Electronic Business: Concepts, Methodologies, Tools, and Applications (4-Volumes) P211

E-Business in Developing Countries foreign direct investment (FDI) in the oil and private banking industries (Walsh, 2004). India provides an example of how fundamen-tal, focused changes in policy and legislation can set free forces that accelerate Internet diffusion. While private sector initiatives expanded the Inter-net infrastructure and Internet services markets, government initiatives promoted the expansion of the Internet into parts of the country not well served by private ISPs (Wolcott et al., 2003). Prakash (2005) considers the importance of ICT (Information and Communications Technol-RJ\LQ³OHDSIURJJLQJ´,QGLDLQWRWKHNQRZOHGJH era. Not everyone agrees, however, with the Indian Government’s focus on ICT. Rather than acting to leapfrog India into the forefront of the global knowledge community, Mir and Mir (2005) sug-JHVWLWVUROHVKRXOGEHPRUHRI³FDWDO\VLV´$VVXFK ICT works better when integrated into existing institutional programs of growth and welfare. Catalysts have more of an accelerating or facili-tating role, rather than a transforming one, and work upon activities already taking place. Culture As with China, the societal culture, as well as the RUJDQL]DWLRQDOFXOWXUHLQÀXHQFHVWKHDGRSWLRQ rate of IT in India (Dasgupta et al., 1999). Poverty levels are high in India, but some of the best run VRIWZDUH¿UPVDOVRH[LVW&KHXQJD2QO\ a fraction of the population can be considered a target for Internet use, but that part is well edu-cated, media-savvy, and an early adopter of new technology. Indian users tend to be young, male, and members of the middle class and above. Indian XVHUVSUHIHUHPDLODQG:HEVXU¿QJUDWKHUWKDQ online shopping. Their reluctance to use credit cards also reduces the rate of growth of B2C activities (Cheung, 2001b). India has a relatively high capacity for entre-preneurship, especially necessity-based, rather than opportunity-based entrepreneurship (Rao, 2002b). Young, moderately educated and well- off men are more likely to be entrepreneurs, as social rigidities still reduce the chances for women. However, changes are occurring. Poverty stricken rural areas are being targeted in India for IT development (Rao, 2002c). Some of these initiatives encourage women entrepreneurs to develop Web based businesses. For example, an Indian Institute of Technology project put women in charge of running 80% of the fast-growing number of Internet cafes and kiosks in Madras (News, 2004). Most IT commercial initiatives are focused on products for global markets, but there are also ³SURSRRU´LQLWLDWLYHVWKDWKDYHEHHQJHQHUDWHGE\ Indian IT institutions in an attempt to narrow the digital divide (James, 2003). Some of these have included small-scale rural telephone exchanges and ultra-low cost computers to provide the rural poor with access to the Internet. For example, less than 1% of the Indian population has access to a computer and more than 40% are illiterate, but a government initiative has developed the SIM-PUTER, an inexpensive, portable, battery-oper-ated, hand held computer. The SIMPUTER has text to speech capabilities and voice mail, but no keyboard. It can break written words into sounds in English, Tamil, Hindi, and Kannada (Meall, 2002). One interesting application has been in the %D\RI%HQJDOZKHUH¿VKLQJYLOODJHVQRZKDYH access to U.S. Navy weather forecasts, helping to NHHS¿VKHUPDQVDIHDVZHOODVVKRZLQJORFDWLRQV RI¿VKDQGFXUUHQWPDUNHWSULFHV Other direct impacts of ICT on development in India include providing market and other in-formation, acting as electronic marketplaces in poor communities, farm cooperative information, farm management tasks, and other applications in education, healthcare, and governance (Quibria et al., 2002). Traditional farmers in remote Indian villages are now conducting e-business through ITC, one of India’s largest agribusiness companies, which has created the e-choupal concept (Sawhney, 2002). Using ITC computers charged by solar panels 2034 E-Business in Developing Countries and backed by batteries, e-choupals are like an integration of Internet kiosk, village gathering place, and e-business hub. Since their launch in June 2000, e-choupal services have reached 600,000 farmers in 6000 villages. Farmers gain by lower transaction costs and better prices and ,7&EHQH¿WVIURPEHWWHUTXDOLW\SURGXFHKLJKHU prices in the international marketplace, and sav-ings on procurement. E-Business Such data as exists indicates that e-business is ment and educational levels need to increase to allow e-business to occur. Economic growth will rely on complex interactions between private ¿UPVWKHSXEOLFDQGSULYDWHVHFWRUVDQGZLWKLQ and between governments. Foreign Direct In-vestments (FDI) and exports are seen as key to continued growth of the China economy (Yao, 2006). However, IT is also expected to have an important role in the continued development of China (Lemon, 2005). China appears to have several advantages over India in the race to economic development through ITC (Thiagarajan, 2002). limited in India, although it appears ready for rapid growth in the near future. Online consumer purchases were about USD 130 million in 2004/5 and are expected to increase to USD 550 million by 2006/7 (E-Commerce, 2005b). Low PC and Internet penetration, security issues, among oth-ers, are holding back e-business in India. E-mail is used by 98% of Internet users in India, while banking is used by 32%, online bill payment by 18%, and stock trading by 15% (eMarketer, 2006). This data suggests a slow, but steady increase in e-business. DISCUSSION While Internet usage is growing rapidly in both India and China, both countries suffer from poverty, illiteracy, and poor ICT infrastructure. Technology transfer is affected by cultural and political differences. Thus, we should see a differ-ence in rate of technology adoption and direction • The general infrastructure is superior to WKDWRI,QGLDERWKLQ¿[HGOLQHVXEVFULEHUV and Internet penetration. China has invested about ten times as much in telecommunica-tions as India and is spending about three times more than India on telecommunica-tions, as a percentage of GDP. • China attracts more foreign direct invest-ment (FDI) – many times that of India. Much of this investment is going into the China IT LQGXVWU\FUHDWLQJVLJQL¿FDQWRSSRUWXQLWLHV for employment. • China policies allow for rapid clearances and approvals for technology businesses, HVSHFLDOO\WKRVHORFDWHGLQ¿YHHFRQRPLF zones and technology parks. • China has a stronger domestic sector than does India, allowing it to absorb production that may not be exported. In addition, the centrally planned policies of of economic growth between China and India. A number of observers see technology as HQDEOLQJ GHYHORSLQJ FRXQWULHV WR ³OHDSIURJ´ the development process (Miller, 2001). While technology can be an enabler, the development process is much more complex than technology alone can rectify (Quibria et al., 2002). Govern-ment policies and regulations must not restrict businesses excessively. Infrastructure develop- China have focused on developing infrastructure nation-wide and especially in rural markets, and are quite dispersed. On the other hand, India’s market–oriented policies are not focused on the broad access to broadband, but rather on serving relatively few outsourcing companies serving the global community (Economist, 2005). Yet, a number of obstacles stand in the way of adopting e-business. Wang (2002) lists ten 2035 E-Business in Developing Countries obstacles he thinks most important. Among them are three critical issues for China that differ from obstacles in India: computer and English illiteracy among elderly business decision-mak- to light the issues of censorship, free markets, and Internet control (Elgin, 2006). On the other hand, India has some advantages over China (Thiagarajan, 2002). HUVLQVXI¿FLHQWWHFKQLFDODQGOHJDOSURWHFWLRQ and incomplete understanding of the real sense of e-business. Computer and English literacy are lower in China than in India. Colonization by the British in India required English as the lingua franca used for business and government communica-tions. There has been no such systematic use of English in China. Computer literacy is probably also higher in India because of the huge software outsourcing business. Technical and legal protec-tion in China is lacking. The legal system in India tries to protect intellectual property rights. Finally, an understanding of e-business has come late to China (Wang, 2002). E-business is not merely the use of e-mail and Web sites – it includes all the business processes that can be made more ef-¿FLHQWWKURXJKWKH,QWHUQHW,QGLDKDVVXEVWDQWLDO experience with software outsourcing to aid in their use of supply chain management, including the ordering, producing, marketing, paying, and • ,QGLDKDVDJUHDWHUÀXHQF\LQ(QJOLVKWKH language of the Web. This, and the train-ing of a large number of skilled technology workers, has enabled India to capitalize on its offshore outsourcing initiatives. China ZLOOKDYHDGLI¿FXOWWLPHLQFDWFKLQJXSRQ outsourcing. • The Indian government has also favored the software industry and encouraged it through tax incentives. • Χ India probably has the highest number of SEI-CMM (Software Engineering Institute – Capability Maturity Model) Level 5 engi-neers in the world. The combination of this FHUWL¿FDWLRQRITXDOLW\DQGJRRGPDQDJH-ment systems and processes has allowed Indian software suppliers to perform projects ZLWKJUHDWHI¿FLHQF The rapid growth of Indian software and delivering processes. E-payment has been an obstacle to e-business in China, although Alibaba and its subsidiary auction site, Taobao, plan to use Taobao’s online payment tool, AliPay, for Alibaba’s B2B e-busi-ness site (Agency, 2005). Also, China still has control issues, which it attempts to address by prohibition of certain activities. China is thought to have the most VRSKLVWLFDWHG ,QWHUQHW ¿OWHULQJ UHJLPH LQ WKH world and uses it in various ways to prevent citizen access to political, religious, and other sensitive information (Bambauer et al., 2005). A recent example is the registering of bloggers and enlisting ISPs to help prohibit content that refers to democracy or political change (Chan, 2005). Even more recently, a controversy about Google, Yahoo!, and Microsoft’s presence in China brings outsourced IT services has been a catalyst for continuing technology-based change and integra-tion into the global economy (Sarkar & El Sawy, 2003). It has not hurt, either, that this growth is primarily outward focused on providing the large economies of North America and Western Europe ZLWKVRIWZDUHDQGEDFNRI¿FHVHUYLFHV&KLQDRQ the other hand, has focused more on internal e-business and the production of electronic products (Xu et al., 2004). The Indian experience of integration of Internet into business is an example of how fundamental, focused changes in governmental policy and regulations can accelerate Internet diffusion. While private sector initiatives expanded the infrastructure for the Internet, governmental initiatives promoted Internet expansion to parts of the country poorly served by ISPs (Wolcott et 2036 E-Business in Developing Countries Table 3. E-business readiness rankings and scores—2004-2005 2005 Rank Denmark 1 India 49 China 54 Source: (Unit, 2005) 2004 Score (of 10) Rank 8.74 1 4.17 46 3.85 52 Score (of 10) 8.28 4.45 3.96 Table 4. Summary of e-business differences between China and India (Data from various sources indi-cated in text + or _ indicates the degree of difference) Factor Regulatory Environ-ment Infrastructure Policy Culture China + focus on consumers +++ broadband high penetration +++ mobile ++ central policy is very focused on growth throughout China + literacy >90% - English & computer (low literacy levels) - entrepreneurship - Poverty India + focus on business, but primarily offshor-ing + broadband - mobile + less planning for growth – mostly focused on key offshoring centers - literacy < 60% + English and computer (higher literacy levels) ++ entrepreneurship - Poverty Advantage China China China India Inter net Users (2004) 95.8 million (2005 est. 100 mil- 18.481 million China lion) Internet Penetration (2004) E-Readiness Current e-business * (2004/5) Expected e-business * (2006/7) 7.48% 54 $41.99 billion (Chinese source) $16 billion (non-Chinese source) 3.77% China 49 India $150 million China $550 million China * As indicated in the text, estimates vary depending on source. These are reported values for both B2B and B2C. B2B is the largest portion in both China and India. al., 2003). Like China, India still has problems of poverty and unequal distribution of wealth, as well as infrastructure problems to overcome. China has promoted a strategy of competition among government-owned organizations, while India has set policy through publicly visible task forces. India’s approach is relatively more trans-parent and market driven than China’s (Press et al., 2002). It is unclear at this stage which approach will yield faster economic growth in 2037 E-Business in Developing Countries e-business, although China seems to have the advantage currently. By many measures, China is ahead of India in the ITC race and is likely to remain so at least in the near future (see Table 3). However, we see India as progressing rapidly in adoption of ITC especially in business applications. In fact, the Economist Intelligence Unit (Unit, 2005), in its 2005 e-readiness rankings, lists India at 49 out of 60 countries measured and China at 54 (Table 3). The e-readiness rankings are based on a number of items comprising six weighted categories: con-nectivity and technology infrastructure—25%; business environment—20%; consumer and business adoption—20%; legal and policy en-vironment—15%; social and cultural environ-ment—15%; and supporting e-services—5%. Both countries dropped in ranking somewhat from the previous year. China’s consumer and business adoption, legal and policy, social and cultural environments, and supporting e-services indices are lower than India’s. China’s lower level RIHQWUHSUHQHXULDOLQLWLDWLYHVLVDOVRUHÀHFWHGLQ the rankings. China does do slightly better in connectivity and technology infrastructure and business environment. The drop from the previ-ous year, and growth in the top ranked countries, should be of concern to both countries, though. The e-business rankings are interesting because they suggest that to succeed in e-business, a number of business and cultural factors must be in place, not just technological factors. Also, the rankings suggest that although e-business is growing rap-idly in both countries, it is not yet large enough to transform large parts of their economies. However, both countries continue to attract foreign direct investment in technology. The e-readiness rankings and other sources suggest that adoption of Internet and e-busi-ness technologies does not automatically result in increased e-business. Like other businesses, HEXVLQHVVUHTXLUHVJRRGPDQDJHPHQW¿QDQFH marketing, and other business processes (Oyc-laran-Oyeyinka & Lal, 2004). In order for any business, but especially e-business to succeed in international markets, understanding these mar-kets and their consumers, whether other businesses RU¿QDOFRQVXPHUVLVFULWLFDO([SRUWSURPRWLRQ councils set up by industry and government can help entrepreneurial e-businesses in both India and China market to appropriate markets. Gov-ernments and industry should not neglect this critical element. CONCLUSION AND RECOMMENDATIONS $QXPEHURIVWXGLHVKDYHFRQ¿UPHGWKDW&KLQD is generally ahead of India in Internet infrastruc-ture development and e-business (Press et al., 1999, 2002), but others see it differently. Kshetri (2005), for example, argues that because India has a higher e-readiness rank (Table 3), it is actu-ally better prepared for e-business than is China. The e-readiness rankings consider a number of IDFWRUVDQG,QGLDKDVEHWWHU³OHJDOVXSSRUWIRU virtual transactions and digital signatures, well-developed private sector and entrepreneurship, the regulatory environment including taxation, and openness to trade and investment” (p. 11), among others. Improving IP protection and more consistent application of the rule of law will help China achieve greater development through the Internet and e-business. While the adoption of technology to enable e-business in China is occurring rapidly, conducting e-business transactions is lagging, due to barriers in business, legal, and cultural perspectives that fail to adapt to the potential of the technology (Tan & Ouyang, 2004). The major differences between e-business in China and India are sum-marized in Table 4. While India will probably not overtake China in the ITC race anytime soon, we do see India attempting to uplift its poor rural areas through technology and also penetrate large foreign markets. Of course, there is a long way to go and as urban areas in both countries 2038 ... - tailieumienphi.vn