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E-Commerce Revolution in Asia and the Pacific

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E-Commerce Revolution in Asia and the Pacific Embracing the E-commerce Revolution in Asia and the Pacific Asia is the world’s largest e-commerce marketplace and continues to grow rapidly. Some countries lead. Others need to catch up. An efficient e-commerce marketplace requires information and communication technology infrastructure—including internet access, speed, and affordability—along with logistics, an effective legal and institutional framework, and social acceptance and awareness. This report reviews the opportunities and challenges in developing business-to-consumer e-commerce in the region. It also examines how Fourth Industrial Revolution technologies—blockchains, the internet of things, machine learning, artificial intelligence, and 5G wireless networks, among others—will transform the industry and unlock its dynamic potential. It also offers policy recommendations to help lower barriers to e-commerce development. About the Asian Development Bank ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its developing member countries reduce poverty and improve the quality of life of their people. Despite the region’s many successes, it remains home to a large share of the world’s poor. ADB is committed to reducing poverty through inclusive economic growth, environmentally sustainable growth, and regional integration. Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance. EMBRACING THE E-COMMERCE REVOLUTION IN ASIA AND THE PACIFIC JUNE 2018 ASIAN DEVELOPMENT BANK 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org EMBRACING THE E-COMMERCE REVOLUTION IN ASIA AND THE PACIFIC JUNE 2018 Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) © 2018 Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Tel +63 2 632 4444; Fax +63 2 636 2444 www.adb.org ESCAP has granted permission to use ESCAP-copyrighted material for this Work, and to make the material available under an open access license. Some rights reserved. Published in 2018. ISBN 978-92-9261-232-0 (print), 978-92-9261-233-7 (electronic) Publication Stock No. TCS189409-2 DOI: http://dx.doi.org/10.22617/TCS189409-2 The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by ADB in preference to others of a similar nature that are not mentioned. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) https://creativecommons.org/licenses/by/3.0/igo/. By using the content of this publication, you agree to be bound by the terms of this license. For attribution, translations, adaptations, and permissions, please read the provisions and terms of use at https://www.adb.org/terms-use#openaccess. This CC license does not apply to non-ADB copyright materials in this publication. If the material is attributed to another source, please contact the copyright owner or publisher of that source for permission to reproduce it. ADB cannot be held liable for any claims that arise as a result of your use of the material. Please contact [email protected] if you have questions or comments with respect to content, or if you wish to obtain copyright permission for your intended use that does not fall within these terms, or for permission to use the ADB logo. Notes: In this publication, “$” refers to United States dollars. ADB recognizes “America” as the United States; “China” as the People’s Republic of China; “Hong Kong” as Hong Kong, China; “Korea” as the Republic of Korea; “Laos” as the Lao People’s Democratic Republic; “Solomons” as Solomon Islands; “Vietnam” as Viet Nam; and “Hanoi” as Ha Noi. Corrigenda to ADB publications may be found at http://www.adb.org/publications/corrigenda. PB Contents iii CONTENTS TABLES AND FIGURES . v FOREWORD . viii ACKNOWLEDGMENTS . ix ABBREVIATIONS . x EXECUTIVE SUMMARY . xii 1 . E-commerce Evolution in Asia and the Pacific Introduction . 2 Objectives, Scope, and Methodology of the Report . 2 Overview . 4 Subregional Overview . 7 Summary . 10 Box 1 1:. Definitions and Coverage of E-commerce . 3 2 . Analytical Framework for Assessing E-commerce Development Introduction . 12 Analytical Framework . 13 Application of the Framework . 15 3 . Current Status and Challenges of E-commerce Development Introduction . 18 Economic Factors and Conditions . 19 Legal and Institutional Environment . 31 Social Acceptance and Awareness . 36 Boxes 3 1:. Four Key Barriers to Internet Access . 18 3 .2: Internet Inclusiveness in Asia and the Pacific . 20 3 .3: China CITIC Bank . 27 3 .4: Cross-border Logistics Issues in Central Asia . 29 3 .5: The Lao People’s Democratic Republic and the Plaosme Website . 31 3 .6: Gender Disparity in Bangladesh . 35 3 7:. Singapore Public–Private Partnership . 36 3 .8: India’s Mobile Literacy . 39 3 .9: Propensity for Foreign Products or Vendors . 40 4 . Key Opportunities for Developing E-commerce Introduction . 44 Macroeconomic Impact of ICT and E-commerce . 44 E-commerce as a Tool for Inclusiveness . 48 Emerging Technologies Affecting the Evolution of E-commerce . 51 iv Contents v Boxes 4 1:. What Is the What3Words Application? . 50 4 .2: Alibaba’s Advanced E-commerce Enabling Services . 52 to Small and Medium-Sized Enterprises 4 3:. Augmented Reality and Virtual Reality in E-commerce . 55 4 .4: Blockchain-powered Digital Identity Programs . 55 4 .5: 5G Wireless Technology and Online Advertising . 56 4 .6: Combining 5G with Other Technologies . 57 5. Lessons Learned and the Way Forward Introduction . 60 Main Actors That Shape an Economy’s E-commerce Landscape . 61 Measures to Address Bottlenecks in Cross-border E-commerce . 72 Creating a Virtuous Cycle of E-marketplace Development . 77 Boxes 5 1:. Improving Data Collection in Japan . 62 5 2:. Mesh Technology . 63 5 3:. Entry of Global E-commerce Companies and Logistics . 64 Infrastructure Development 5 .4: India—Efforts to Facilitate Cybersecurity Enforcement . 69 Regulations 5 .5: Airpay and E-commerce Payments . 70 5 6:. How Wi-fi Sniffers Work . 70 5 7:. Deepening Customer Engagement Through Blockchain . 71 Technology 5 8:. Cognitive, Behavioral, and Technological Aspects . 73 of Cybersecurity Awareness APPENDIXES Appendix A: Selective Methods for Analysis . 79 Appendix B: Tables and Charts . 80 REFERENCES . 85 iv Contents v TABLES AND FIGURES Tables Table 1 1:. E-commerce Readiness Score—Selected Asian . 6 Economies, 2017 Table 1 .2: Cross-border Business-to-Consumer E-commerce . 6 Market Forecast by Region ($ billion) Table 2 1:. Facilitators of and Barriers to E-commerce: . 16 Operationalizing Them Table 3 1:. E-commerce Payment Options . 24 Table 3 .2: Cash-on-delivery Transactions—Selected Asian Economies . 26 (% of total online transactions) Table 3 .3: Logistics Performance Index Score and Rank— . 28 Selected Asian Economies Table 3 .4: Number of Internet Users—Selected Asian Economies, . 29 2016 (‘000) Table 3 .5: Some Key Legal and Institutional Challenges and Issues . 31 Facing the E-commerce Industry and Market— Asia and the Pacific Table 3 6:. Percentage of Machines Infected by Phishing Attacks, . 33 Q3 2016 (%) Table 3 7:. Examples of Trade Associations Related to E-commerce . 36 in Asia and the Pacific Table 3 .8: Some Key Social Acceptance and Awareness Challenges . 37 and Issues Facing the E-commerce Industry and Market— Asia and the Pacific Table 3 .9: Principal Findings of Selected Business and Consumer . 41 Surveys on Privacy and Security Issues Table 4 1:. Technologies That Shape the E-commerce Landscape . 45 Table 4 .2: Roles of ICT and the Internet in GDP Growth . 45 Table 4 .3: Economic Benefits and Costs of Using E-commerce . 46 Table 4 .4: Economy Case Studies of the Impact of E-commerce . 47 on Firm Productivity Table 4 .5: Selected Payment Systems in Asia and the Pacific . 50 Table 4 .6: Selected Venture Capital Investments in Asia and the Pacific . 50 Table 4 7:. Examples of Indian E-retailers Using Foreign-supplied . 51 Technologies Table 4 .8: Some Uses of Artificial Intelligence and Machine Learning . 53 in E-commerce Activities by Rakuten Table 4 .9: Combining 5G with Other Technologies to Enhance . 57 E-commerce Table 5 1:. Ways to Develop and Enrich the E-marketplace . 60 Table 5 2:. De Minimis Thresholds—Selected Asian Economies, . 74 as of April 2016 Table 5 3:. Characteristics of VAT/GST Tax Collection Models . 76 Table 5 .4: Compliance Continuum and Corresponding Actions . 76 from Government vi Contents vii Table B 1:. Number of Internet Users—Asia and the Pacific, . 81 2016 (‘000) Table B .2: Status of E-commerce Legislation—Asia and the Pacific . 82 Table B .3: Principal Findings of Business and Consumer Surveys . 83 on Privacy and Security Issues Figures Figure 1 1:. Size of Business-to-Consumer E-commerce . 4 by Region ($ billion) Figure 1 .2: Size of Business-to-Consumer E-commerce (% of GDP) . 5 Figure 1 .3: Internet Retail Market Size by Region . 5 Figure 1 .4: Internet Retail Spending Per Capita—Central and . 7 West Asia, 2016 ($) Figure 1 .5: Internet Penetration—Central and West Asia, 2016 (% of population) .
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