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Korea’s Experience in promoting e-business adoption among micro and small business

Korea’s Experience in promoting e-business adoption among micro and small business. Yoon, Jeongwon Director National Computerization Agency. Table of Contents. Introduction E-business in Korea ASP based e-business project for small business 30,000 SMB Informatization Project Conclusion.

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Korea’s Experience in promoting e-business adoption among micro and small business

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  1. Korea’s Experience in promoting e-business adoption among micro and small business Yoon, Jeongwon Director National Computerization Agency

  2. Table of Contents • Introduction • E-business in Korea • ASP based e-business project for small business • 30,000 SMB Informatization Project • Conclusion

  3. Part I Introduction

  4. Background Cyber Korea 21 e-Korea Vision 2006 • Why e-business ? • Remove the barriers of time and distance with the Internet • Tool to boost the nation’s competitiveness as witnessed in the Korean success case. • Renewed focus on Internet growth and Internet Business : “Use ICT as a strategic means to overcome economic crisis” • New national IT master plan for five years(2002 ~ 2006) : • “Emphasize on advancing B2B e-commerce and providing a safe and reliable online business environment”

  5. Background • Continual growth in size of e-commerce market in Korea • 47.9 billion dollars in 2000 -> 195.6 billion dollars in 2003 Total Commercial Transaction vs. e-Commerce(B2B, B2C) 16.5 % Unit : billion USD 12.8 % e-commerce transaction 9.1 % 1,400 4.5 % 196 148 1,200 99 48 1,000 800 1,188 1,155 600 1,090 1,058 Total e-commerce transaction 400 200 0 2000 2001 2002 2003 Source: National Statistical Office of Korea

  6. Background Relation btw GDP Growth and IT Industry Growth in Korea 40 35 30 25 IT Industry Growth Rate 20 15 10 5 GDP Growth Rate 0 1996 1997 1998 1999 2000 2001 2002 -5 -10 Unit : %, contrast to previous year Source: Bank of Korea

  7. Objectives • Closing the gap in IT use between small businesses and medium & large enterprises • Utilizing its highly advanced information infrastructure Right business environment for small businesses Promoting new business model Highly Advanced Information Infrastructure

  8. Part 2 E-Business in Korea

  9. B2B in Korea More than 88% of the total e-commerce market(198.3 billion USD as of 2003) CALS B2B Network Project 1998 1999 2001 2002 2003 • Electronics • Automobiles • Construction • Defense • Start with 9 fields; steel, shipbuilding, machinery,etc. • 11 fields added; watches, agricultural products, livestock, and machinery, etc. • 10 fields added; Semiconductor animation, etc.(Total 30 fields) • 9 fields added, ; stationary, jewelry, fruit, and flowery. (Total 1,017 companies)

  10. B2B in Korea Large Enterprise Large Enterprise SME SME Large Enterprise Large Enterprise Large Enterprise Large Enterprise “Optimizing Value Chain” B2B Network Project CALS Project B2B Network Project • Government investment : 70% of the total costs (Total $51mil) • ISP, Standardization, raising awareness on e-business, pilot implementation

  11. B2C in Korea • B2C market : 5.8% billion USD as of 2003, taking up 4.7% of the total retail market(105.8 billion USD) Growth of B2C Market in Korea (in Billion USD) • <Source: National Statistical Office>

  12. Establishment of a single window government procurement system for entire process via the Internet • Public announcement of all government-wide projects for bidding • Enabling online process for registering as a contractor, bidding on public project, signing contract agreement, and receive payment for services • Standardized e-Catalog system for procurement supplies Realizingfair and transparent procurement process and services G2B in Korea

  13. G2B in Korea Other G2B Tool Tax Reduction • ‘Special Act on Taxes’ enacted in 2001 • Online single window for public services • Trade permit, logistics, customs declaration • Credit inquiry, business matchmaking Online Business Registration & permit Online Export & Import Processing Promotional sites for international trade information

  14. Government Initiatives E-leadership • Establishment of ‘Informatization Strategy Meeting’ under the presidency • e-Korea Vision 2006, e-business Facilitation Measure • Informatization Promotion Committee and several sub-committees • Collaboration for detailed implementation strategy= Political Commitment from the Top Visions & strategies for Informatization Implementation Framework Cooperative Partnership btw Public & Private Sectors

  15. Government Initiatives Government’s role Enhance e-trust for E-business market • Building trust for user and consumer • High-speed broadband network, R&D, HRD • Procurement of government and public corporate • Create favorable market environment • e-commerce law and regulations Establish infrastructure Facilitate G2B Promote e-commerce in the private sector Lay a groundwork for cyber trade standardization

  16. Government Initiatives Public Policy e-Commerce and Informatization Budget Portion for Traditional Industries (Unit : million USD)

  17. Government Initiatives Key-Policies for e-Business

  18. Government Initiatives • Technical problems in MSB • No IT expert, insufficient number of application software • lack in capacity to operate or maintain IT resources adopted. • low standardization level • Skills • Solutions; • Adoption of ASP in the form of consortium. • Provide free IT training courses • Development & introduction of Business models through consulting

  19. Part 3 The ASP Based e-Business Project for Small Business

  20. Implementation Framework • The implementation structure of ASP based e-business project for SMB MIC SMBA Promotion Committee NCA Related Agencies Council TFT Advisory Committee Service Business KIMI BM Business CNK

  21. Implementation Progress • Master Plan for the project & 1st year project began • Formulation of ASP consortia • ASP-based integrated IT pilot services 2001 2002 • 45 integrated ASP services • 3 community-BMs focusing on unions or associations related to small businesses. • Designation of 5 ASP consortia with 175 companies • A hub-BM developing company was designated for provider-oriented e-business adoption • 4 community-BM developing companies chosen. 2003 2004 • The 4th year project on progress.

  22. Implementation Strategy ASP Diffusion “Cost-effective” Training for SME “Promote informatization” Synergy through Consortia “Maximized synergy through integration” Win-Win Framework “Link suppliers&demanders”

  23. Implementation Status “Acts independently, attracting MSBs wanting to benefit from ASP services” NCA • The ASP based implementation framework for MSB informatization Select & designate Consortia Consortium Public bidding Broadband ISPs Portal Service Providers MSB Consortia Consortia Contents Providers Consortia Solution Providers Consortia Etc… MSB MSB

  24. Implementation Status • Development of Business Models: • Pilot projects involving industry unions, industry associations, and IT companies were launched to promote development of network-based business models. • Two types of e-business models : • Community-Model • “Demander oriented” • Industry Association or Union • 7 models developed by 2003 • HUB-Model • “Supplier oriented” • Individual service provider • 32 models developed by 2003

  25. Firm Level Support Educational Support & PR • Customized training services & promotional activities through Unions or associations - > 160,000 companies benefited as of Nov 2003 Creation of Demands on Initial IT services for MSB • Government led the creation of the market (80% of investment covered by matching-fund system) • A provider-oriented business model proposed Cyber IT Support center • Provide online service and technical support for e-Business project

  26. Part 4 30,000 SMB Informatization Project

  27. 5 Areas of Assistance Pre-Consulting for Informatization • 30,000 SMB Informatization Project Basic Business Software ERP Manufacturing Process Informatization Collaborative Informatization Out of 37,392 companies applied 35,324 companies were selected for assistance

  28. Pre-Consulting for Informatization Basic Business Software • Raise awareness on Informatization • Present IT guidelines appropriate to their level • Business process software for SMBs in early stage of Informatization • For businesses looking to integrate their system • Informatizing work process in the factory • External expansion of Informatization ERP Manufacturing Process Informatization Collaborative Informatization

  29. Part 5 Conclusion

  30. Success Factors Technical Factors Organizational Factors Environmental Factors Government reduced cost burden for IT adoption Information systems & business models Customized for Industry types Various IT training Systematic IT manpower support Advanced Information Infrastructure

  31. Recommendation • Establishment of Standards • Ministerial cooperation • Long-term and effective support policies • Differentiated policies for small and medium businesses • Improving environments from the public sector • Meeting technological progress

  32. Thank You!

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