The International Report - Asia-Pacific - Surf's up down under.

The Asia-Pacific region is increasingly important to dotcoms - and they're using Australia as a springboard to launch into Hong Kong and Singapore. Lisa Simmons reports.

Living up to its reputation as the surfers' paradise, Australia trails behind only the US and Scandinavia in terms of PC penetration, at 49 per cent. But it's a small market, in which many of the top slots have been taken. Also, although the stereotype might have them jumping from cliffs and rafting through ravines, our Australian cousins are a little cautious when it comes to e-commerce, with 40 per cent citing credit card security as the greatest obstacle to business success in a recent survey carried out by Ernst and Young.

But despite this, blue skies prevail down under for UK-based lifestyle site ebop, which launched in the UK in October 1999. "At Christmas we sat down to discuss our expansion plans. Targeting 18 to 30-year-old music lovers, we picked New York and Australia, as well as Ibiza, for our internet cafes," says managing director Mike Murphy.

Ebop hired a former colleague who was living out in Australia to run things in Brisbane. "Its very hard to just parachute someone in so far away. We now have five local staff," says Murphy.

The team setting up the company had the tough job of hanging round bars and surf clubs, recruiting wannabe journalists to contribute. "We can't lift content from the UK site, so our guys hung out with skateboarders and surfers to make sure we got the flavour of the site right," says Murphy.

Already present in Italy, with a web site and a TV show, ebop found that it made headway faster in Australia than it did in New York. "There is far less hassle with accountants and paperwork, they just want to set the thing up and go," says Murphy. From talking about it in January, the office was up and running in March and the site went live in July.

Having launched a branded internet cafe in Ibiza earlier this year, ebop is looking to establish its home page in a number of internet cafes across Australia. "You don't get the chains of cafes out there that you do here, so it's a good opportunity to rebrand them under our name," says Murphy.

Beenz, the online currency which launched in the UK and the US simultaneously last summer, has also chosen Australia as a springboard into East Asia.

It has now launched in Hong Kong and Singapore, and is in the process of planning an assault on Tokyo, Seoul, South Korea and Taiwan.

The Australian site was launched in September 1999, and the company combined a bit of local recruitment with its own staff, although the new managing director is Australian.

The biggest hurdle, according to Glenn Jasper, vice-president of corporate communications at beenz, was marketing to a country that has two major cities. "In the UK, if you conquer London it's often enough, but in Australia you have to make a big splash in both Sydney and Melbourne," he says.

Online advertising in Sydney made up 30 per cent of the company's budget, with 20 per cent spent in Singapore and 10 per cent in Hong Kong. According to internet research firm Consult, advertising revenue from e-commerce in Australia has tripled over the past three years. Consult claims that in the three-month period from March to May 2000 the 300 sites in Australia that file reports claimed total revenues that amounted to £8.6 million.

Branding wasn't a problem because the concept of using beenz as monetary currency crosses continents. "In Hong Kong, where beenz launched at the beginning of the year, users are turned on by games and quirkiness, so the marketing message was focused on encouraging users to find out new ways to collect beenz and fun ways to spend them," says Jasper.

"We found that viral emails worked really well in Hong Kong and Singapore, because of the fun element of recommending a friend. Contests and quizzes likewise worked well, and were well-publicised on banners and the radio," he adds.

Although no UK companies attended the Information Infrastructure Expo in Hong Kong in March 2000, Jasper believes that the UK's image as an innovator, particularly in more creative technology industries such as design and computer games, is an advantage in entering the region.

Hong Kong was also the first city in the world to have a fully digitised telephone network and has the highest telephone penetration in Asia after Singapore. Even better for companies looking to set up an e-commerce site, the total value of products and services transacted over the internet in Hong Kong is expected to increase from £41m in 1998 to £1.7 billion in 2003.

Although Hong Kong was the first region to launch a commercial interactive TV service, through the Cable and Wireless-owned HKT, it has not performed to expectation and has only 90,000 subscribers. On-demand services have proved the most popular, and there is also a lot of potential for UK companies supplying interactive media content for broadband (such as games), interactive TV technology and e-commerce technology.

What gets Jasper most excited is the possibilities for WAP technology in Hong Kong and Singapore. "In the US, they are jumping up and down saying: 'We've all got cellphones', but out there, they've all got WAP," he says.

A boost to beenz's adventures in Asia came when it received private funding of £8m to invest in joint ventures across Italy, Greater China, Japan and Korea. One company beenz teamed up with was New World CyberBase, a technology company owned by Hong Kong-based New World Group and Central Banking Corporation. Greater China is actually a joint venture between New World CyberBase and

"It's much more realistic to go in with a local partner, especially as Hong Kong and Singapore are sensitive about UK companies sweeping in, hoovering up money and then leaving," says Jasper.

The most successful foreign countries to move in to the area, such as MSN, Yahoo! and E*Trade, partnered established local firms right away. AOL, which did not, has made far less of a mark.

About to launch in Hong Kong, but tight-lipped about it, is It is already in Australia through a joint venture with " has 35 per cent of the online travel market there, so teaming up with it meant we had access to its suppliers and our time to market was greatly reduced," says Tom Virden,'s vice-president, international.

"When you're nine time zones away, it's important to work with a company entrenched in the market," he says. "The web down there is more portal based, and although Amazon, auction sites and travel sites are doing well, I've yet to see any major players taking a lead, so there is a lot of opportunity."


Australia has a population of 19 million,around a third of whom are online - this figure is expected to grow to 47 per cent by 2003. The country has two large paid ISPs, two large free regional ISPs and many smaller players.

Banking and stock trading are the most popular b2c activities, and six per cent of Australians purchased online in 1999. Around 1.5 million users had bought online by June 2000.

Around nine million people are expected to own a mobile phone by the end of 2000, when six network providers should be operating, including Vodafone, Telstra and Hutchison. The Australian Government plans to auction third-generation mobile phone licences later this year. Less than 20 per cent of cell phones are WAP-enabled.

Around 16 per cent of the population have pay-TV, and cable is more popular than satellite. New digital services are being hindered by the Australian Government's decision to protect traditional TV broadcasters from the threat of streaming, causing predictions that customers won't buy digital television sets or even set-top boxes.

The Electronic Transactions Act serves as a framework for e-legislation. Australia is expected to be the first country with fully defined e-commerce laws from coast to coast. A new goods and services tax (GST) is waived on imported items sold via the internet if the tax payable is less than A$20.

Singapore has a population of 3.2 million, with 54 per cent online.

Since the liberalisation of the telecommunications market in April 2000, there are six main ISP players. Most provide leased-line and content-hosting services, and some are offering free internet access promotions.

Interactive TV is in its infancy, with 217,000 cable TV subscribers.

There are 1.3 million mobile phone users; major mobile communication providers in Singapore such as SingTel and StarHub Mobile provide WAP services.

The government is devising a multimedia project, Singapore ONE, to create knowledge-based industries. Of all the Asian countries, Singapore is considered to have the best regulatory environment.

E-commerce transactions are not yet taxed: the Government appears to be waiting for international consensus.

Hong Kong has 135 ISPs, the largest of which is C&W HKT, with a third of the market. As a major trading centre, HK has good opportunities for e-commerce. The small size of its consumer base makes b2c less obvious, although partnerships with local firms might create a path into China.

There is a low penetration of credit cards and banks are reluctant to support electronic transactions.

Hong Kong has 1.7 million cable TV subscribers and was the first city to launch a commercial iTV service.With 3.9 million mobile phone users, it produced the world's first commercial WAP service, from SmarTone, and the city is well on the way to establishing a licensing framework for third-generation broadband services.

Hong Kong's legislative council enacted the Electronic Transactions Ordinance in January to foster development of e-commerce, giving digital signatures the same legal status as paper. The Government takes an assertive role in developing Hong Kong as a major hub of e-commerce and imposes no taxes on it.


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