Asia, the Emerging Net Giant

By Julia Scheeres, Wired, 9 February 2001

Asian Web surfers will constitute 27 percent of the online world by 2004, but poor infrastructure and expensive access rates still hamper connectivity in many countries, a new study found.

The number of Internet users in Asia will jump from 49 million users in 2000 to 173 million in 2004, according to a report by eMarketer.

Hong Kong has the highest penetration rate with 49 percent of the population connected while in Vietnam, only .13 percent of the population has access, according to Nua surveys, which tracks Internet penetration worldwide.

In some countries such as India, cybercafes have flourished as a solution to the access problem, said Eddie Cheung, senior Asia analyst for eMarketer. India’s 4,000 Internet cafes supply access for 60 percent of the country.

They serve as an introduction to the Internet for a lot of young Indians, Cheung said.

The privatization of regional telecoms should improve infrastructure and drive Internet access prices down, he added. But many Asians aren’t waiting for the local telecom to kick it into high gear, and have jumped straight into mobile Internet.

In Japan, for example, the leading ISP is the mobile phone company NTT DoCoMo.

A lot of people prefer the convenience of the Internet-enabled phones, said Nina Young, who tracks Japan for Jupiter Media Metrix. A lot of the services build on the mobility characteristic they offer.

For example, Ekimaetanken club, or the train explorers club delivers train information such as schedules and fares directly to commuters’ handheld phones.

Mobile Internet use is cheaper than PC-based surfing in Japan, where special cell phones equipped with larger screens that support images, and mouse balls in the dial pads make the experience more enjoyable.

E-commerce in the Asia Pacific region will grow from $39.4 billion in 2000 to $338 billion by 2005, the study said. The landscape is uneven, with Japan making up 70 percent of the region’s online revenues.

Moreover, the business-to-business commerce has dwarfed the business-to-consumer market. Asian B2B revenues topped $36 million in 2000 while B2C revenue grew to $3.2 billion.

There simply aren’t enough households with Internet access or sufficient disposable income to power growth in the B2C sector, Cheung said.

Such is the case of Chinadotcom, which runs the portals in China, Hong Kong and Taiwan. More than 80 percent of the company’s revenue comes from creating an online presence for traditional retailers, according to VP of marketing Michelle Yeh.

Even though Asian e-commerce revenues will increase substantially in the next few years, the region as the whole only accounts for a fraction of total revenues worldwide, Cheung said.