A joint venture between local commerce service provider (CSP) SETcom and Singapore-based broadband technology provider Malifax Technologies could result in a firm foothold in the Asia Pacific region for the CSP, if all goes according to plan.
The joint venture is one of the first steps towards the expansion of SETcom's services into the Asia Pacific region, which company CEO David Liu confirms is targeting the economies of Hong Kong, Malaysia, Taiwan, South Korea and later on, mainland China and Japan.
"Widespread research forecasts that this region will make up 30% of all Internet users by 2004, which has positioned it as a very important market in SETcom's global growth strategy. Singapore is the ideal country to start up a home base and grow into that region, mainly because it's very westernised," says Liu.
In line with the agreement, the two companies have formed a jointly owned and funded company, SETcom Singapore. Malifax will bring to the alliance regional contacts and management skills, while SETcom will offer technical expertise and experience in providing e-commerce services based on SET (secure electronic transaction) protocol.
Liu believes SETcom is firmly poised to grab significant market share in the region, citing two contributing factors - SETcom is first-to-market in Singapore with its focused service of providing credit card transaction processing only, and despite the conservative e-commerce climate in the region, there is a strong demand for e-commerce services, both from consumers and businesses.
"It's very consumer-oriented; everyone wants Internet and there's actually more Internet users in those individual countries than in SA. Certainly growth has been tremendous; and to date, the majority of that growth has been in the younger age group, but we're seeing a lot of businesses realising that they have to go online, and they're doing tremendous things [to achieve that].
"We want to make it easier for consumers/end-users and business-to-business [B2B] to buy from each other using both the credit and debit card systems. We'll see a lot of new tools come out that will facilitate trading between B2B and also on the consumer side. Most of the large companies in the East have been seriously looking at taking e-commerce to their customers or business partners."
The joint venture has already signed a major contract with the two largest banks in Singapore, which Liu explains, provides SETcom with access to the banks' existing merchant base. "By working very closely with them, [we] can aim toward signing up many brand name corporate clients."
SETcom's primary strategy allows the company to partner with Web designers and hosting companies to reach a greater number of clients and leverage on existing relationships. The CSP has no intentions of departing from this tried and trusted plan, which it will use to leverage Malifax's existing relationships with its major clients - Internet service provider SingNET and telcos Singapore Telecom and StarHub.
"Through SingNET and StarHub, we'll gain access to the big Internet players in Singapore. Also [Malifax has] quite a big reseller network which we believe will bring us a lot of benefits in the strategy that we pursue."
Established in 1985 as a systems integrator, Malifax has evolved into Singapore's leading broadband technology provider. The company's multimedia and digital broadband telecommunication solutions include a range of high performance digital products such as ISDN TAs, routers, NT1, super NT1, ISDN phone, video phone and ASDL modem.
SETcom's time-critical move into the East means that most of the CSP's Asian skills base has its origin in SA. But, Liu confirms, in addition to building up "certain competencies in Singapore, there's the possibility of SETcom setting up an R&D lab in Singapore".
"We're comfortable with our skills base here and we will use it in Singapore, and we'll develop a skills base there as we go along. It will be quite important, as all the main support and development for that region will be from Singapore. But the core product will still come out of what we've done here and what we will be doing here. Then we'll roll it out across the various [target] countries, and hopefully into Europe as well."
Although the success of SETcom's bid to gain a foothold in the East will largely be determined by how easily the company can integrate its offering into such a different marketplace, Liu is optimistic.
"Up to now, we've been thinking on the same wavelength; we're very happy with the people we've found there and we believe it is a very workable formula. In a business sense, the companies there are a lot more conservative, and the banks especially are a lot more conservative than the banks here, but that's something that we'll work together with them on, and make them understand what our approach is.
"[Consumers] are very conservative by nature, so they're more wary of doing transactions online, but in Singapore the government is very actively promoting e-commerce and encouraging people to use it, by way of advertisements on the major television stations.
"The office in Singapore will be up and running by the end of this month, and we have a commitment already from a client who needs to go live by mid-May. We're putting up the infrastructure, the server farms, so that's going ahead. So things are moving very fast in Singapore; I think the next three months will be spent gaining a foothold, and going after key accounts. Thereafter, we'll look to grow into the other countries in that region."
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