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Following is the full text of a speech by the Secretary for Information Technology and Broadcasting, Mr K C Kwong, at the HKMA/TVB Award for Marketing Excellence 1998 Award Presentation Ceremony today (Monday):

Dr Li, ladies and gentlemen,

It is my honour to be invited to speak to you at the presentation ceremony of the HKMA/TVB Award for Marketing Excellence 1998.

Given the theme of this presentation ceremony, the presence of predominantly marketing professionals in the audience today and the portfolio of my policy bureau, I have been asked to talk about marketing in the new Information Age this afternoon.

The impact of the Information Age can be seen in virtually all areas of our daily life. One does not need to look far. The personal computers in our offices are now so ubiquitous and offering us so much more functionality, and convenience that we cannot operate without them. Indeed, on the odd occasions when my PC went down and I could not be connected to the rest of my colleagues, I would feel restless and helpless - no doubt withdrawal symptoms from my PC addiction!

Another obvious example is the rapid and widespread development of the Internet which is breaking down geographical barriers and encouraging world-wide communication and information flows in ways few could have imagined a few years ago. In Hong Kong, in particular, we are seeing a phenomenal growth in the number of people using the Internet. In the past 12 months, the number of Internet accounts has been growing at some 30% every six months and now stands at around 570,000. I can go on and on with equally significant examples of the impact of IT but I would now turn my attention to marketing.

First, I should point out that marketing is not immune to the influence of IT advances. For example, the multi-media capabilities of the current generation of computer hardware and software have enabled the creation of TV commercials with dazzling graphics and images which achieve a much greater visual impact and hopefully a longer lasting effect on potential customers.

Second, the rapidly growing popularity in the use of the Internet has is offering marketing professionals a completely new channel to advertise their products and services. A significant difference between the Internet and other channels of marketing is that the Internet operates round the clock and round the globe. Through its use, businesses will be able to significantly enhance their capabilities to get in touch with potential customers any time, any where in the world.

Third, with the direct contact between businesses and their customers over the Internet, the traditional roles of intermediaries will be changed in a fundamental way. There will be disintermediation as the traditional middleman is cut out from the supply chain. One obvious example is the purchase of airline tickets on-line directly from the web sites of airline companies. This enables the airlines to reduce their cost of operation on the one hand, and reduces, if not eliminates, the role of the conventional ticketing agents on the other. Moreover, through direct contact over the Internet, businesses will be able to serve their customers better by offering customised products and services to suit individual clients' needs.

But all hope is not lost for the middlemen. With the information overload on the Internet, there will be opportunities for reintermediation. New business activities will develop to take advantage of the versatility of the Internet to push tailored and value-added information and services to customers. The development of cyberbook stores, such as Amazon.com which you may all have heard of, is a very good example.

The global value of purchases over the Internet by consumers and businesses is forecast to grow from US$ 10 billion in 1997 to US$220 billion by 2001. No business can let such an enormous opportunity drift away. This is particularly true for businesses which have set sight on the increasingly connected global market. For small and medium-sized enterprises, which comprise over 95% of businesses in Hong Kong, marketing through the Internet will also be particularly advantageous since it offers an inexpensive and new channel for reaching out to the global market. Enterprises will no longer need to feel constrained by the high costs of establishing a physical presence overseas. In short, the development of the Internet and electronic commerce will completely transform the way we do business and change the environment in which our enterprises operate. I therefore urge you all, as marketing professionals, to help your clients seize this enormous business opportunity and fully exploit the potential that this new development will bring.

The Government fully recognises the significance of the development of electronic commerce over the Internet. We also recognise the need for the Government to take the lead in its promotion. We have therefore decided to introduce on-line delivery of public services in phases. The first phase should be up and running in the year 2000. Electronic Service Delivery, as the scheme is called, will provide Government services to the community electronically through an information infrastructure accessible throughout the territory. Our aim is to enable the public to transact business with the Government on-line and on a seamless basis through the use of information kiosks installed in convenient public locations, personal computers at home or in the office, telephones through interactive voice response system or interactive television. Public services will be available 24 hours a day and seven days a week. In short, the scheme will transform the way public services are delivered. We also anticipate that the scheme will serve as a catalyst to pump-prime the development of electronic commerce in the private sector, as the open and common information infrastructure adopted for the scheme can also be readily used by the private sector for the conduct of electronic transactions at a later stage.

To support the implementation of the Electronic Service Delivery scheme and to facilitate the development of electronic commerce in Hong Kong, we consider it necessary to have locally established certification authorities to provide security and trust in the conduct of electronic transactions under a public key infrastructure. While we shall leave it to the market to decide on the number of certification authorities to be established in Hong Kong, we accept that Government should take the lead in the establishment of the public key infrastructure. In this regard, the Hongkong Post's agreement in principle to set up a public certification authority in support of our Electronic Service Delivery scheme is a most welcome development.

Another area we are looking into is the need for a legal framework to enhance certainty in the conduct of electronic transactions. If necessary, we will ensure that the necessary legislative steps are completed ahead of the launching of the Electronic Service Delivery scheme. Our objective is to provide a favourable environment for electronic transactions to take hold in Hong Kong.

Finally, I would like to congratulate the winners of the prestigious HKMA/TVB Award this year for their outstanding achievement in the marketing field. I hope that they will fully exploit the information infrastructure that we are building up to more effectively market their goods and services.

Thank you.

End/Monday, September 28, 1998

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