Mrs Jessie TING, Deputy Secretary

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Presentation on Impact of ESD on e-Commerce
Development in Hong Kong Friday December 10 1999

• Mrs Jessie TING, Deputy Secretary
• for Information Technology and Broadcasting

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Potential of e-Commerce
A new wave of economic transformation is coming
...
in five years time, all companies will be
Internet companies, or they wont be companies at
all ... Andrew Grove, Chairman of Intel the
storm thats arriving is when thousands and
thousands of institutions that exist today seize
the power of this global computing and
communications infrastructure and use it to
transform themselves. Thats the real revolution
... Louis Gerstner, Chairman and CEO of IBM
in e-Commerce, the big wont beat the small - but
the fast will beat the slow John Chambers,
CEO of Cisco Systems
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Potential of e-Commerce
The potential is huge...

• No. of Internet users worldwide has exceeded 171
  million, out of which 27 million are in Asia
• Value of world e-commerce sales forecast to
  exceed US1,800 billion annually by 2003
• Locally, value of electronic transactions
  estimated at US142 million in 1999 and forecast
  to reach US 2.4 billion by 2003

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Characteristics of Successful e-business
An example - Cisco Systems

• Demand chain - comprehensive customer support,
  extensive product information, online problem
  solving tools, networked commerce applications
• Supply chain - allows agents to handle business
  online
• Result - 80 of customers and partners query
  handled online 55 of order passed through the
  system without manual handling 1999 e-Commerce
  revenue reaches US10 billion

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Characteristics of Successful e-business
An example - Charles Schwab

• 24-hour access to trading and investment
  information
• Full range of services online
• technical infrastructure to handle volatile
  transaction volume
• Result - more than 1 million online accounts,
  39 of trades are online, 50 market share of US
  online brokerage business
• Catalyst to change - Merrill Lynch to follow suit

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Characteristics of Successful e-business
The keys to successes are...

• As a business (Cisco Systems and Charles Schwab)
• Rich and value-added content
• Customer centric provision of service
• As an economy
• A population who understands and accepts the new
  technology and the new mode of business
• Excellent telecommunication and IT infrastructure
  - easy channel of access
• Easy means of electronic payment
• Legal certainty and secure environment

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Characteristics of Successful e-business
A local example, Netvigator

• Business-to-Consumer portal - Full range of
  services and information including financial
  services, entertainment, news, technology,
  sports, travel, education, shopping, etc.
• Business-to-Business portal - full range of
  services and information including financial,
  trading, insurance, IT, professional, etc.
• Result - one of the largest portal site in Hong
  Kong

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Characteristics of Successful e-business
A regional example, Sohu ???

• A portal for Chinese - Full range of services and
  information targeted for customers in Mainland
  China
• Vision - Huge opportunities for Chinese Language
  Internet Content Providers
• Result - one of the largest portal sites in
  Mainland China, with daily hit rate of 4.5 million

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Hong Kongs Advantage
Core capabilities of Hong Kong in e-Commerce
development
Fast acceptance to new technology Diligent and
hardworking Innovative and adaptive
Pro business environment Governments
commitment to IT development Sound legal
system Low tax rate
Culture
Increasingly IT literate labour force
Skills
Business Environment
Capability
Geographical and linguistic advantage
Communication Infrastructure
World class telecommunication infrastructure
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Information Infrastructure for the conduct of
e-Commerce
Possible Access Means
Certification Authority
Content Provider
Internet Appliances
Personal Computers via the Internet
ESD Service Provider
Public Information Kiosk
-Government departments -Public
agencies -Businesses
Smart Phone (Public Telephone with
Interactive Interface)
Financial Services Provider
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Drivers of ESD
Drivers of ESD
Impact of ESD on e-Commerce development in Hong
Kong
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Why a common infrastructure for e-Commerce?
Problems commonly faced by companies in adopting
e-commerce

• Lack of technical expertise
• Huge capital investment
• Problem exists for both large and small
  organisations

Database
Server
System analysis
Data Centre Management
Network
Security
Web design
Certification Authority
Internet Service Provider
Technical Issues
Business Issues
Financial Institutions
Financial Institutions
Marketing of web site
Helpdesk Support
Training
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Business Model of ESD
ESD Operator - a provider of e-Commerce services

• Provide the complete information infrastructure
  for the conduct of e-Commerce
• Economies of scale (bulk purchase of hardware,
  software and manpower, negotiation power with
  Financial Institutions and Certification
  Authorities)
• Integrated solution
• Value-added services (Directory services,
  marketing, help desk support, training)
• User-friendly portal interface to end-user

Core Capabilities Competitive Advantage Deli
verables
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Business Model of ESD
Content provider - no need to build its own
infrastructure
Core Capabilities Competitive Advantage Delive
rables

• Its own business - utilities, manufacturing,
  trading, education, retail, media, whatever
• Provision of rich and valuable content
• Obtain e-Commerce capabilities at affordable
  price
• Enrich content of the portal site and arouse
  interest of the end customer

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Business Model of ESD
Government - Two goals achieved
Government as content provider Government as
facilitator of e-Commerce Objective

• Common and open information infrastructure for
  the Government. Individual departments do not
  need to face the same problem as the SMEs
• Common and open information infrastructure for
  the whole community, empower the SME to switch to
  e-Commerce
• A model for other electronic transaction
  intermediaries.

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Our ESD Operator
Front end and back end development

• ESD Operator selected from private sector through
  open tender
• Contract was awarded to Timbo Star (a joint
  venture of Hutchison Communications Ltd. Compaq
  Computer Ltd.) in November 1999
• Back end system to be developed by ITSD with
  outsourced contractors
• Finance Committee has approved funding of 123
  million in December 1998
• Phase I to be launched in October 2000

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Our ESD Operator
A consortium with strength in both technical and
business arena
Hutchison Whampoa Limited
Compaq Computer Corporation
Hutchison Telecommunications (Hong Kong) Limited
Compaq Computer Limited
Timbo Star Investment Limited
Strategic Partners
Financial Institutions
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Our ESD Operator
Financial Infrastructure for the conduct of
e-Commerce

• Debit payment
• EPS and JETCO
• Credit payment
• Visa, MasterCard, Diners
• Smart card payment
• Visa Cash
• Additional security features
• SET (Secure Electronic Transactions)
• SSL (Secure Socket Layer)
• This will capture over 90 of the electronic
  payment market in HK

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Our ESD Operator
HutchCity and HutchBusiness

• Business-to-Consumer portal -
• Newsline, Financial Centre, Information
  Technology, Leisure World, Entertainment, Sports,
  Employment Service
• Business-to-Business portal - Facilities
  Management, Internet Access, Web Hosting, Web
  projects
• Opportunity - Government as one of the largest
  content providers

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Services of ESD
Phase I of ESD includes a wide range of services
of 10 departments and public agencies.
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Services of ESD

• Channel Type approach will be adopted to provide
  user friendly services, e.g.
• Citizen Channel
• Business Channel
• Tourist Channel

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Services of ESD
Life Event Approach

• Moving home - change of address in one go
• Transport Department as a driver or
  vehicle owner
• Inland Revenue Department as a
  taxpayer
• Registration Electoral Office as a
  registered voter
• Rating Valuation Department as a
  rate payer
• Reaching 18
• Immigration Department registration for
  identity card
• Registration Electoral Office
  register as a voter
• Transport Department obtaining
  driving license

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Wider Access to ESD
Wider access to ESD

• Community Cyber Point
• public computers at District Offices, community
  halls/centres, public libraries
• Access for visually impaired persons
• screen enlarger software, power braille, voice
  synthesizer
• Public Information Kiosks
• 100 kiosks at convenient public locations

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ESD Associated Initiatives

• Electronic Transactions Bill
• Public Key Infrastructure
• Common Chinese Language Interface
• Interactive Government Services Directory

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Summary

• E-Commerce has huge potential
• ESD as a tool to foster the development of
  E-Commerce in Hong Kong

• ESD as an infrastructure for the conduct of
  e-Commerce
• Government as a content provider and active
  participant in e-Commerce
• ESD to provide adequate delivery channels for
  access to e-Commerce
• ESD to nurture a e-community

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• Thank you