IT for Development of Small- and Medium-sized Exporters in East Asia and Latin America Regional Summary: Asia Masatsugu Tsuji OSIPP (Osaka School of International Public Policy) Osaka University, Japan Osaka School of International Public Policy ECLAC, Chile November 2004

IT Usage In East Asia ➢ Infrastructure Broadband: ADSL, Cable modem FTTH ➢ Platform PC, Mobile ➢ Application e-commerce, EDI, SCM Osaka School of International Public Policy

Growth of Japanese Broadband Osaka School of International Public Policy

Number of Internet Users and Coverage Osaka School of International Public Policy

Mobile Internet Access Rates Osaka School of International Public Policy

Ratio of Firms introduced PCs Osaka School of International Public Policy

Comparison of e-Commerce: B2B Osaka School of International Public Policy Korea Singapore

Comparison of e-Commerce: B2C Osaka School of International Public Policy

Market size of e-Commerce (B2B) Industry Chemical 0.80% 1.65% General machines Electronics Automobile Transportations and travel Information and Software Food Utilities 0.00 Fabric Osaka School of International Public Policy

Market Size of e-Commerce (B2C) PC and related products 12.2% 15.4% Entertainment Food Automobile Real estate Finance Cloths Travel Service Osaka School of International Public Policy

Share of SMEs JapanKoreaChina Singapore ThailandVietnam No. of SMEs GDP Export Employ- ment

Purposes of IT Usage ➢ Providing and sharing information , homepages, web pages ➢ Efficiency of internal works Groupware such as accounting, payroll, and inventory management ➢ Collaboration other firms through networking B2B, B2C, EDI, SCM, ERP, CRM Osaka School of International Public Policy

Obstacles of IT usage by East Asian SMEs ➢ Human resources General knowledge, IT specialists, and Managerial leadership ➢ Funds for IT investment ➢ Business environments of SMEs Traditional business practice, regulations, and relation with large firms or MNCs ➢ Consumers’ attitudes Offline or online shopping ? Osaka School of International Public Policy

Analysis of Japan Team I ➢ Quantitative research by mail survey June 2004 Higashi-Osaka City Ohta Word, Metropolitan Tokyo Two major SME clusters in Japan 6,000 SMEs, and 1,198 responses ➢ In-depth interviews Osaka School of International Public Policy

Analysis of Japan Team II Identify factors promoting IT usage by SME Y i = β 0 + β 1 X 1i + β 2 X 2i + … …+β n X ni + e i Y i : index of IT usage, X i : variables as characteristics of SMEs, amount of IT investment, human resources, managerial behavior, expectations for IT usage, etc., β i : coefficients to be estimated, e i : residual. Osaka School of International Public Policy

Results of Analysis of Japan Team Extracted factors promoting IT usage by SMEs (1) Managerial behavior of top management Self-renovating type Positive attitude toward transforming their businesses by IT usage (2) Size of SMEs Number of employees Amount of Capital Osaka School of International Public Policy

Issues of SMEs’ Networking through IT Industrial structure of East Asian economies Hierarchal structure based on long-run contract relationship, not on market mechanism. Principals: large firms and MNCs Subcontractors : SMEs Osaka School of International Public Policy

Toward Networking by SMEs Osaka School of International Public Policy SMEs Large firms MNCs Hierarchical structure Non-hierarchical structure

Examples of New Networks I “Kentiku Itiba (Construction Market)” SCM formed by local construction firms CAD/CAM selection of design by PC Automated estimation system Web camera Reducing costs and speed up construction Now covering Western part of Japan Osaka School of International Public Policy

Examples of New Networks II “Sisaku Net (Prototype Network) ” Kyoto based high-tech group specialized in precision machine industry. Respond quickly by the Internet. “Shoudan Jouzu (Better Marching)” Matching site located in Osaka, and 3,500 SMEs participate. Local SMEs can receive orders all over the world. Osaka School of International Public Policy

Systems Supporting New Network Governments’ assistance programs NPOs “IT Coordinator Association” Groups of retired engineers and craftsmen Collaborations of industry, government and academia TLO of university Osaka School of International Public Policy

New Policy Implementations for Support East Asian SMEs in the Age of Information East Asian success model: Strong government leadership Public Private Partnership Collaboration of a ll regional resources so as to nurture new networks of SMEs Osaka School of International Public Policy