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Internet helps rewire Asian economies

Update: April, 19/2013 - 09:38

Le Hung Vong

SINGAPORE (VNS)— Small and medium businesses (SMBs) are using the Internet to rewire Asian economies and small and medium enterprises in Asian countries are proving themselves the real engines of growth, experts said at a conference held by Google Asia-Pacific in Singapore on Wednesday.

Speaking at the conference titled Helping Small Business Think Big, Google Asia-Pacific President Karim Temsamani said, "Asia's small businesses are going through a transformation. These small businesses will lead the rest of their economies onto the Internet."

The number of SMB advertisers in India, the Philippines, Viet Nam, Hong Kong, Australia, New Zealand, Indonesia, Singapore, Japan, Taiwan, and Thailand is growing faster than in the US or Great Britain, Temsamani said.

He said it was significant change from the immediate past. For fifty years, Asian business had been defined by conglomerates, chaebols and keiretsu.

"The industrial revolution rewarded companies that were large because they were able to reach markets around the world. The bigger your company, the lower your average costs. Large companies could fund campaigns to access foreign markets. Large companies made it easy for rising Asian economies to direct industrial policy," said Temsamani.

The Internet has changed this equation. It is helping to kick off an "industrious revolution" where hard work and great ideas matter more than size and resourcefulness matters more than resources. And growth will help fund businesses as much as size, he said.

"Today, in 2013, almost any business in Asia could make use of the Internet to make it big. They're starting up a business and looking for anything that will work. They don't have big IT departments or legacy systems constraining their thinking. They use whatever works. And in the process, without planning to, they become Internet businesses," he said.

A small business can advertise not just to people in the immediate area, but to everyone with an Internet connection — 2.5 billion people.

It can buy text ads, video ads, mobile ads that reach millions of people for less money than a basic offline marketing campaign would 10 years ago.

Internet use constraints

Anu Madgavkar, a senior fellow from the McKinsey Institute, cited figures from Viet Nam Chamber of Commerce and Industry for 2012 that say Viet Nam has some 400,000 small and medium enterprises (SMEs) that contributed an estimated 40 per cent of the country's GDP, 20 per cent of its exports, and employed 77 per cent of the country's workforce.

In 2010, the Internet contributed one per cent to Viet Nam's GDP compared with 5 per cent to the GDPs of South Korea and Taiwan; 4 per cent for Japan and Malaysia, 3 per cent for China; and 2 per cent for India.

In 2011, 84 per cent of SMEs in Viet Nam attained high-speed Internet access, compared with 98 per cent in South Korea, 96 per cent in China, 87 per cent in Japan, 86 per cent in Malaysia; 82 per cent in Taiwan and 81 per cent in India.

Madgavkar said low bandwidth speed and equipment costs are the two top contraints that limit Internet usage amongst SMBs in Asia.

The other constraints include cost of Internet access, lack of education, high cost of mobile plans, lack of trust, lack of reliable postal system, insufficient local businesses online, high cost of smartphones and lack of Internet infrastructure, he said.—VNS


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