1. E-Commerce Trends in Asia
Kurt Cavano
Chairman and CEO, TradeCard
September 2004
Presented at American Chamber of
Commerce Taipei

2. Ensuring Asia’s Competitive Advantage
• Low cost labour is not enough to maintain Asia’s success as
workshop of the world; buyers move on to the cheapest location
when production costs go up in Asia
• Asia’s traders need real-time information to fulfill their buyers’
growing demands for faster turnaround and shorter lead-times
• Greater visibility helps to reduce cost and credit risk
• Paperless trade through automation ensures better relationships
with overseas trading partners
• Overseas buyers are only willing to purchase from those vendors
that can meet electronic/automated service requirements
2

3. B2B eCommerce Trends
• In 2004, US$992 billion, or 13% of all B2B transactions globally
will happen in Asia/Pacific (Gartner Group)
• However, security concerns are still a serious impediment to the
growth of e-commerce
• Pan-regional efforts on the implementation of a secure e-
commerce infrastructure for trade, such as the Pan Asian Alliance
and APEC’s efforts show, getting rid of paper is key in maintaining
a competitive edge in the Asia-Pacific region.
3

4. What the Analysts are
Saying

5. How Ready is Asia for E-Business?
The Economist Intelligence Unit produces “E-business readiness rankings”
every year whereby countries are assessed according to the following
criteria:
• Technology infrastructure
• General business environment
• Degree to which e-business is adopted by consumers and companies
• Social and culture conditions that influence Internet usage
• Availability of services to support e-businesses
5

6. Economist Intelligence Unit E-Readiness
Survey – Ranking Globally
2004 e-readiness score (of 10) out of 70 countries
8.4
The annual EIU survey
8.2
assesses countries’:
8 -technology infrastructure
- general business
7.8
environment
Score
7.6 - degree to which e-
business is being
7.4 adopted by consumers
and companies
7.2
- social and culture
conditions that influence
7
Internet usage
6.8 - the availability of
South Korea
Taiwan
France
New Zealand
Switzerland
Australia
Singapore
Netherlands
Ireland
Canada
Sweden
UK
Denmark
Hong Kong
Finland
US
Austria
Belgium
Germany
Norway
services to support e-
businesses
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Country & ranking
6

7. Economist Intelligence Unit E-Readiness
Survey – Ranking of Asian Countries
2004 e-readiness score (of 10) out of 16 countries
9
The annual EIU survey
8
assesses countries’:
7
-technology infrastructure
6 - general business
5 environment
E-readiness Score
4 - degree to which e-
business is being
3 adopted by consumers
2 and companies
1 - social and culture
conditions that influence
0 Internet usage
New Zealand
South Korea
Hong Kong
Philippines
Singapore
Indonesia
Australia
Malaysia
Pakistan
Taiwan
Vietnam
Thailand
Sri Lanka
China
Japan
India
- the availability of
services to support e-
businesses
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Country & ranking
7

8. Asian Countries are Catching Up*
• After Western Europe,Asia-Pacific is the next-best represented region in the 2004 e-
readiness rankings. Singapore (7th) and Hong Kong (9th) are in the top ten, followed by
Australia (12th), South Korea (14th), New Zealand (19th),Taiwan (20th) and Japan (25th).
• Asian governments are intimately familiar with each other ’s e-development practices and
increasingly, there is cooperation at both the national and the industrial level.
• Despite the rapid growth of e-trading platforms, particularly in the regional finance and
trading hubs of Singapore and Hong Kong, enabling technologies such as digital
signatures and digital rights management remain under-utilised by businesses.
• This is not for lack of legal infrastructure; even Thailand has passed legislation recognising
the legitimacy of digital signatures. But Asian banks, a key link in the e-commerce chain,
have not adopted them in their own transactions, let alone mandated them in their clients.
*Source: Economist Intelligence Unit, E-readiness rankings 2004 8

9. Forrester Research’s eCommerce
Predictions
Global eCommerce Predictions for 2004 (Forrester Research)
3.5
3
2.5
Total (USD) trillion
Region Total (USD) trillion
2
North America 3.5
Asia Pacific 1.6
Western Europe 1.5 1.5
Latin America 0.816
Rest of World 0.686 1
0.5
0
North
Asia
America Western
Pacific Latin
Europe Rest of
America
World
9

10. Gartner Group’s Predictions for B2B
Transactions 2000-2004
Transactions Transactions in
Region in 1999 2004
World 145 billion 7.29 trillion
US 63% of above 39% of above
Europe 31.8 billion 2.34 trillion
Asia-Pacific 9.2 billion 992 billion
Japan 11.1 billion 861 billion
Latin
America 1 billion 124 billion
10

11. Electronic Trade Initiatives
in Asia

12. Electronic Trade Initiatives in Asia:
Overview
- many regional and
national e-commerce
ABCDE Plan DTTN
initiatives in planning and
(Taiwan) (Hong Kong)
implementation stages
APEC e-commerce PAA
Initiative
E-ASEAN
Singapore Trade-
net
12

13. Taiwan: ABCDE Plan
• 1999: implementation of the Industrial Automation and Electronic Business
Program (iAeB Program) under the Ministry of Economic Affairs (MOEA)
• Aim: help companies in the information industry to establish electronic supply
chain systems, as well as to encourage thousands of Taiwanese small and
medium enterprises (SMEs) to acquire the basic capabilities needed for
business-to-business (B2B) e-commerce.
• 2001: implementation of Projects C, D and E, building on existing electronic
supply chain system as the foundation for further integration of money flow,
materials flow and R&D and design
• Aim: to provide companies in all segments of the supply chain with e-services for
cash flow, delivery system and uniform engineering collaboration, and to
strengthen their logistics management capability.
13

14. Hong Kong: DTTN
• The Digital Trade and Transportation network is an initiative by the HK
government and electronic trade services provider Tradelink (42% government-
owned) to help smooth trade flows
• DTTN seeks to provide a shared electronic infrastructure to enable the
exploration, development, and delivery of innovative value-added services to
improve competitiveness in trade and logistics
• DTTN will facilitate 10 major processes, from creating sales/purchase contracts
and insurance to arrangement/execution of transporation and submission of
trade declarations and other licenses.
14

15. Asia: Pan Asia e-Commerce Alliance
• Aim: Create a regional electronic trade infrastructure for secure e-commerce
between traders in PAA member countries or economies which include Hong
Kong, Taiwan, Japan, Korea, China, Singapore, Malaysia and Macau. Thailand
and Indonesia send observers and are potential members.
• Activities include
– creation of a Secure Cross Border Transaction Service, with a set of
electronic trade documents
– Pan-Asian Trade Portal
• PAA members use PKI (Public Key Infrastructure) for e-commerce
security, and are using digital certificates issued by Certificate
Authorities under a mutual recognition scheme operated under PAA.
• Current PAA cross-border electronic trade chains are claimed to provide
cost savings of 40% or more compared with manual methods
15

16. Singapore: Trade-net
• Nationwide electronic trade documentation system that approves permit
applications almost instantaneously
• Allows electronic submission of permit applications to multiple government
bodies for processing of import, export, and transshipment documentation.
• When an application is approved, a permit message will be returned
electronically to the sender
• Singapore's success in e-government, coupled with its citizens' acceptance of
this program, demonstrates yet again their willingness to accept new technology
16

17. e-ASEAN Information Infrastructure
• Establishment of e-ASEAN information infrastructure and growth of electronic
commerce
• ASEAN governments commit themselves to foster a favorable legal and policy
environment for the development and use of Information and Communication
technologies (ICT)
• e-ASEAN aims for the liberalization of trade in products and services and the
promotion of investments in the production of ICT products and in the provision
of ICT services.
• Establishment of a system of mutual recognition of digital signatures; secure
electronic transactions, payments and settlements; protection of intellectual
property rights arising from e-commerce; measures to promote personal data
protection and consumer privacy; and dispute settlement mechanisms.
• Aim: to reduce the digital divide between developed and developing nations
17

18. APEC E-Commerce Steering Committee
• APEC member countries are working towards a cross-border paperless trading
environment
• Through the 1998 APEC Blueprint for Action on e-Commerce, member
economies are committed to a goal of achieving “Paperless Trading,” where
possible, by 2005 for developed economies and 2010 for developing economies.
• Sixteen economies have now prepared Paperless Trading Individual Action
Plans. These outline the steps APEC economies are taking to meet APEC's
target to reduce or eliminate the requirement for paper documents needed for
customs and other cross-border trade administration and other documents and
messages relevant to international sea, air and land transport.
18

19. Trends in Global Trade

20. Trends in Global Trade Dictate the Use of e-
Commerce Technology
• Increased sourcing from lower cost regions
• Decrease in use of Letters of Credit and increase in open account
transactions as payment method
• New government programs in the US to ensure security and
secure supply of goods (24-hour manifest rule, C-TPAT etc)
• Increasing demand for vendor managed inventory
• Increasing demand for more frequent and smaller shipments
• Continued adoption of supply chain and payment technologies by
overseas buyers
• Quota systems demands flexibility
20

21. A Unique Opportunity: Financial Supply
Chain Management
• Asian governments understand the necessity for automating documents, but
connecting the physical flow of goods with the financial processes revolutionizes
the whole concept of global trade.
• “The good news is that $260 billion in cash is concealed in the financial supply
chains (of the Global 2000) and it will not be that difficult to liberate.” (Source: Killen and
Associates)
21

22. What Is the Financial Supply Chain?
“ Financial Supply Chain parallels the physical or materials supply chain
and represents all transaction activities related to the flow of cash from the
customer’s initial order through reconciliation and payment to the seller.”
Killen and Associates, Inc.
• Financial Supply Chain Management consists of automating and optimizing
the order-to-cash cycle for suppliers and the procure-to-pay cycle for
customers.
– Purchase order – Cash management
– Invoice and EIPP – Dispute resolution
– Credit protection – Payment
– Financing – Analysis
22

23. How the Supply Chain is Completed:
The Financial Supply Chain
Movement of Movement of
Documents Documents
Data Data
& &
Physical Goods Money
Raw
Retailer /
Goods Manufacturer Customer
Distributor
Supplier
Physical Supply Chain Questions Financial Supply Chain Questions
Currently being
Optimized over
last 10 years
What to buy? What and how to pay?
optimized
When to buy? When to pay?
How much to buy? How much to pay?
From whom to buy? Who to pay?
Just-in-time-manufacturing Just-in-time-cash
23

24. A Complete FSC Solution is Flexible and
Paperless
TRADING PARTNER
AP/AR MANAGEMENT
TRANSACTION SOLUTIONS FINANCIAL MANAGEMENT
MANAGEMENT
Workflow and Event Management Patented Automated Compliance Money Movement
Move tasks within and among Checking Platform automatically initiates
enterprises on a common platform, Electronically compare electronic payment to suppliers with
with real-time notification of supply procurement and fulfillment automated wire transfers and ACH
chain events. documents to make or support transactions.
Purchase Order Management payment decisions. Credit Protection
Manage the delivery, negotiation and Payment Decisioning and Have access for suppliers to
amendments of purchase orders. Payment Scheduling payment assurance, without tying
Electronic Invoicing Decide when and how payments up credit lines, and to electronic
Present invoices electronically. should be made, whether upon Letters of Credit.
compliance or triggered by the Supply Chain Finance Programs
Document Management customer.
Route, store, and organize electronic Optimize credit availability and
documents. Discrepancy Management and usage across the supply chain with
Dispute Resolution innovative programs, including
Shipping/Logistics Documents Identify and resolve discrepancies terms extension program.
Have access to transaction data, between procurement and
including proof of delivery. Financing
fulfillment documents to enable Electronically apply for pre-and
Integration Module payment. post-export financing online.
Connect to ERP systems, EDI
interfaces, and other services or
solutions.
24

25. TradeCard AP/AR Management
Solutions Management
Financial
Trading Partner Management
1
1 2
2
Purchase Order
Purchase Order
CAPABILITIES CUSTOMER Create Purchase Order
Create Purchase Order Purchase Order Advised,
Advised, Approved, and
Advised, Approved, and SUPPLIER
(UI, EDI, ERP interfaces)
(UI, EDI, ERP interfaces) Approved, and Stored
Stored
Stored
TRADING PARTNER MGMT
 Workflow Management
 Purchase Order Management
 Electronic Invoicing AP/AR MANAGEMENT
FINANCIAL MANAGEMENT
TRADING PARTNER MGMT
7
7 3
3
 Document Management Send Commercial
Send Commercial
Discrepancy Resolution;
Discrepancy Resolution;
 Shipping/Logistics Payment Decision
Invoice and/or
Invoice and/or
Payment Decision Packing List
Packing List
Documents
 Integration Module
AP/AR MANAGEMENT
AP/AR MANAGEMENT 5 4
4
5
Payment Approval and/or
Payment Approval and/or
 Patented Automated
 Patented Automated Proof of Delivery (optional)
Proof of Delivery (optional)
Inspection Certificate
Inspection Certificate
Compliance Checking
Compliance Checking 6
6
 Payment Decisioning
 Payment Decisioning Patented Electronic Compliance:
Patented Electronic Compliance:
and Payment Scheduling
and Payment Scheduling Logistics Service
Logistics Service Compares Procurement and
Compares Procurement and Buying Office
Buying Office
 Discrepancy Management
 Discrepancy Management Provider
Provider Fulfillment Data/Documents
Fulfillment Data/Documents or Agent
or Agent
and Dispute Resolution
and Dispute Resolution
8
8
FINANCIAL MANAGEMENT
FINANCIAL MANAGEMENT Determine Value Date;
Determine Value Date;
A/P Visibility
A/P Visibility A/R Visibility
A/R Visibility
 Money Movement
 Money Movement Schedule Funds Transfer
Schedule Funds Transfer
 Credit Protection
 Credit Protection Supply Chain Financing
Supply Chain Financing Money Movement:
Money Movement: Credit Protection:
Credit Protection: Financing Banks:
Financing Banks:
 Supply Chain Finance
 Supply Chain Finance Programs:
Programs: •• JP Morgan Chase
JP Morgan Chase •• Coface
Coface  eLC
 eLC •• Cathay United
Cathay United ChinaTrust
ChinaTrust
Programs
Programs •• Various
Various •• CIT
CIT •• Bank of Communications
Bank of Communications
Bank of East Asia  Others
•• Bank of East Asia  Others
 Financing
 Financing
25

26. Summary
• In order to cope with growing global trade volumes, businesses
will need to employ new technologies
• Web-based technologies offer the most promising prospects in
managing the many challenges in today’s trading environment
• Asian economies are catching up as their governments provide
better national e-commerce infrastructures as well as engaging in
regional initiatives
• Automated financial supply chain management provides a huge
opportunity for businesses and whole economies to save costs
and improve their competitiveness
26

27. About TradeCard
• TradeCard is recognized as the leading web-based platform that enables the
global supply chain to conduct trade transactions from purchase order to
financial settlement.
• More than 800 corporate members have realized value from the TradeCard
platform including Staples, JC Penney, Linens N’ Things, Wolverine Worldwide,
Hurley International (a division of Nike), Columbia Sportswear, TAL Apparel,
Phillips Van Heusen and Vans.
• These customers enjoy access to a suite of innovative financial services offered
by our partners JP Morgan Chase, Coface (largest provider of credit insurance),
CIT and over 100 logistics firms, to move money, obtain financing, and secure
credit protection.
• TradeCard holds a patent for its data compliance engine which enables payment
decisions by comparing electronic documents.
• Backed by Warburg Pincus, Mitsui & Co., Mitsubishi Corporation and the World
Trade Centers Association, TradeCard is headquartered in New York with offices
in Hong Kong, Taipei, Brussels, Tokyo, Seoul, San Francisco and Shenzhen.
• TradeCard is sustaining double-digit growth every month.
27

28. Global Companies Using TradeCard
FOOTWEAR APPAREL RETAIL
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