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    Asia Business Club Conference 2000 - Key Note Address Dr. Ronald Chwang

     
    2/29/2000
    Asia has caught the Internet fever, and local companies must change the way they do business to prosper in the new environment. That was the message Ronald Chwang, president of Acer Technology Ventures, delivered to a capacity audience in a keynote speech at the Harvard Asia Business Conference. Logistics and local traditions present obstacles, said Chwang, but within two years, he predicted, Asia-Pacific e-commerce trade will surpass that of Western Europe, changing the economic and business landscape of the region.

    ABC Conference by Martha Lagace, Staff Writer, HBS Working Knowledge

    Imagine the scenario: You're Chinese, you're in China, and you manage to initiate a purchase online through your home computer. Good work! However, if you — like most people in China - have any kind of payment card, it is a cash card rather than a credit card. So you then need to climb on your bike and ride over to the Chinese equivalent of 7-11 in order to actually pay for what you just ordered online.

    This absurd situation is not at all far-fetched, according to Ronald Chwang, a keynote speaker at the Harvard Asia Business Conference.

    Chwang, as president of Acer Technology Ventures, presides over the venture capital unit of Acer Group, one of the largest PC manufacturers in the world and the number one exporter in Taiwan, with $6.3 billion in computer, peripheral and semiconductor operations. In his keynote address, the American- and Canadian-educated Chwang told the audience that he contends with exactly these sorts of logistics issues in building e-commerce in Asia. He also outlined how his own company is addressing these issues, including the bicycle problem.

    Even in the midst of the enormous challenges facing Asian business, Chwang said, there have to be ways to make seemingly simple transactions that much simpler, and to deliver more goods and more services that much more effectively.

    The Long Way To E-Commerce

    "The formal way is to build an infrastructure, but this is the long way," he responded, when a conference participant asked his opinion on the above scenario. "E-commerce in China will take different forms, some of which will be very regional and local. As it is now, after you order an item online - tickets, for example — someone might ride a bicycle to your home and deliver the goods and take the money.

    "You saw the guy and you feel good about the transaction."

    This sort of low-tech delivery of a high-tech service will be more prevalent at first, Chwang said. But over time, a real infrastructure would have to grow to a much larger scale, he predicted.

    Despite these kinds of problems that are likely to linger, Chwang's address to the group was overwhelmingly positive concerning business prospects in Asia.

    He said his company and Asia as a whole had learned many painful lessons in the last financial crisis. Overstretched financial leverage and weak corporate governance are two problems, he said, and Asian conglomerates need to change with global trends. "This crisis happened just in time," he continued, "before the more complex matrix of the Internet was injected into the system."

    Several trends have since emerged from the crisis, according to Chwang. One is that Asia is an integral and critical part of the global information-technology supply infrastructure, in terms of technology hardware, design and even the backend infrastructure of packaging assembly and testing.

    "The earthquake in Taiwan was felt by the IT industry worldwide," he noted, adding that Asia, led by China, presents a colossal consumer market for the "right technology," such as wireless communications.

    Changing the Landscape

    "Asia has caught the Internet fever," he said, citing statistics from Goldman, Sachs & Co. that predict Internet use in Asia will grow from the estimated 29 million users last year to 202 million by the year 2003.

    "Asia-Pacific e-commerce trade will surpass Western Europe in 2002," Chwang predicted. "Venture capital money has been pouring into dot-com startups in the past six months, and capital markets are anxiously getting ready for an Internet IPO."

    A borderless and efficient Internet economy will change the landscape of the Asia business structure, he said, adding that this trend presents companies with both a threat and an opportunity. To survive, Asian corporations must change their existing business structure if they expect to prosper in an Internet environment. This means forging new businesses to participate in the growth of the new Internet economy, while guarding intellectual property, assuring customer satisfaction and asserting technology branding. Part of this requires promoting closer communication between end users and designers.

    Still, despite the potential for fast-paced technologies and conveniences in Asia, Chwang conceded that time-honored habits and passions need to be acknowledged - and not only accommodated but actually embraced.

    "You have match logistics with lifestyle," he told the audience. "You have to match the culture." One of the most popular activities on his site, Acer.net, he said, is online gaming. A whole community of gaming aficionados has sprung up with a special penchant for mah-jong.

    "But even online mah-jong is no fun if you cannot chat," Chwang said, adding that Acer.net took special care to put in a chatroom feature especially for the mah-jong players.

    That's customer satisfaction, New Asian style.

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