Copyright, 2001 © Stefan Probst “stand-alone” version of 24.11.2001 Tele-Trade: Stepping-Stone...

Copyright, 2001 © Stefan Probst “stand-alone” version of 24.11.2001

Tele-TradeTele-Trade::Stepping-Stone or Stumbling-Stepping-Stone or Stumbling-BlockBlockon the Way to eCommerce in on the Way to eCommerce in VietnamVietnam

Stefan Probst, Opticom Technologies Ltd.Internet Society VN, Internet Societal Task Force,

with valuable support of the GTZ SME Projectwww.SMEnet.com.vnwww.SMEnet.com.vn

eCommerce,eCommerce,a double-sided sword:a double-sided sword:

if late and/orif late and/or if early and if early and insufficient:insufficient: sufficiently broad:sufficiently broad:

Digital DivideDigital Divide Digital Digital OpportunityOpportunity

““eCommerce” in VietnameCommerce” in Vietnam- Legislation -- Legislation -

• ““By end of 2005 a majority of Vietnamese By end of 2005 a majority of Vietnamese businesses and all Government offices will be businesses and all Government offices will be involved in eCommerce”involved in eCommerce”

• “… “… the legal environment is the primary factor the legal environment is the primary factor for developing eCommerce…for developing eCommerce…Relevant eCommerce laws have yet to be issued Relevant eCommerce laws have yet to be issued ...”...”

• eCommerce Project under Ministry of Trade, 14 eCommerce Project under Ministry of Trade, 14 sub projects, 24 State bodies involvedsub projects, 24 State bodies involved

““eCommerce” in VietnameCommerce” in Vietnam- Business -- Business -

• Much hype, little real action:Much hype, little real action:until today until today (Nov. 2001)(Nov. 2001), not a single Vietnamese , not a single Vietnamese site accepts firm orders or on-line payments.site accepts firm orders or on-line payments.

• VERY few companies have a detailed on-line VERY few companies have a detailed on-line catalogue, i.e. the first step to eCommerce.catalogue, i.e. the first step to eCommerce.

• Until recently (before “Decree #55”), Internet Until recently (before “Decree #55”), Internet presence was difficult and/or expensive.presence was difficult and/or expensive.

e.g.:e.g.: eCommerce in the US eCommerce in the US

• B2B TotalsB2B Totalsin 98: 50 bln, in 99: 180 bln, in 00: 400 bln US$in 98: 50 bln, in 99: 180 bln, in 00: 400 bln US$

• Digital Signature Law in June 2000 onlyDigital Signature Law in June 2000 only

• eCommerce started in the USeCommerce started in the US - and many other parts of the world - - and many other parts of the world - before specific legislation was enacted! before specific legislation was enacted!

• How was this possible?How was this possible?

Before there was Before there was eCommerce ...eCommerce ...

• Because in many countries in the West, Because in many countries in the West, there was long time already “Tele-Trade”:there was long time already “Tele-Trade”:

– buyers and sellers never meet in person;buyers and sellers never meet in person;an “unpersonal” business relationan “unpersonal” business relation

– offering, ordering, payment, deliveryoffering, ordering, payment, deliveryis done over a distanceis done over a distance

– post, telecom, and bank services made this post, telecom, and bank services made this possible; laws and regulations didn’t obstruct.possible; laws and regulations didn’t obstruct.

e.g.:e.g.: Tele-Trade Tele-Trade in Germanyin Germany(data taken from two biggest German mail-order (data taken from two biggest German mail-order companies)companies)

• 1878: Cash on Delivery Service by Post 1878: Cash on Delivery Service by Post OfficeOffice

(seller sends good via post office,(seller sends good via post office,buyer pays on receiving to the post manbuyer pays on receiving to the post manpost office transfers the money to the seller)post office transfers the money to the seller)

(safe for the seller: looses max. the post/mailing (safe for the seller: looses max. the post/mailing fee,fee,safe for the buyer: no need for advance safe for the buyer: no need for advance payment) payment)

– VN: not yet!VN: not yet!

Tele-TradeTele-Trade in Germanyin Germany


• 1927: Mail-Order Company founded1927: Mail-Order Company founded– not yet in VN (quite impossible without not yet in VN (quite impossible without COD)COD)



• 1927: Mail-Order Company founded1927: Mail-Order Company founded

• 1928: First printed catalogue1928: First printed catalogue– in VN since about mid ‘90sin VN since about mid ‘90s

– still very rare and unusualstill very rare and unusual

– often very incompleteoften very incomplete




• 1928: First printed catalogue1928: First printed catalogue

• mid 60s: Telephone ordersmid 60s: Telephone orders– VN, since mid 90s: only for direct deliveriesVN, since mid 90s: only for direct deliveries(e.g. gas bottles, fast food, medical services)(e.g. gas bottles, fast food, medical services)

or to known customersor to known customers




• 1928: First printed catalogue1928: First printed catalogue

• mid 60s: Telephone ordersmid 60s: Telephone orders

• 1989: 24h-Delivery Service1989: 24h-Delivery Service• 1990: Telephone orders 24h/7d (COD or CC)1990: Telephone orders 24h/7d (COD or CC)

• 02.95: Catalogue on CD-ROM02.95: Catalogue on CD-ROM

eCommerceeCommerce in Germanyin Germany

• 08.95: from Tele-Trade to eCommerce:08.95: from Tele-Trade to eCommerce:– eOffer:eOffer: Catalogue in the InternetCatalogue in the Internet

– eOrder:eOrder: eMail or “shopping cart” on WebsiteeMail or “shopping cart” on Website

– eInvoice:eInvoice: eMail or print-out of Website, if at alleMail or print-out of Website, if at all

– ePayment:ePayment: with Credit Card on Website or via eBankingwith Credit Card on Website or via eBanking

– eDelivery:eDelivery: (n/a in this case; only digital goods)(n/a in this case; only digital goods)

alternative payments:alternative payments:* COD (cash on delivery)* COD (cash on delivery)* “open invoice”* “open invoice”(for known customers, state offices, etc.)(for known customers, state offices, etc.)

From From Tele-TradeTele-Trade to to eCommerceeCommerce

• A comparable small stepA comparable small step- for buyers and sellers -- for buyers and sellers -from Tele-Trade to eCommerce!from Tele-Trade to eCommerce!

• If Tele-Trade is possible,If Tele-Trade is possible,then only very few additional legislation then only very few additional legislation is is neededneeded, but some more is, but some more is helpful: helpful:e.g. USA:e.g. USA:* * Digital Signature Law in June 2000 onlyDigital Signature Law in June 2000 only

Official Awareness in Official Awareness in VietnamVietnam

• The Party and the Government The Party and the Government consider eCommerce as importantconsider eCommerce as important(but tend to underestimate the urgency).(but tend to underestimate the urgency).

• International Donors are willing to International Donors are willing to assistassist(but think actually only about the small step(but think actually only about the small stepfrom Tele-Trade to eCommerce and tend to from Tele-Trade to eCommerce and tend to forgetforgetthe pre-conditions).the pre-conditions).

Official’s and Media Official’s and Media AwarenessAwareness

• Confusion about Segments, Importance, Confusion about Segments, Importance, Implementation Differences:Implementation Differences:– B2C vs. B2C vs. B2BB2B

cited problems:cited problems:“few credit cards, few bank accounts”“few credit cards, few bank accounts”“high connection cost”“high connection cost”

BUTBUTB2B is world-wide larger than B2C,B2B is world-wide larger than B2C,Businesses can easily obtain a credit card,Businesses can easily obtain a credit card,they have bank accounts, andthey have bank accounts, andcommercial benefits outweigh high connection commercial benefits outweigh high connection

costcost


• Confusion about Segments, Importance, Confusion about Segments, Importance, Implementation Differences:Implementation Differences:– B2C vs. B2C vs. B2BB2B– domestic vs. domestic vs. internationalinternational

Differences:Differences:not always need for credit cards for domestic eCommerce,not always need for credit cards for domestic eCommerce,excessive import/export procedures,excessive import/export procedures,strict “financial Invoices” unknown abroad,strict “financial Invoices” unknown abroad,foreign bank accounts are strictly regulated/not allowed,foreign bank accounts are strictly regulated/not allowed,use of foreign currencies is regulateduse of foreign currencies is regulated

International segmentInternational segmentis more important and more urgentis more important and more urgent


• Confusion about Segments, Confusion about Segments, Importance, Implementation Importance, Implementation Differences:Differences:– B2C vs. B2C vs. B2BB2B– domestic vs. domestic vs. internationalinternational– import vs. import vs. exportexport

Differences:Differences:export is encouraged, therefore easierexport is encouraged, therefore easierimport is restricted, more difficult proceduresimport is restricted, more difficult procedures

Export more important than ImportExport more important than Import


• Confusion about Segments, Importance, Confusion about Segments, Importance, Implementation Differences:Implementation Differences:– B2C vs. B2C vs. B2BB2B– domestic vs. domestic vs. internationalinternational– import vs. import vs. exportexport– tangible products vs. digital goods vs. servicestangible products vs. digital goods vs. services

Differences:Differences:import and export of digital goods and servicesimport and export of digital goods and services is difficult to prove, which is important for taxation, is difficult to prove, which is important for taxation, much easier to deliver digital goods, than tangible ones, much easier to deliver digital goods, than tangible ones,


• Confusion about Segments, Importance, Confusion about Segments, Importance, Implementation Differences:Implementation Differences:– B2C vs. B2C vs. B2BB2B– domestic vs. domestic vs. internationalinternational– import vs. import vs. exportexport– tangible products vs. digital goods vs. servicestangible products vs. digital goods vs. services– short vs. short vs. mediummedium vs. vs. long termlong term

connection cost could drop quite quicklyBUT

language barriers are high and will stay for much longer

Official’s and Media Official’s and Media ExpectationsExpectations

• Try to Cover Every Eventuality, i.e.Try to Cover Every Eventuality, i.e.Over-Regulation of Business Risk, but:Over-Regulation of Business Risk, but:– eTransactions are limited in valueeTransactions are limited in value

Multi-Million Dollar Deals with unknown partnersMulti-Million Dollar Deals with unknown partnersare not done via eCommerceare not done via eCommerce

– Risk is normal part of businessRisk is normal part of businessPrivate entrepreneurs should be allowed to decidePrivate entrepreneurs should be allowed to decidethemselves what to do with their capital,themselves what to do with their capital,even if this includes some risk for them.even if this includes some risk for them.

– Absence of Tele-Trade means lack of experienceAbsence of Tele-Trade means lack of experience

Businesses’ AwarenessBusinesses’ Awareness

• Don’t recognize important changes during Don’t recognize important changes during the last years the last years (e.g. Commercial Law).(e.g. Commercial Law).

• Believe too much the poor information in Believe too much the poor information in the media the media (e.g. “Cannot start until more Laws are issued”).(e.g. “Cannot start until more Laws are issued”).

• Wait sometimes too much for the State.Wait sometimes too much for the State.

• Often prefer to pay “tea money” instead of Often prefer to pay “tea money” instead of insisting on their rights insisting on their rights (e.g. when new regulations).(e.g. when new regulations).

The Situation in VietnamThe Situation in Vietnam

• The most important eCommerce enabling The most important eCommerce enabling laws are already in place!laws are already in place!– the Civil Code allows verbal contracts and the Civil Code allows verbal contracts and

contracts by specific actioncontracts by specific action

– the Commercial Law gives agreements by eMail the Commercial Law gives agreements by eMail and other electronic communication the status of and other electronic communication the status of written contractswritten contracts

– a new official letter allows export contracts by a new official letter allows export contracts by eMail etc., according to Commercial LaweMail etc., according to Commercial Law

The Situation in VietnamThe Situation in Vietnam

• The most important eCommerce The most important eCommerce enabling laws are already in place!enabling laws are already in place!

• Tele-Trade is next to impossible:Tele-Trade is next to impossible:– no COD service by Post Officeno COD service by Post Office

– sellers not used to comprehensive cataloguessellers not used to comprehensive catalogues

– details of taxation, customs, other regulationsdetails of taxation, customs, other regulationsmake Tele-Trade very difficult or make Tele-Trade very difficult or

impossible impossible

To Do - Short Term:To Do - Short Term:The Government, Ministries, The Government, Ministries, etc.etc.• Introduce COD Service Introduce COD Service (DGPT)(DGPT)

• Allow Basic Forms of Encryption for Allow Basic Forms of Encryption for eCommerce eCommerce (Gov. Committee on Encryption)(Gov. Committee on Encryption)

• Allow Companies to open Bank Accounts Allow Companies to open Bank Accounts Abroad to receive eCommerce payments.Abroad to receive eCommerce payments.

• Allow Verbal and Electronic FormAllow Verbal and Electronic Formfor “Economic Contracts” for “Economic Contracts” (Government)(Government)

To Do - Short Term:To Do - Short Term:The Government, Ministries, The Government, Ministries, etc.etc.

• Speed-up the Implementation of Speed-up the Implementation of Payment Gateway Payment Gateway (Banks, Finance Ministry)(Banks, Finance Ministry)

• Allow Foreign Currencies for Domestic Allow Foreign Currencies for Domestic eCommerce eCommerce (as long as VND is not yet (as long as VND is not yet possible).possible).

• Set-up a “Red Tape eTask Force”Set-up a “Red Tape eTask Force”where businesses can report problems with where businesses can report problems with existing regulations - and maybe get solutionsexisting regulations - and maybe get solutions

To Do - Medium Term:To Do - Medium Term:The Government, Ministries, The Government, Ministries, etc.etc.• Overhaul - or abolish - theOverhaul - or abolish - the

Ordinance on Economic ContractsOrdinance on Economic Contracts

• Overhaul the Financial Invoice RegimeOverhaul the Financial Invoice Regime

• Focus on “Localization” of the Internet:Focus on “Localization” of the Internet:* Tools * Tools (Hardware and Software)(Hardware and Software)

* Standards* Standards* Content* Content(other problems will disappear over time, or solved elsewhere,(other problems will disappear over time, or solved elsewhere, but this very big one will but this very big one will have to be solved by Vietnam itselfhave to be solved by Vietnam itself))

Difficult, but Possible NowDifficult, but Possible Now

• Domestic B2B TradeDomestic B2B Trade(very difficult to receive credit card payments)(very difficult to receive credit card payments)

• Domestic B2C TradeDomestic B2C Trade(but no “trial sales”)(but no “trial sales”)(very difficult to receive credit card payments(very difficult to receive credit card payments and no COD, therefore and no COD, therefore only advance payment or open invoice) only advance payment or open invoice)

• Note: paying on-line with a credit card is usually done Note: paying on-line with a credit card is usually done via an encrypted Internet transmission protocol via an encrypted Internet transmission protocol (http(httpss)). . Encryption is at present not allowed in VN.Encryption is at present not allowed in VN.

Possible Now AlreadyPossible Now Already

• Export of Tangible GoodsExport of Tangible Goods(via foreign payment clearing house,(via foreign payment clearing house,or conventional payment)or conventional payment)

• Import of Tangible GoodsImport of Tangible Goods(using a credit card or conventional payment)(using a credit card or conventional payment)(but needs a “contract” by eMail or webpage) (but needs a “contract” by eMail or webpage)

• Import of Digital Goods for Re-saleImport of Digital Goods for Re-sale(actually grey-area: goods would be de-facto smuggled into VN,(actually grey-area: goods would be de-facto smuggled into VN,but since all taxes (VAT) would be paid on re-sale,but since all taxes (VAT) would be paid on re-sale,the state would loose no taxes)the state would loose no taxes)

BenefitsBenefits

• SMEs can get additional foreign SMEs can get additional foreign customerscustomers- no need to visit expensive fairs abroad- no need to visit expensive fairs abroad- no middle man, therefore- no middle man, therefore

make full use of low labour costmake full use of low labour cost

• Easy International ProcurementEasy International Procurement- wide range of available products- wide range of available products- search for lowest prices- search for lowest prices

BenefitsBenefits

• Study Competition Study Competition (as part of marketing)(as part of marketing)

- adapt products - adapt products (to the customer’s taste)(to the customer’s taste)

- adapt prices - adapt prices (stay competitive)(stay competitive)

• Bridge Domestic Urban-Rural Gap:Bridge Domestic Urban-Rural Gap:- buy from everywhere- buy from everywhere- sell to everywhere- sell to everywhere

ConclusionsConclusions

• NO new laws are needed to STARTNO new laws are needed to START

• Some changes are needed to make it easierSome changes are needed to make it easier

• Most of the changes could be done quicklyMost of the changes could be done quickly

• Allow business risks Allow business risks - at least for private sector- at least for private sector

• Foreign Markets don’t wait - Act now!Foreign Markets don’t wait - Act now!

• Domestic Sellers: Prepare and Start NOW!Domestic Sellers: Prepare and Start NOW!

ConclusionsConclusions

From US GovernmentFrom US Government““A Framework for Global Electronic Commerce”:A Framework for Global Electronic Commerce”:

““There is a great opportunity for There is a great opportunity for commercial activity on the Internet. If commercial activity on the Internet. If the private sector and governments act the private sector and governments act appropriately, this opportunity can be appropriately, this opportunity can be realised for the benefit of all people.” realised for the benefit of all people.”

eCommerce Consultancy:eCommerce Consultancy:[email protected]@opticom-vn.com

eCommerce Workgroup:eCommerce Workgroup:[email protected]@ISOC-VN.org

Full presentation, with translation,Full presentation, with translation,

will be on-line at www.ISOC-VN.orgwill be on-line at www.ISOC-VN.org

Copyright, 2001 © Stefan Probst “stand-alone” version of 24.11.2001 Tele-Trade: Stepping-Stone...

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