Robust Growth Predicted For Taiwan's E-Commerce Market in 2004

Tung Chen-cho, the owner of a prominent retail chain selling the traditional Hakka mashu snack, set up an Internet store in 1999 to help expand his NT$100 million (US$2.9 million at NT$34:US$1) annual-revenue business. Today, the cyberstore rakes in as much revenue as any one of the chain's 10 retail outlets around the island.

Chang Kunlin, a tea farmer, plans to sell his products online via a dedicated website, which he thinks is a viable tool for the marketing of agricultural goods.

Both Tung and Chang run traditional businesses which few would associate with such new-economy marketing methods as e-commerce, which has always been linked with banking organizations, large companies, and new-economy enterprises.

The entry of mashu and tea into Internet marketing indicates that the idea of doing business through the Internet has quickly spread to businesses in all fields and of all sizes in Taiwan. This development prompted H.C. Zhan, chairman of the Chinese-language Internet service provider Pchome Online, to say recently, "Taiwan's e-commerce market is expected to have reached an overall size of NT$15 billion (US$440 million) in 2003, and it will surely expand 100% to NT$30 billion (US$882 million) in 2004."


Both Zhan and T. Yuan, vice president of the Chinese-language portal site Yam, agree that there is no longer any doubt about the success of e-commerce. Local service providers became profitable in 2003, they point out, with revenues growing at a staggering pace.

Pchome, for example, chalked up revenues of more than NT$100 million (US$2.9 million) from its e-commerce operations last September alone. The firm's first-half revenues from e-commerce soared 213% compared with the same period of 2002, to NT$604 million (US$17.7 million).

The local Yahoo!Kimo site registered 3.2 million online auction cases last year, leading to a bold projection that deals closed on the website last year will top NT$10 billion (US$294 million) for the first time this year.

Business at the local branch of the eBay online auction website surged nearly 100% last year, to at least 200,000 cases. The branch's manager, P.L. Chen, points out that a popular TV commercial that the company placed last June gave rise to online auction "fever" and greatly boosted his firm's second-half revenue. The Taiwan branch plans to inspire local sellers to target foreign buyers in 2004.

Chen says that the American headquarters of eBay will likely introduce the PayPal online-payment security mechanism to Taiwan in the near future, so that auction payments can flow internationally over the Internet.

To promote its service, the 3G cellular-service provider SaveCom International Inc. is encouraging its subscribers to link with the auction sites which it provides, and to bid on the items on offer as frequently as possible. Whenever a subscriber connects with the site to place a bid, the price of the item in question drops and the telecom provider makes up for the decrease out of call charges. Prices are updated every 10 seconds.

An e-commerce research unit of the government-backed Institute for Information Industry (III) reported recently that domestic-household Internet penetration reached 57% in 2003 (in Taipei City, the rate was 75%), and that 75% of the connections were broadband (up 15% from a year earlier). Around 66% of the broadband subscribers used digital subscriber lines (DSLs). Online gaming was the biggest reason for families to link to the Internet.

Of all the connected families, 22% carried out transactions over the Internet, up from 20% in 2002. Books and magazines accounted for the largest portion of the purchases, at 6.7%, while the procurement of 3G equipment came in second with 4.3%. Fashions and garments accounted for 4%.

Lotung, a town in Ilan County, recently tested a wireless-network transmission facility that it set up jointly with National Taiwan University. The system, which the Lotung government plans to have operating this month with 50 "hotspots" in schools, government organizations, and public sites, will offer consumers a friendly wireless environment for online activities, including trading.

E-commerce platforms have allowed banks to provide more functions and allowed them to reduce operating costs, increase revenues, and realize greater value.

More and more retailers in Taiwan, especially convenience-store chains and hypermarts, have been chosen by banks as their partners in providing e-commerce services because of their superior understanding of the local market and of supply-chain management. Many 24-hour convenience stores have installed "unmanned banks" with automatic teller machines (ATMs), to which financial specialists expect retail functions to be added once they have been added in the United States.

Tung Chen-cho plans to spend about NT$10 million (US$294,000) promoting products over his website in 2004. This, he explains, will further modernize his business.