E-Business Growth Strategies for SMEs in East Asia and Latin America

1. International Seminar on Information Technology for Development of Small- and Medium-sized Exporters in East Asia and Latin America ECLAC - Santiago, Chile, 23-24 November2004 Information Technology: Concepts Applied to SMEs’, Trade Facilitation and Exports Organized by ECLAC with the collaboration of IDE/JETRO, sponsored by UNDP Sidney Rezende Division of International Trade and Integration ECLAC

2. E-COMMERCE and E-BUSINESS The Difference E-commerce, or electronic commerce, is conducting business communications and transactions via computers and over networks. It is the buying and selling of goods and services through digital communication. It also includes transactions on the WWW and Internet, and electronic funds transfer, smart cards, and digital cash, among others. E-business, or electronic business, derived from 'e-commerce'. It is conducting business on the Internet, but not just buying and selling but also servicing customers and collaborating with business partners. The term conveys that the business conducts its business entirely online.

3. ELECTRONIC DATA INTERCHANCE - EDI What is it? EDI is“ transfer of structured data, by agreed message standards, from one computer system to another by electronic means ” UN/EDIFACTis the international EDI Standard developed under the United Nations. The acronym stands for "United Nations / Electronic Data Interchange For Administration, Commerce, and Transport". The work of maintenance and further development of this standard is done throughUN/CEFACT.

4. SMDG Togaf SWIFT HR-XML EHD xCat UBL Rosettanet OTA IATA cXML E-construct CATXML PIDX Bolero XAML Opentrans xCBL HL7 Acord CIDX xBRL BSML agXML VICS UNeDoc GCI GML DATA STANDARDS: Too Many! All have different data elements!

5. United Nations Centre for Trade Facilitation and Electronic Business UN / CEFACT - www.unece.org/cefact/ • Mission: to improve the ability of business, trade and administrative organizations, worldwide, to exchange products and relevant services effectively - and so contribute to the growth of global commerce. • It facilitates the development of e-business standards that can cross all international boundaries and help lower transaction costs, simplify data flow and reduce bureaucracy • Work outputs of UN/CEFACT activities includethe UN/EDIFACTand e-business XML– ebXML (ISO 15000)

6. STANDARDIZATION: Benefits to the entire community • OASISand(Organization for the Advancement of Structured Information Standards) UN/CEFACTjoint initiative • Mission: "... enable a global electronic marketplace where enterprises of any size and in any geographical location can meet and conduct business with each other through the exchange of XML based messages".

7. XML and ebXML: Definition • XML(eXtensible MarkupLanguage ) is a markup language for documents containing structured information (for example: vector graphics, e-commerce transactions) • ebXML(electronic business using eXtensible Markup Language) is a modular suite of specifications that enables enterprises of any size and in any geographical location to conduct business over the Internet.

8. Currently more than 800 million Internet users are online globally www.internetworldstats.com Online retail is estimated to increase from $121 billion in 2004 to nearly $316 billion by 2010. www.emarketer.comwww.forrester.com ADVANTAGES OF e-BUSINESS FOR SMEs

9. ADVANTAGES OF e-BUSINESS FOR SMEs • To be more efficient in their internal processes. • To select the best suppliers from any part of the world. • To develop a closer relationship with their local and foreign suppliers. • To offer better services according to the requirements and expectations of their clients. • To offer goods and services in the global market.

10. Business Consumer Government Business B2B B2C B2G Consumer C2B C2C C2G Government G2B G2C G2G e-TRANSACTIONS: The Diferent Types

11. Source: www.e-consultingcorp.com.br/insider_info/indicadores.htm B2B and B2C INDICATORS

12. e-TRANSACTIONS: Tortas_Peru - PE B2C US$22

13. e-TRANSACTIONS: Carvajal - CO B2B 250.000 TRANSACTIONS PER MONTH AMOUNTING TO OVER US$ 100 MILLION. It integrates suppliers and merchandisers in retail/mass marketing communities. Over 2.000 companies in Colombia, Ecuador, Peru and Venezuela, mostly SMEs but also big corporations such as Nestlé, Procter & Gamble and Unilever.

14. e-TRANSACTIONS: COMPRASNET - BR G2B

15. Mexico Survey Report Findings (I) “Comparative Study on East Asian and Latin-American IT Industries”, ECLAC, 15 October 2004. • Build a strong telecommunications and Internet infrastructure • Create ITC business incubators and ITC Industrial Parks • Provide incentives to telecom companies to build networks • Expand existing infrastructure to promote greater broadband bandwidth. • Invest in human capital and job creation

16. Mexico Survey Report Findings (II) “Comparative Study on East Asian and Latin-American IT Industries”, ECLAC, 15 October 2004. • Establish basic rules for online commerce • Maintain an open government procurement bidding process • Build consumer confidence in the electronic world • Eliminate trade barriers • Provide access to financial capital • Ensure network and information security

17. E-TRANSACTIONS: SECURITY RISKS OF E-COMMERCE : • Messages can be intercepted and manipulated; • The validity of documents can be denied; • Personal data can be illicitly collected; TASKS OF ELECTRONIC SIGNATURE : • Verify the origin of the data (Authentication of data source); • Check that data are complete and unchanged (Integrity of data) • Guarantee the confidentiality of data message (Message content security)

18. Different Systems of E-Sign • Various Techniques and Systems are currently available on the market by which some or all the functions mentioned above can be performed in an electronic environment. These are referred to broadly as “electronic signatures”: • Encryption; • Digital Signature; • Personal Identification Numbers (PIN); E-TRANSACTIONS: SECURITY Encryption is a form of Cryptography which transforms (by mean of an Algorithm) a plaintext into an unreadable cyphered text (encryption) and vice versa (decryption). At present, encryption provides the most important tool to keep electronic communication and documents confidential. Encryption is increasingly being integrated into financial and banking messages. Digital Signature To sign a document with a digital signature the signatory: (I) Delimits precisely the borders of what is to be signed. (II) Signatory’s software computes a result unique to the information to be signed; (III) Software transforms the result into a digitalsignature using the signatory’s private key. Public-Key Infrastructures (PKI) To verify a digital signature, the verifier must have access to the Signatory’s public-key and have assurance that it corresponds to the signatory’s private key. However, a public- and private-key pair has no association with any person: it is simply a pair of numbers. An additional mechanism is necessary to associate reliably a particular person or entity to the key pair. This is usually done by third Parties ( “Certification Authority” or “Certification Service Provider”) which associate an identified signatory or the signatory’s name with a specific public-key. In a number of countries, such certification authorities are organized hierarchically into what is often referred to as a “Public-Key Infrastructure” (PKI).

19. TRACEABILITY: What is it? • Traceabilityis the ability to trace the history, application or location of an entity by means of recorded identification. Trackingis the capability to follow the path of a specified unit of a product and/or batch through the supply chain as it moves between organisations towards the final point-of-sale or point-of-service Tracingis the capability to identify the origin of a particular unit and/or batch of product located within the supply chain by reference to records held upstream.

20. TRACEABILITY: Flow of Information

21. Loans, Investments and Payments E-FINANCE • e-Finance is about web-enabling everything that a financial institutions does – giving loans, offering investments (stocks, funds, bonds), executing transactions etc. – all available using web technology • In Latin America, on-line financial market activity is limited, with some exceptions in Brazil and Mexico, where on-line brokerage services seem well-developed.

22. E-FINANCE: Offline Payments

23. E-FINANCE: Online Payments

24. Reduce transaction costs Monitor external trade flows TRADE FACILITATION: Transportation, Port- System and Logistics, Trade Finance, Security TRADE PROMOTION: IT and Non-IT Sectors CREATING AN EFFICIENT AND SECURE TRADE INFRASTRUCTURE TRADE PROCEDURES and MEASURES: e-Customs, e-Sanitary and Phyto-sanitary Certificates, e-Certificate of Origin, and Single Window System

25. INSURANCE CERTIFICATE CERTIFICATE OF ORIGIN LETTER OF CREDIT BILL OF LADING DECLARATIONS WAYBILL MANIFEST PHITOSANITARY CERTIFICATES DEBIT ADVICE CUSTOM CLEARANCE REMITANCE ADVICE PAYMENT ORDER INVOICE PURCHASE ORDER FORWARDING INSTRUCTION STOWAGE PLAN-BAY PLAN ARRIVAL NOTICE BTW 20 and 40 PAPER DOCUMENTS REQUIRED FOR INTERNATIONAL TRADE Costs: up to 10 per cent of the value of the goods. Every year, US$550 Billion Worldwide.

26. CUSTOMS INFORMATION SYSTEMS Latin America and the Caribbean

27. SINGLE WINDOW: The Most Common Models Simplifying International Trade The new approach - a simple, one-stop solution offering official control with trade facilitation. UN CEFACT Recommendation 33

28. 12TH APEC ECONOMIC LEADERS' MEETING 12TH APEC ECONOMIC LEADERS' MEETING SANTIAGO DECLARATION "ONE COMMUNITY, OUR FUTURE" Santiago de Chile 20‑21 November 2004 • (...) Trade Facilitation:We will continue our work to reduce business transaction costs by cutting red tape, embracing automation, harmonizing standards and eliminating unnecessary barriers to trade. We will also work together to advance the trade facilitation negotiations in the WTO, promote secure trade, and build on the APEC Best Practices for RTAs/FTAs in the area of trade facilitation; • (...)

29. KNOWLEDGE AND TOOLS FOR SMEs

30. GLOBAL TRADEPOINT NETWORK www.wtpfed.org/newsite/index1.php • A trade facilitation centre, where participants in foreign trade transactions are grouped together under a single physical or virtual roof to provide all the necessary services for trade transactions. Participants: chambers of commerce, customs, foreign trade institutes, banks, freight forwarders, transport agencies and insurance companies. • A source of trade-related information, providing actual and potential traders with data about business and market opportunities, potential clients and suppliers, as well as trade regulations and requirements. • A gateway to global networking, in order to increase the participation of traders, particularly SMEs, in the emerging electronic commerce economy. G T P N E T

31. WORLD TRADE POINT FEDERATION www.wtpfed.org/newsite/index1.php Sidney Rezende, CEPAL, Agosto 1997

32. INTERNATIONAL TRADE CENTER (UNCTAD / WTO) www.intracen.org/ec/welcome.htm

33. STUDIES AND PUBLICATIONS - ECLAC 71 PUBLICATIONS on Information Technology 6 PUBLICATIONS on e-BUSINESS, e-COMMERCE WWW.ECLAC.ORG

34. www.eclac.org/comercio Thank you for your Attention! Sidney Rezende SRezende@eclac.cl