E-commerce throws out manufacturing manual

By Yoke Har Lee

E-commerce has a wakeup call for New Zealand businesses: goods can be manufactured anywhere.

It does not matter that a New Zealand product is made by a Malaysian manufacturer. What counts is the New Zealand brand and the fact that this means business.

Entrepreneurial Malaysian company Hightechniaga, with support from the Government, is using the internet to link a community of 170 small manufacturers wanting to go global.

Microsoft has also provided sponsorship to get the Mybiz project going.

New Zealand could think about a similar scheme, says Cheong Yuk Wai, chief executive of the IT company.

He spends a lot of time trying to change business leaders' attitudes, particularly about manufacturing goods themselves.

"Get the volumes going first, then you know the markets. You can worry about manufacturing later."

Mr Cheong says a New Zealand company with a great design and idea need not have manufacturing facilities. Mybiz, for example, offers a network of manufacturers who will make goods to order.

Hightechniaga started with web-based trading but found that going alone meant being a slave to price.

With its background in building e-commerce and procurement systems, the latter for a Silicon Valley firm, Hightechniaga found that selling alone on the internet made it hard to compete.

"Margins were pushed out so it eventually became non-positive to adopt the Internet [to trade]," Mr Cheong says.

In 1997, the company decided to try the community approach, linking about 50 manufacturers and ancillary services. This grew to 170 very quickly and the target is now 1000.

Last March, Hightechniaga was asked to showcase its technology to demonstrate Microsoft's Digital Nervous System during the Asia Entrepreneurs Summit in Hong Kong.

About 160 chief executives, all Microsoft business partners, were given a demonstration of business-to-business transactions.

Hightechniaga charges a fee to members of its manufacturing community when a transaction is made.

Mr Cheong, who is a member of the influential National Information Technology Council, says small businesses will propel e-commerce.

But basic tenets must be observed in cyber-trade.

"The Malaysian Government realised that the very fundamentals of the economy will change with e-commerce."

It set up taskforces to look at:

* e-community - issues related to needs, how it will work, and its cultures and values.

* e-economy - what constitutes this new environment, how it will take place and what to do to facilitate it.

* e-learning - how to digest knowledge for the new economy.

* e-sovereignty - how to protect the country's identity, ideas and knowledge.

* e-public services - how public institutions must change to enable them to service the e-commerce community.

Mr Cheong says educating politicians is crucial.

"This involves exposing leaders to new thinking on how the new economy will take place.

"In Malaysia, every important minister chairs one taskforce. The e-commerce taskforce is chaired by our International Trade Minister and the e-learning by the Education Minister."

Another critical factor in developing e-commerce is infrastructure, in telecommunications and operating platforms.