President of Korea Federation of Printing & Information Industry Cooperatives
Paper presented by the Republic of Korea
at the 5th Annual Meeting Of the Forum of Asian Graphic Arts Technology (FAGAT) in Manila
1. Introduction
2. Current Status and the Future of the Internet
2.1 Internet Users
2.2 Internet Business
3. E-commerce
3.1 E-commerce Emergence
3.2 Types of e-commerce
4. Printing Industry Trend
Part 2
1. Introduction
Every industry has been affected by the rapid development of the Internet. For Korea, the Internet has had profound effects, with the number of users expected to reach 20 million users by the end of 2000. The use of the Internet is expected to further increase, which is quite positive, especially when compared to the remarkable growth of cellular phone users in Korea (more than 50% penetration rate currently).
This leads one to ask a very important, but fundamental question: what is the use of the Internet for Asia and for Asians? For consumers, the Internet may be considered a place to gather information and to shop, while for small and medium sized companies Internet use may be considered (still) somewhat superficial, and so not much benefit to the bottom line.
Unlike the limited and basic Internet use by consumers, however, various industries are changing their perception of the Internet, and slowly realizing the benefits of effective usage. Various industries, especially the printing and newspaper businesses, are accepting the potential value of the B2B marketplace. Therefore, the realization, acceptance, and implementation of a successful B2B strategy is at the forefront of current changes in Internet perception and use.
If one pursues this course of logic, then the implications for the printing industry must be examined. The purpose of this paper is to examine and then address the impact of the B2B marketplace, and in a broader sense, the constantly evolving Internet, and the various changes, effects and uses on the printing industry. The focus of the paper will be to draw a broad picture of possible trends and development, as well as to attempt to answer various issues arising from the examination of the printing industry, especially within the context of Asia.
2. Current Status and the Future of the Internet
2.1 Internet Users
Every institution trying to summarize Internet users worldwide show different results and such difference is mainly due to the definition of 'users'. In 1998, MCI reported that the current users were 130 million, and it expected this figure to grow to 200 million by 2000. IDC (www.idc.com) reported that users were 150 million as of the end of 1997 and would rise to 1 billion users by 2000. According to The Industry Standard Corporation figures, worldwide users were 140 million in 1998, 196 million in 1999 and is expected to reach 520 million by 2003. In November 1999, Almanac (www.c-i-a.com) announced that it predicted users to hit 490 million, which will be 7.9% of the world population, with the user percentage increasing to 11.8% by 2005.
It also predicted that 82% of Internet users will be comprised of 15 most advanced nations. It stated that 25 nations worldwide will have more than 10% of its population using the Internet. Korea was ranked 10th for the absolute number of users.
2.2 Internet Business
Internet business is considered to be well-defined as a bona fide business constructed on the net. There are sectors newly introduced with the emergence of the net, and existing offline sectors that have interweaved business into the new net environment. Such businesses have proven to be feasible by the mid 1990s and have come out as a serious business sector. Although many institutions have various reports on market growth, Internet-related businesses, including e-
commerce have expanded greatly.
The number of Internet users have proliferated greatly during the past 2 to 3 years and is still expanding. Such phenomenon can be viewed as strong evidence of the old economy transforming into a new economy, thus leading existing corporations to put efforts to tie into the new management system.
According to the Boston Consulting Group (BCG), Asian users will increase by 5 folds from the current level, due to the expected increase of Chinese users, reaching 370 million by 2005. As of 1999, the total number of Asian users were estimated to be 66 million, with the Japanese on top with 20 million users, followed by China, Australia, Korea, and Taiwan. BCG forecasts that Chinese users will overtake Japan by 2005, followed by India, Korea and Taiwan; 85% of Asian users are expected to be concentrated in these 5 countries.
Source ETRI(The Electronics and Telecommunications Reseach Institute) in Korea, Jan 2000
Description 1998 1999 2000 2001 2002 Avg.Growth Rate Internet Portal 1,422 3,000 4,000 5,500 7,500 52% Internet E-C 293,400 488,700 792,900 1,968,750 4,02,300 92% Internet Sales 253,100 401,700 657,900 90% Internet Media 40,300 87,000 135,000 105% Internet Contents 45,440 99,900 163,100 293,580 645,876 94% Total 340,262 591,600 960,000 2,267,830 4,655,676 92%
Source ETRI(The Electronics and Telecommunications Reseach Institute) in Korea, Jan 2000
Description 1998 1999 2000 2001 2002 Avg.Growth Rate Internet Portal 4 35 69 95 130 137% Internet E-C 41 274 445 1,105 2,250 172% Internet Sales 36 227 364 909 1,818 167% Internet Media 5 47 82 196 432 194% Internet Contents 7 64 138 249 547 194% Total 53 373 663 1,449 2,927 173%
According to the PIA (Printing Industries of America), as of 1997, the American printing industry had 52,000 print management companies, 1 million employees and a market size of USD 142 billion. According to the Korean government, the Korean printing market, as of 1997, was comprised of 16,816 printing-related corporations and 75,000 employees in a market valued at USD 2.9 billion.
| Type of material | Typical products | Corporations concerns | Market Size |
|---|---|---|---|
| Basic | Name card, Letter heads, etc | Repetitive, Purchase of commodity, Purchase by various departments | $17 billion |
| Sales promotion related (ECP) | Catalog, DM | Sales material, High value added, Purchase by specialized departments | $35 billion |
| Materials (ECP) | Wrapping, Label, Manual etc | Simultaneous out put with product, Include product code, Purchased by specialized departments | $35 billion |
| Publishing | Newspaper, Magazine, Independent volumes | End Product, Large Scale Contract with printing companies, Complicated printing process | $38 billion |
| Others | Calendar, Card | Purchase like commodity, Consumer/Retail product, Small scale business | $15 billion |
| Total | $142 billion | ||
The potential B2B e-commerce market is expected to be approximately USD 70 billion, which represents half of the current US printing market (USD 142 billion). RCI conservatively predicts that the B2B e-commerce market for the printing industry is approximately USD 37 billion. The Internet is expected to increase efficiency of the ECP market by 50%. Therefore, the ECP market is expected to go online within the next 2 to 3 years.
Most of Asian companies are heavy Internet users, and the Asian printing industry should at least follow this trend by going online to provide better service for clients. PODi (Print on Demand Initiative) have estimated that printing materials via B2B will post 14.7 billion pages, and the B2C printing materials will reach 16 billion pages. There are regional differences, but it is clear that the B2B market will be quite large.
Definitions regarding e-commerce are constantly changing as the market develops and evolves. Corporate e-commerce can be divided into the following areas based on the e- commerce models: Buyer Driven, Seller Driven and Broker Driven. RCI took M. Swahney and S. Kaplan's article 'The Emerging Landscape of Business to Business e- Commerce' to describe the vertical trend in e-commerce and the printing industry is no exception.
'e-hubs ', which are core companies that act as a major intermediary to support business flows within the e-market place, induce companies which enter and participate in the e- marketplace by providing objective advice and technical services. It generates value by centralizing buyers and sellers in one marketplace and by providing liquidity for the market, as well as reducing costs. 'e-hubs' are being generated within the printing industry, and is creating new markets by combining the technology from the information industry with the existing printing industry.
Many companies must control and manage the printing part of their business via various suppliers, which is an integral part of the printing process. The Internet can provide a solution to simplify the whole process by concentrating it into one nexus.
'e-hubs ' will act as the center of the whole process and mediating companies shall enhance efficiency of the printing process by managing the printing process itself. This new service will be able to increase overall effectiveness. Therefore, the intermediary will improve the process, as well as reduce ordering costs. In addition, it will assist companies adjust to the new online communication system.
According to John Parsons article ' Does E Commerce Mean E Profits? ' published in Seybold Report on Publishing Systems; ' e-commerce in Printing: Update on The News and the Workflow Issues ' Volume 29, Number 10 on April 3, 2000, the benefits for buyers and seller over the Internet can be summarized as follows.
As you can see in the chart, the benefits from e-commerce are very different from sellers to buyers. The printing industry should attempt to have measures that can support buyers' benefits, while promoting the industry's margin structure simultaneously.
2001/01/19 00:00:00