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Staying Alive and Staying Competitive

Mr Khaw Boon Wan, Minister of State for Transport, Information, Communications and the Arts 6th Internet Conference, Singapore International Exhibitions and Convention Centre

Mr Khaw Boon Wan, Minister of State for Transport, Information, Communications and the Arts
6th Internet Conference, Singapore International Exhibitions and Convention Centre
Singapore, 15 August 2002

Mr Kwek Leng Joo
President of Singapore Chinese Chamber of Commerce and Industry
Friends and Colleagues

1. The first Internet Commerce Conference (ICC) was held 6 years ago. It was targeted at our local SMEs. Internet was hot and e-commerce threatened to change the way we conduct our business.

2. The Chinese Chamber quite wisely launched this series of annual Conferences to bring the Internet message to the SMEs. It provides a useful forum for the SMEs to share their experience and learn from one another.

Learn from Others

3. Years ago, I spent many years running hospitals. I recall the many conferences run by computer vendors, like IBM, offering solutions on how to computerise different aspects of hospital operation. Yes, the computer vendors did it for marketing purposes, selling their solutions to prospective customers. But what I found most useful of those conferences was the opportunity to network, to discuss with my counterparts in other parts of the world. We may come from different countries or even different industries, but the problems we face are similar. How to serve our customers better? How to create value for our customers? How to retain them? How to reduce our operating costs?

4. Very often, the problems we face are problems which others are facing too. And some of them may have already found a good solution. We would be stupid to re-invent the wheel. We can save a lot of time and efforts, just by learning how the others have done, and either copy their solutions or to adapt them to suit our own situation.

Customers Prefer On-line

5. With a new medium like the Internet, there are many new tricks to learn. SMEs all over the world are still trying to figure out, how best to make use of this medium to make money or simply to cut cost. It will be many more years, before the situation enters a mature stage. But meanwhile, those who are ingenious will make a lot of money, while those who are laggards may find themselves pushed out of businesses.

6. Take the tourist agency business. In Singapore, we have hundreds of SMEs involved in this business: selling air tickets, organising tours, looking after the tourists. It is a highly competitive industry. Airlines make use of them as intermediaries as they provide a more efficient, low cost and personalised distribution network for their passengers.

7. But with the Internet, airlines can now access directly with passengers in a low-cost manner. For those passengers who merely need the tour agent to issue tickets, the Internet can potentially replace the tour agent. Moreover, passengers prefer this mode of transaction as they can do it in the comfort of their home and any time of the day.

8. Not surprisingly, in the US, one in three travelers now arrange their flights via the Internet. The rate in Singapore is still low, but the trend is catching on. Our SMEs in this particular business must therefore respond to this trend. It is no use wishing the Internet away. It won't. Instead, better see how you can make use of the Internet, to provide a service better or richer than what the airlines can do. There is still an important role for the intermediary. Airlines merely push their flights. But as tour agents, you can offer a price comparison service. You can add in tour schedules, you can arrange hotel and car rentals. You can offer tourism advice. But at the same time, you must accept that your customers are now increasingly Internet savvy and would like to engage you on-line. If you ignore them, you lose this segment of the market.

9. Chan Brothers is using the Internet as a customer relationship management tool, to provide its customers with a whole suite of travel packages. I was therefore not surprised to read in a recent Straits Times article (of 13 Jul 02) that its bookings from its web site went up by a third, from $30 mil in 2000 to $40 mil in 2001 despite an economy recession. Further more, on-line bookings now form one-third of its total turnover.

Invest in IT

10. I am therefore cheered by the strong turnout today - more than 1,000 compared with the 250 we started with in 1997. This is evidence that firstly the Conference has been useful, and secondly, that despite the current recession, many of you have your eyes on the long term future.

11. The current recession is part of a global slowdown. We have little control over such global developments. But we can better prepare ourselves, and make sure that we can quickly climb out of the bottom and be ready when business recovers. For many companies, IT investment is an important part of the preparation.

12. That is why worldwide IT spending is still growing. In the US, it is expected to grow at 6 to 9% this year. In particular, companies continue to exploit the Internet. Global e-commerce transaction value has grown to US$600 billion in 2001, a 68% increase over year 2000 E-Commerce Times dated 13 February 2002 - IDC Study: E-Commerce To Top $1 Trillion in 2002. In Singapore, e-commerce has also reflected a similar trend, growing at 19% last year Singapore E-Commerce Survey 2000.

13. You are here today because you understand that IT can help businesses to succeed in good times and in bad. The bursting of the Internet bubble is not a bad thing. It has removed the hype, and allowed us to see more clearly what technology can do. Companies do not invest in IT because it is "fashionable" to follow the crowd, but because IT can help them retain customers, get new customers, and serve all customers better.

Sharing Experiences

14. Across different sectors, Singapore companies large and small have found innovative ways to use the Internet to do just that. Let me share some examples with you.

15. Sing Lun Holdings is an apparel company that provides one-stop design development, fabric sourcing, and manufacturing services. It has operations all over Asia. It serves big brand names like GAP, DKNY, Walt Disney and Fila. In January this year, it moved its entire supply chain on to the Internet. Within a few months, the company reduced its turnaround time by 15% (from 120 to 100 days) and expects to reduce it by another 15%. This allows Sing Lun to react quickly to fast-changing fashion trends and enhance its customer service levels.

16. Another example is AutoAcc Trading, an auto-accessories wholesaler. It has developed a regional e-business platform that links up its suppliers and distributors with an order management and client tracking system. Since its launch in April, the company has reduced its procurement cycle by 50%.

17. Many of us know Far East Flora, a flower and gift provider. In 1999, Far East Flora developed its integrated order tracking and customer relationship management system to its cyber store front. With this e-business capability, it is now able to provide its customers with real time order status and delivery confirmation. This has reduced its order processing time by 50% and has increased its customer satisfaction and service levels significantly.

MNC-driven Strategy

18. In manufacturing, multinations like Cisco have mandated that it will only do business with its partners electronically. Companies that wish to keep Cisco's business have to get on-board; there is no choice. I understand that Intel will do the same by the end of this year. For companies in such sectors, adopting IT is a matter of retaining businesses, and survival.

19. Major players in other industries too are beginning to get their suppliers to transact with them electronically. Suppliers not only have to be part of the value chains of these players, they have to be part of the e-value chains as well. If you don't "e", you are out! For example, Sincere Photo Studio has joined to offer its customers new and convenient services online. With digital cameras fast becoming common, customers of Sincere Photo Studio are able to email their pictures electronically for processing from the comfort of their homes. By tapping on this trend, Sincere Photo Studio has enjoyed a 25% increase in sales despite a slow economy.

Over there in China

20. Globalisation also offers some interesting opportunities. With China's entry into the WTO, many of their companies will be embracing e-business to make themselves more competitive in the global marketplace. Let me cite two examples.

21. SinoTrans, a logistics and transportation services provider installed an automated warehouse management system and an IT network to integrate more than 9 sites across China.

22. Another company, CITIC Industrial Bank, started its business transformation in 1999. Now, with an integrated network connecting 23 cities in China, it is able to deliver financial and insurance services over the Internet, both in two languages, English and Chinese. This has given it a competitive advantage to capture a larger market share.

23. These are just two examples that demonstrate that Chinese companies have realised that to be serious global players, they too must transform themselves quickly using e-business. Unless we do likewise in Singapore, we will not be able to hold our ground.

24. I am pleased to say that many Singapore companies are doing just this. Both of these Chinese companies that I have mentioned have one thing in common. Their e-business transformation was made possible by a Singaporean company - IPACS Asia. This Singaporean company has set up its business in China for more than 12 years and today employs more than 200 Chinese employees. IPACS has been using their solutions that were tested in Singapore to clinch over 400 business deals in China. Likewise, you too, should take advantage of our excellent infrastructure and tech-savvy consumers to trial your innovative products and services. With our proximity and cultural similarities, Singapore makes an ideal test-bed for other regional markets.


25. The examples that I have given provide a glimpse of how large and small companies in different sectors can remain competitive by harnessing the potential of e-business. We have also seen that we can use Singapore as the springboard to access overseas market as in the case of IPACS. This conference will give you an opportunity to learn from your peers, to exchange experiences, and to meet potential partners, who can help you succeed even in these challenging times.

26. I hope that all of you will find this Conference a fruitful one, in networking with like-minded people speaking the same language, and with IT partners who can meet your needs.

Thank you.