Mrs Jessie TING, Deputy Secretary for Information Technology and Broadcasting

1. 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

2. Potential of e-Commerce A new wave of economic transformation is coming ... “… in five years’ time, all companies will be Internet companies, or they won’t be companies at all ...” Andrew Grove, Chairman of Intel “… the storm that’s 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. That’s the real revolution ...” Louis Gerstner, Chairman and CEO of IBM “… in e-Commerce, the big won’t beat the small - but the fast will beat the slow … ” John Chambers, CEO of Cisco Systems

3. 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 US$1,800 billion annually by 2003 • Locally, value of electronic transactions estimated at US$142 million in 1999 and forecast to reach US$ 2.4 billion by 2003

4. 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 US$10 billion

5. 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

6. 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

7. 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

8. Characteristics of Successful e-business A regional example, Sohu 搜狐網 • 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

9. Hong Kong’s Advantage Core capabilities of Hong Kong in e-Commerce development Fast acceptance to new technology Diligent and hardworking Innovative and adaptive Pro business environment Government’s 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

10. 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

11. Drivers of ESD Drivers of ESD Impact of ESD on e-Commerce development in Hong Kong

12. 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 System analysis Server Data Centre Management Network Security Web design Internet Service Provider Certification Authority Technical Issues Business Issues Marketing of web site Helpdesk Support Training Financial Institutions Financial Institutions

13. Business Model of ESD ESD Operator - a provider of e-Commerce services Core Capabilities Competitive Advantage Deliverables • 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

14. Business Model of ESD Content provider - no need to build its own infrastructure Core Capabilities Competitive Advantage Deliverables • 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

15. 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.

16. 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

17. 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:

18. 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

19. 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

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

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

22. 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

23. 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

24. ESD Associated Initiatives • Electronic Transactions Bill • Public Key Infrastructure • Common Chinese Language Interface • Interactive Government Services Directory

25. 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

26. Thank you