Go to contents

Korea`s e-biz scores 30 out of 100

Posted December. 07, 2000 15:24,   


"Koreans are adapting themselves to the Internet quite well. Then, why are corporations not properly utilizing the Internet in their businesses?"

In Korea, a total of 16.8 million people are using the Internet with 500,000 registered domain names and over 200 cyber shopping malls. As a result of the Internet fever that his Korea during the past couple of years, Korea is comparable with advanced information technology (IT) countries in terms of the number of Internet users and installation of high-speed communications networks.

Korea is still in an infant stage with regard to the e-business world that has a great effect of the Internet. A recent survey by the Ministry of Commerce, Industry and Energy (MOCIE) showed that the e-business index of Korean manufacturing firms scores only 30 points out of a possible 100.

Corporate business-to-business (B2B) e-commerce will be the area that could benefit from introduction of the Internet. Both venture companies and large corporations are racing to establish B2B marketing in the fields of electronics, steel, textiles and heavy industries. But none of them are successful yet. It is because company officials in charge of purchasing hate e-commerce.

"Companies could reduced purchasing prices by 20-30 percent by utilizing e-commerce,¡± Lee Keum-Yong, president of Auction Inc., said. ¡°But purchasing officials are reluctant to introduce e-business since that will get rid of benefits, entertainment and kickbacks they have enjoyed."

Also, they are worried about manpower reductions in purchasing department as well as reduction in their influence within the company.

Samsung Corp. informed its employees to send their proposals to the CEO through an e-mail. But there was no response from them. Recently, the company has introduced an anonymous e-mail system with expectation that it would get rid of the formality-oriented authoritative culture. Still, it doesn't seem effective.

"Corporate culture has to change to cope with the Internet for e-business, but Korean companies haven't changed at all," said Park Sung-Ju, professor of Korea Advanced Institute for Science and Technology (KAIST) graduate school of techno management.

Some observers have pointed out that the government is required to take a leadership in e-business. In fact, domestic e-commerce businesses visited government ministries like the Defense Ministry that purchase goods massively, but they refused to allow them to participate in the ministry's bidding for supplies. Some local autonomous entities tried to build their own e-commerce network, but they tend to waste the budget.

Now the government is trying to give a helping hand to local companies to promote their e-businesses. A total of 10 billion won will be raised as an exclusive fund to transform traditional industries into e-business system. Also, digital tax calculation sheet will be introduced as replacement of existing printed forms.

The MOCIE held the third e-CEO consultative meeting at Seoul's Inter-Continental Hotel, with nearly 80 representatives of manufacturing firms, venture companies, solution providers and economic organizations participating. A comprehensive plan to spread e-business was announced on that day. The highlights of the plan were introduction of digital tax calculation sheet and allowing venture firms to issue corporate bonds with no suretyship.

Also, the government is pursuing a tax reporting system through the Internet. Currently, the Ministry of Finance and Economy (MOFE), National Tax Service and private enterprises are jointly working out details for the system, which will be implemented from January next year.

By the end of next year, the government plans to raise 10 billion won in e-business fund together with venture firms and large corporations.

The corporate bonds with no suretyship that are issued by Internet venture firms will be purchased by Small and Midium Industry Corp. Bonds issued by venture companies with poor credibility will be assumed by the securities firm that manages the issuing and then they will be sold to specialized asset-floating companies.

If the asset-floating companies issue asset-backed securities (ABS), the priority bonds are to be sold in the capital market and the government will purchase the non-priority bonds with public funds. This year, a total of 200 billion won worth ABS will be issued.

Lee Byong-Ki eye@donga.com