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South Korea's e-Commerce Market Exploding
The volume of electronic commerce increased almost 50 percent in South Korea last year, with business-to-consumer and business-to-government transactions showing the largest growth.
According to the National Statistical Office (NSO), e-commerce transactions totaled 177.8 trillion won ($149 billion) in 2002, up over 49 percent from 2001.
Business-to-business transactions made up the bulk of the total at 155.71 trillion won, a 43 percent rise from 108.95 trillion won in 2001.
Business-to-government (B2G) amounted to 16.6 trillion won, a 136 percent jump from last year's 9.5 trillion won, while business-to-consumer (B2C) dealings rose to 5 trillion won, up 95 percent from 2.6 trillion won in 2001.
The e-commerce sales growth in the country was led by such sectors as electrical and electronics parts, automobiles, shipbuilding, and retail and wholesale.
A breakdown of the B2B market shows that 113.25 trillion won worth of deals were buyer-centric transactions, while 36.51 trillion won worth of deals were initiated by the seller of the goods or services. Deals that were made through a middleman amounted to 6 trillion won.
Buyer-centric B2B revenues comprised 72.7 percent of all B2B revenues in 2002. This indicates that most B2B deals involve suppliers who bid on supply contracts posted by conglomerates on their corporate websites.
B2B e-marketplaces are expected to grow at a robust rate and outperform any other B2B business.
At the end of 2002, there were 262 B2B e-marketplaces operating and the general trading sector had the highest concentration of e-marketplaces followed by the electronics sector, raw materials trade, and maintenance renovations operation (MRO).
Reducing supplies costs and streamlining the purchasing process are a few of the cost saving advantages that B2B presents.
More companies are becoming aware of these advantages and are using MRO services. In the construction material supply business, middlemen still play a huge role in B2B transactions.
The Korean B2C market grew at an astounding rate in 2002. In the fourth quarter of 2002, revenues in the B2C market hit 5.04 trillion won, which was a 95 percent increase compared with the previous year.
In 2002, the B2C market accounted for 4 percent of Korea's 122 trillion-won consumer retail market. The high growth rate of the B2C market and its growing market share in the retail business will have a great impact on the retail market.
The most popular category in B2C transactions was accessories, including shoes, bags, wallets and purses, trailed by music, books, clothes, home appliances and PC hardware.
In terms of revenue, home appliances and PCs were the top sales items in the B2C business. General e-retailers that sell a wide selection of products have taken market share away from small specialty e-retailers.
These trends have emerged after revenues at leading general e-retailers posted a substantial increase, while many specialty e-retailers expanded their product offerings.
G2B is e-commerce activity between the government and private sector, and is mostly comprised of government procurement, administration services and the issuing of certified government papers.
The Korean government has expanded its e-procurement in 2002 to accelerate its formation of an e-government. After the government finished building a G2B system and enacted laws to govern the service, the G2B market has expanded in both scope and scale.
The G2B market in Korea started with only 900 billion won in revenues in the first quarter of 2001, but surged to 2.99 trillion won in the fourth quarter.
As of the fourth quarter of 2002, the revenues in G2B transactions have reached 6.23 trillion won, up 168.6 percent from the same period a year earlier.
Since the Government e-Procurement Systems (GePS) went into operation, 33,109 out of 34,773 government contracts were open for bidding over the span of three months starting from October 2002.
Among the commodities that were exchanged in G2B transactions, purchase of supplies amounted to 986 billion won, which accounted for over 46.4 percent of the entire G2B market.
As of last June, the number of subscribers that have signed onto Internet banking services in Korea topped 20 million, nearly 42 percent of the nation's entire population, according to the Bank of Korea.
This strategy has attracted many subscribers and banks have since introduced new banking services such as the Electronic Bill Presentment and Payment (EBPP) service, loan services via the Internet, integrated balance statements for people with several bankbooks, bank wire transfers via the Internet, and e-Customer Relationship Management (e-CRM) services.
Around 20.03 million people have signed onto Internet banking services offered by 19 local and two foreign lenders, including Korea Post, nearly all domestic banks, Citibank and HSBC, up from 14.48 million people seen a year earlier.
Banks have customized their Internet banking services for corporate accounts as well and this has resulted in a 76.9 percent increase in the use of Internet banking services by corporations at the end of 2002.
In 2001, approximately 390,000 companies were using Internet banking services and in 2002, the number of companies jumped to 690,000.
Internet banking is now one of the four most used financial services, along with CD/ATM withdrawals, telebanking, and bank teller services. Korea first adopted Internet banking services in July 1999.
A survey of the mobile Internet banking industry shows that 18 Korean banks offered mobile banking services as of December 2002.
During December 2002, more than 1.09 million financial transactions were made through mobile banking compared with 900,000 transactions in September 2002. In merely three months, mobile banking grew by 21.9 percent.
Most banks offer services such as statements of account balance, transaction statements, wire transfer services, cash withdrawals services through credit cards over mobile phones.
Local mobile carriers _ SK Telecom, KTF and LG Telecom _ have expanded their wireless Internet services to allow mobile phone subscribers to transfer money to another person's account with their mobile phones and purchase goods with their mobile phones.
In just two years, the share of online stock trading activity in the securities trading market rose to over 40 percent. Korea's online securities trading market is the one of the most active in the world.
At the end of 2002, more than 60 percent of all stock trading activity was conducted via the Internet. Online securities transactions that include trading in futures and options comprise a 50-55 percent share of all securities transactions.
Some 5.89 million online accounts have been opened for securities trading as of June 2002. In June 1998, there were only 126,000 online accounts for securities trading, but the number of accounts steadily increased and currently 62.6 percent of all online accounts are active accounts.
Online stock trading accounted for 62.4 percent of all securities transactions in the country in 2002, while online futures trading accounted for 40.2 percent and online options trading made up 55.2 percent.