Report: Asia-Pacific B2B Will Top $60B Next Year

Despite a recent hesitancy on the part of e-business investors to get involved in the Asia-Pacific market, a report released Friday by IDC predicted that B2B e-commerce in the region will sell more than US$61 billion in direct and indirect materials by the end of 2002, compared to $12.8 billion spent in 2000.

In addition, the report said that of the $500 billion in B2B the region expects to generate by 2005, 45 percent will occur through heavily consolidated e-marketplaces. Currently, e-distribution and e-procurement account for the majority of B2B e-commerce transactions in the Asia-Pacific region.

Richard Jacobson, the author of the report, said that it is the traditional brick-and-mortar companies who will provide the major impetus behind the B2B growth in the Asia-Pacific region.

"Asia's largest conglomerates are already investing in B2B solutions, which are radically changing the structure of many industries," Jacobson said. "Amidst a backdrop of sidelined investors and cautious venture capital funds, here we have the B2B e-commerce market poised to grow at a tremendous rate."

Two-Stage Process

According to the report, massive growth in the Asia-Pacific area will take place over two different stages of B2B adoption.

Early adoption will be led by large multinational corporations with operations in Asia, as well as by companies in the technology , manufacturing and commodities sectors.

The second evolution will consist of small and mid-sized businesses jumping into the B2B market, as well as the increased use of e-marketplaces, the study said.

The report also said that China and South Korea are expected to bypass Australia as the biggest B2B leaders, accounting for just under half the total B2B in the region by 2005, excluding Japan.

Primary Drivers

"The biggest driver of B2B adoption is the lowering of administrative costs for buying and selling activities," Jacobson said. "One of the key benefits in driving the adoption of B2B is the need to reduce the cost of doing business."

Jacobson also cited strong manufacturing and export-oriented economies as key accelerators of B2B adoption in the region.

Before the B2B boom can truly take hold, however, e-businesses in the Asia-Pacific region will have to overcome the current negative sentiment for all things "dot-com," the report said.

Barrier Jumping

Security issues also remain a concern for Asian business jumping online, and a lack of e-commerce standards could also inhibit the adoption rate.

In addition, Jacobson said that B2B in the region will also have to overcome possible antitrust issues in the monopolization of e-marketplaces, as well as the short supply of skilled IT workers in the region.

Ultimately, however, these inhibitors will be overcome to boost the region's worldwide share of the B2B e-commerce market from 5 percent in 2000 to 12 percent in 2005.

"Technology providers who ignore this market potential because of the gloomy picture painted by various merchants of doom could end up missing the boat," Jacobson said.