CEOs In Asia See Electronic Business as Major Source of Future Revenue, Survey Says.

SINGAPORE--(BUSINESS WIRE)--Oct. 12, 1998--

Consensus is that e-business Will Change Competitive Landscape

CEOs Also Say, in Essence, "No Worries" Regarding Y2K 

CEOs in Asia plan a major push toward electronic business as a competitive necessity, and with expectations that doing so will lead to major revenues within the next five years.

That according to a major new survey of CEOs in Asia, conducted by PricewaterhouseCoopers and the World Economic Forum.

The survey results were released at the World Economic Forum's 1998 East Asia Economic Summit. Nearly 300 CEOs from major companies in nine Asian countries took part.

The survey found that CEOs in Asia see electronic business as prospectively having a profound impact on competition. "Electronic business" was defined broadly, as use of internet and intranet technologies to sell things, provide services, recruit personnel and utilize suppliers. Nearly three quarters (73%) of CEOs surveyed believe that e-business will either "completely reshape" or have a "significant impact" on competition in their industries.

E-business will also have a significant impact on net revenues, they predict. Fully a fifth of CEOs surveyed see more than 20% of their total revenues coming from e-business in five years. Another fifth estimate total e-business revenues in the 11-20% range, another fifth in the 6-10% range. These predictions are all the more impressive when measured against e-business today, when 40% of the sample say they derive no revenues at all from e-business, and another 35% are in the 1-5% range.

PricewaterhouseCoopers Chief Executive Officer Jim Schiro presented the results, and commented, "To meet these projections, e-business will need to grow incredibly quickly in Asia. But we don't doubt the ability of these CEOs to make that happen. They realize what's at stake, from a global competitiveness standpoint."

Indeed, it's not just traditional competition that drives these CEOs' views toward e-business. A large majority of CEOs surveyed see the prospect of non-traditional competitors using e-business as their main channel to customers. Nearly a quarter (23%) of the CEOs regard this as an "extremely likely" prospect, another 36% view it as "somewhat likely." "E-business changes the competitive landscape by opening up a whole new means of access to the customer," said Jim Schiro. "Just look at the success of Internet-based booksellers in the U.S. As more countries throughout Asia get `wired,' as Internet usage continues to expand, look for more non-traditional, `electronic' competitors to proliferate."

Interestingly, the survey found that Japanese CEOs as a group have stronger opinions on the future of e-business than their counterparts throughout the rest of Asia. Twenty-two percent of Japanese CEOs believe that e-business will "completely reshape" competition in their respective industries, as opposed to 9% of Asia at-large CEOs who share that strong viewpoint. Also, 35% of Japanese CEOs took the view that it's "extremely likely" that non-traditional competitors will emerge in e-business, as compared to 17% of Asia at-large CEOs who feel the same way. However, the Japanese are much less likely than their Asia at-large counterparts to see e-business revenues exceeding 10% of total revenues, within five years.

Again taking an overall view, the survey verifies that at the heart of these CEOs' sense of urgency about e-business is a focus on the customer. Of various reasons why a company would expand its e-business, servicing existing clients more efficiently topped the CEOs' lists, followed by creating channels to new customers. Other reasons consistently ranked as "extremely important:" reducing operating costs and dealing with suppliers more effectively. Recruiting employees was seen as a strictly secondary rationale for e-business.

Focusing specifically on the Internet, the PricewaterhouseCoopers-World Economic Forum survey found a surprisingly high number of CEOs in Asia who claim to be regular Internet users. Nearly 60% of the CEOs say they personally use the Internet for purposes other than e-mail on at least an occasional basis. At the extremes: 20% say they've logged on more than 10 days out of the preceding month, 34% say they haven't logged on at all in that period.

Despite a relatively high rate of usage, these CEOs report there is room for improvement in terms of their level of Internet sophistication. Forty-three percent call their level of Internet sophistication "fair" and 30% say "poor." Look for that to change, says Jim Schiro: "CEOs recognize that in the next 10 years, they're going to have to become more sophisticated not only with respect to the Internet, but to information technology applications in general. Faster decisions will be expected, based on better data. Using IT to support analysis, decisions and operations will become a CEO core competence."

In the area of Internet regulation, the CEOs surveyed are libertarians. Nearly two thirds overall (63%) agree that the Internet should be allowed to grow with "absolutely no" government regulation, although 32% of Japanese CEOs disagree on that point. They're united, however, in opposing taxation of Internet access and transactions (70% agreement). And they agree with near unanimity on the urgent need for global standards being developed for privacy protection, security and authentication, and dispute resolution.

Finally, the survey asked CEOs how concerned they were about their companies' readiness for the Year 2000. Stories in the global business press paint a grim picture of companies struggling to prevent major problems with their enterprise-wide computer systems when the date changes from "99" to "00" in about a year. However, CEOs in Asia don't appear to be overly concerned. Nearly nine out of ten (87%) say their company is prepared to deal with Y2K. And, more than two thirds (68%) say their company has given a great deal or fair amount of time to ensure that their trading partners, such as suppliers, are equally prepared. "We can only conclude that CEOs in Asia have been a little more far-sighted on Year 2000 than their counterparts in other parts of the world," said Jim Schiro. He continued, "Or, if their computers are on the traditional Asian calendar, of course they have no Y2K problem to contend with."

Interviews for the PricewaterhouseCoopers-World Economic Forum CEO survey were conducted by independent market researchers during the months of July and August, in China, Hong Kong, Japan, Korea, Malaysia, Philippines, Taiwan, Thailand and Singapore. A total of 282 chief executives participated in the survey. Results from the survey of CEOs in Asia will be included in the second annual PricewaterhouseCoopers-World Economic Forum Global CEO Survey, to be released at the World Economic Forum's Annual Meeting in Davos, Switzerland in January, 1999.

PricewaterhouseCoopers (www.pwcglobal.com), the world's largest professional services organization, helps its clients build value, manage risk and improve their business. Drawing on the talents of more than 140,000 people in 152 countries, PricewaterhouseCoopers provides a full range of business advisory services to leading global, national and local companies and to public institutions.

The World Economic Forum (www.weforum.org) is the foremost global partnership of business, government, intellectual and other leaders of civil society committed to improving the state of the world. Incorporated since 1971 as a foundation, the World Economic Forum, an international membership organization, is independent, impartial, and not-for-profit, tied to no political, partisan or national interests. The motto of the World Economic Forum is, "Entrepreneurship in the global public interest."

NOTE: A full copy of the report is available as a pdf file at the PricewaterhouseCoopers web site, www.pwcglobal.com.