Like most forms of electronic commerce, on-line business-to-business (B2B) marketplaces were born in the USA (see sidebar, "B2B for beginners"). Still finding their feet in that country, they have also begun to appear in Asia, where their value could be substantial. One market research firm1 expects that by 2003, on-line B2B transactions in the Asia-Pacific region will be worth $270 billion, some 20 percent of the worldwide total.
The trading mechanisms of B2B marketplaces are much better defined and understood today than they were a few years ago. So are the ways their owners can make money. Asian market builders can thus learn from the experience of the pioneers in the United States, but this doesn’t mean that it will be easy to establish successful marketplaces in Asia. The important sources of value for buyers won’t be the same, because the business environments are different.
Asian buyers, for example, will gain less from lower procurement-process costs than US buyers have, because those costs are already low in Asia, thanks to its lower cost of labor. Conversely, Asian supply chains are much less efficient, and this leaves a wider margin for market builders to improve them, not...