Jackie Chung (鐘宏駿) of ECnet doesn't shrink from a tough
question.
When asked about his company's main competition -- i2 Technologies, a business-to-business e-commerce facilitator worth US$21.5 billion in the US -- he was quick with an answer.
PHOTO: CHEN CHENG-CHANG, TAIPEI TIMES
"I think i2 is a great company," said Chung, who heads ECnet's Taiwan operations. "But we're professionals in the high-tech industry ... They're involved in different industries. We're involved in one industry and we do it best."
Whereas i2's goal is to help everyone from car manufacturers to plane makers use the Web to become more efficient, Chung said, ECnet has a narrower focus.
It's niche is primarily high-tech manufacturers -- the makers of consumer electronics, PCs, semiconductors, components and telecom equipment.
By using the Internet, ECnet can help high-tech companies speed up the pace of communications, thus improving forecasts and reducing costly excess inventory.
Niche opportunity
And while e-commerce enablers such as i2 Technologies have decided to go after the broader business-to-business market, the niche ECnet has settled on isn't exactly small. By some estimates, high-tech manufacturers do an estimated US$600 billion in business annually.
It's a major reason why the Singapore-based company has established outposts in most of Asia's major manufacturing centers.
"We can reduce from four days to two days messaging transactions," Chung said of ECnet's Web communication services.
Major Taiwan clients so far include Taiwan Semiconductor (
Other customers in Taiwan include National Panasonic, Epson Taiwan and broadband equipment maker ZyXEL.
In addition to streamlining communications between manufacturers and suppliers, ECnet also operates a digital marketplace, where US$3 billion in goods passed hands last year.
But unlike other Web businesses that claim to "disintermediate" the middleman, ECnet has embraced the role.
Because many investors would quickly sell off the shares of any company with an excess inventory problem, ECnet allows its clients to sell excess goods anonymously.
"Any logo on the product we will repackage," Chung said.
They'll even verify the quality of a product and handle payments through escrow accounts.
What's more, transactions that take place through ECnet's digital marketplace -- which can be reached at www.ecpart.com -- usually require less time. Purchased goods normally arrive within five to seven days, compared to 10 for transactions in the offline world.
"ECnet -- we're just the middleman," Chung said, adding that his company usually earns a 10 percent commission for every successful transaction.
Since coming to Taiwan last year, ECnet has landed two major accounts and they have the goal of winning the business of the nation's 23 high-tech manufacturers that do more than NT$10 billion in sales per year.
To accomplish that goal, the company has plans to bulk up its Taiwan staff to 100, up from 36 today, Chung said. "Most of the employees will be customer service providers and engineers," he said.
But the competition will be stiff, especially as the e-commerce industry's barriers to entry are low.
While i2 Technologies may have cast a wide net across a number of industries, that net has managed to catch major high-tech manufacturers such as Acer Inc.
Chung said ECnet differentiates itself in the level of customer service it provides.
Analyzing the customer's needs
Before signing up a customer, the company will study a prospective client's needs over a three-month period.
The main purpose of the study, Chung said, is to determine whether a customer's business processes are suitable for e-commerce.
Then the company will determine whether or not an investment in ECnet's services will yield a worthwhile return.
"The report will analyze your ROI. Is this good for you or not?" Chung said.
Finally, after establishing an e-commerce infrastructure for its clients, ECnet will test the system for three months to make sure everything works smoothly.
"Few others do that," Chung said.
While he wasn't allowed to say how much revenue ECnet brought in last year, Chung was quick to volunteer that the company does have a NASDAQ initial public offering in the works, possibly as early as July.
And despite the US' markets downturn in recent weeks, ECnet could expect to command a handsome valuation when it floats. Investors value i2 Technologies at 385 times 2000 earnings.
That should put a smile on the faces of ECnet's financial backers, a group that includes Goldman Sachs, Morgan Stanley, Doll Capital and SilkRoute Holdings.
In the meantime, however, Chung is concentrating on getting some of Taiwan's top high-tech manufacturers to sign on with ECnet.
He'll have some help: The government is subsidizing the cost of the move online for Taiwan's major businesses, Chung said. It's called Plan B, and the nation's top 23 high-tech manufactures qualify for the handout.
"There are many service provider companies booming. Why?" Chung said. "It's because of the government's Plan B."
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