PACIFIC BASIN ECONOMIC COUNCIL
MAIN PAGE | EVENTS & PROGRAMS | 2001 | IGM | SPEECHES | KEIJI TACHIKAWA
Regional Vitality in the 21st Century
April 6-10, 2001 Tokyo, Japan
Mr. Keiji Tachikawa
Good morning, I am Keiji Tachikawa. It is my honor to have been invited to speak in front of this distinguished audience. In my presentation today, I would like to describe the current state and future prospects of e-commerce and mobile commerce transactions. Let me first sort out the types of E-commerce. In terms of who it is for, we can put it into two categories - B to B, business to business, and B to C, business to consumers. B to B transactions can be further divided into four categories, in terms of the relationship between buyers and sellers, while B to C divides into three, in terms of the purpose of purchase. Let's take a look at more specific images of these transactions in the following slides. The initial form of B to B transactions has been mostly used for procurement of parts and raw materials, and it is a one-to-one transaction between a buyer and a seller. Converting conventional transactions into electronic transactions can contribute to enhancing the efficiency of the order placement process. However, the degree of improvement may not be substantial. With increasing use of the internet, corporations began to work on improving productivity through the introduction of IT. As shown here with the example of GE, more and more companies are setting up their own portal sites, in an effort to make their transactions with clients more efficient. In other words, this has developed into a "one to N" E commerce transaction. As result, with only the initial investment of creating a portal site, the seller can deal with multiple number of buyers, and the buyers in turn can easily obtain information or place orders anytime, 24 hours a day. Another example of a further evolved format led by buyers is "N to 1" transactions, exemplified by internet auction sites. Buyers are able to find sellers who meet their conditions without much work, while sellers can obtain orders from new customers without having to do sales activities. We are seeing the emergence of e-commerce transactions with "N to N" buyerseller relationship. A typical example is so called e-market place. A third party company that manages the market handles the payment and manages the database, so both sellers and buyers can enter the market with just a small initial investment of a membership fee. The great advantage is that, through the increasing number of participants, there are more opportunities for possible transactions. One of the objectives of B to C e-commerce transactions is purchase of hardware. This is an example of a personal computer - It has the advantage of not having to physically go to shop, and you can do shopping at your leisure, while disadvantages are the logistics cost and some time lag between the time of ordering and receiving of the actual hardware. The second possibility is the purchase of software. The purchase of things that can be made into software forms, such as music or games, does not have disadvantages like time lag, and thus you are able to maximize the benefits of e-commerce. Indeed, this is the field with great prospects for future market growth. I would like to mention the third objective, which is money transfer. Like the purchase of software, financial transaction is another category that best fits electronic commerce. In addition to the transfer of funds between personal accounts through the internet or i-mode, more and more electronic money transfers are made with further advances in security technology. We've been looking at e-commerce transactions in general, but let's focus on mobile commerce utilizing mobile communication devices. Some of the examples of electronic settlement while moving are:
Leveraging the strengths of mobile communication such as 1) mobility, 2) immediacy, 3) remote capability and 4) ease of use, we are projecting a further growth of the mobile commerce market going forward. This is an example of mobile electronic settlement. Electronic settlement based on the PKI (Public Key Infrastructure) provides privacy protection and secure financial settlement. For the security protocol, SSL (Secure Socket Layer) is used, realizing proper authentication process to ensure the identity, as well as end-to-end encrypted communication capability. Installation of a removable IC card (UIM - User Identity Module) on the cellular phone realizes a high degree of secrecy and sophisticated functions. We are providing secure communication, as well as added values capable of supporting various electronic settlement functions. According to an ECOM survey, the size of the B to B market in 2000 was 22 trillion. It is projected to grow to approximately 110 trillion, a five-fold increase in the next 5 years. On the other hand, size of the B to C market in 2000 was 824 billion. It also states that, through rapidly growing use of mobile internet, a 60-billion-yen mobile commerce market was newly created in 2000 alone. B to C market is expected to continue its steady growth. It is projected to be 13 trillion 300 billion in 2005, out of which 2 trillion 450 billion would be mobile commerce. Looking from a different perspective, 70 percent (200 trillion) of the total B to C market (290 trillion) is currently being paid by cash transaction. In this cash transaction, the purchase of goods and services directly connected with daily lives are included; example for general merchandise, food, music, books or entertainment. We call this type market "micro payment market." If the purchase of goods and services in this micro payment market is to be done through terminals instead of cash, one can say that the M-commerce is a 200 trillion market. As we have seen, e-commerce is rapidly growing in the 21st century. Concurrently, in the mobile world, IMT-2000, the Third Generation mobile communication service with the capability for much faster, broad-band communication will be starting soon. Through the introduction of IMT-2000, capability to handle mobile commerce would significantly increase. As a mobile communications carrier, we will continue our efforts so the mobile commerce will have even more growth than expected, leading to a greater economic growth. Thank you very much for your attention today. |