to president Dante Briones.
Ms. Carreon's work with ITC may provide other opportunities. Organizations
in Cambodia, Pakistan, Sri Lanka, Bangladesh, Bhutan, and Nepal
are asking that BayanTrade bring its expertise to these countries
so that they, too, can benefit from a vibrant SME sector that is
Internet-enabled. To understand how critical these sectors are for
national development, consider that in the Philippines small companies
account for 34 percent of all purchase spend. Mid-market firms account
for another 26 percent. Together, they account for 60 percent of
all purchase spending in the Philippines, according to data provided
by BayanTrade.
BayanTrade's regional expansion should pay off for Philippines firms,
too. "For Philippine suppliers, the expansion means they will
be able to sell their services to a larger customer base,"
Briones told me recently. "Philippine businesses that either
sell or distribute domestically developed goods and services will
be able to market to other Asian countries by posting their product
offerings in our online procurement catalogue. This will provide
greater visibility for their brands and opportunities to network
with and attract prospective customers and partners."
To be sure, it's B2B or die. Fortunately for Asia's SMEs, ITC and
BayanTrade are helping assure they live, and prosper.
(Michael Alan Hamlin is the managing
director of consultancy TeamAsia and the author of three books on
Asian economies and companies. His latest book is Marketing Asian
Places, of which he is a co-author (Wiley, 2001), and he is currently
at work on High Visibility: The Making and Marketing of Asian Professionals
into Celebrities. Write him at mahamlin@teamasia.com.).
Copyright © 2003 Michael Alan
Hamlin. All Rights Reserved.
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