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

DISCUSSION While Internet usage is growing rapidly in both India and China, both countries suffer from poverty, illiteracy, and poor ICT infrastructure.. Thus, we should see a differ-enc

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 InterInter-net 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]DWLRQDO FXOWXUH LQÀXHQFHV WKH DGRSWLRQ

rate of IT in India (Dasgupta et al., 1999) Poverty

levels are high in India, but some of the best run

VRIWZDUH¿UPVDOVRH[LVW&KHXQJD2QO\

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

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

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

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-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)

• 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\ WKRVH ORFDWHG LQ ¿YH HFRQRPLF 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 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

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-HUV LQVXI¿FLHQW WHFKQLFDO DQG OHJDO SURWHFWLRQ

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

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

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)

•  ,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

• C 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 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

2005 2004 Rank Score (of 10) Rank Score (of 10)

Source: (Unit, 2005)

Table 3 E-business readiness rankings and scores—2004-2005

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)

Regulatory

Environ-ment

+ focus on consumers + focus on business, but primarily

offshor-ing

China

Infrastructure +++ broadband high penetration

+++ mobile

+ broadband

- mobile

China

Policy ++ central policy is very focused

on growth throughout China

+ less planning for growth – mostly focused

on key offshoring centers

China

Culture + literacy >90%

- English & computer (low literacy levels)

- entrepreneurship

- Poverty

- literacy < 60%

+ English and computer (higher literacy levels)

++ entrepreneurship

- Poverty

India

I n t e r n e t U s e r s

(2004)

95.8 million (2005 est 100 mil-lion)

18.481 million China

Internet Penetration

(2004)

Current e-business *

(2004/5)

$41.99 billion (Chinese source) $150 million China

Expected e-business

* (2006/7)

$16 billion (non-Chinese source) $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

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 IDFWRUV DQG ,QGLD KDV EHWWHU ³OHJDO VXSSRUW IRU 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

advance, the distances between urban and rural,

as far as technology and development go,

con-tinue to widen This disparity between urban and

rural connectivity may have long range internal

implications for both countries

What should other countries, developing and

developed, learn from the technology

experi-ences of China and India? Can their experiexperi-ences

be a guide for development and utilization of the

Internet and e-business? The answer is yes, with

the caveat that what has worked for both countries

ZLOO OLNHO\ QHHG ORFDOL]DWLRQ DQG PRGL¿FDWLRQ

to work well in individual countries With that

caveat, we offer the following observations and

suggestions:

• The Internet is a compelling

communica-tions system that, properly used, can inform

and educate people in ways that have not been

SRVVLEOHEHIRUH:KLOHXUEDQDUHDVEHQH¿W

LQLWLDOO\UXUDODUHDVFDQDOVREHQH¿WLIWKH

proper infrastructure is built

• The Internet can change business models

through e-business E-business has the

potential of unleashing innovative and

en-trepreneurial ways of thinking and doing

business that will aid in economic

develop-ment

• Landline based Internet models are rapidly

being overtaken by mobile Internet

con-nections in developing countries Mobile

technology has the potential of allowing

even more users access to the potential of

the Internet and e-business

• Developing countries can take advantage of

the experiences of both developed countries

and other developing countries as models

for their own growth

• *RYHUQPHQWDOSROLF\LVDQLQÀXHQWLDOGULYHU

of Internet usage and e-business Countries

with a focused policy of infrastructure

de-velopment (e.g., China) will likely outpace

those with confused and unfocused policies

(e.g., India)

• Intellectual property protection and the rule of law must be enforced for sustained development, but has apparently not been critical in development during the initial stages (e.g., China)

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