Korea's small firms spend big on e-commerce

Still plenty of opportunity for growth, says analyst.

Small and medium sized businesses in South Korea are expected to increase spending on IT products and services to US 16.6bn this year, according to research from AMI-Partners. 

More than US$2bn of this will be on the hosting and development of company websites.

Although spending on websites is already significant, only about a fifth of small firms with internet connections have actually set up a site.

"Websites help small businesses enhance their corporate image and showcase their products to the global market," said AMI-Partners analyst Dev Chakravarty.

"Websites also enable small businesses to compete more successfully against larger rivals. They can economically reach out to business partners, customers and suppliers worldwide.

"Currently just over 20 per cent of internet-owning small businesses in South Korea have a corporate website. A further 11 per cent are planning to host corporate websites in the next 12 months."

Despite South Korea's status as one of the world's most wired nations, a quarter of small businesses told AMI that they have not adopted internet-related technologies at all.

"This offers a significant opportunity for internet service providers, more so as South Korea's broadband network is one of the strongest in the world, and almost all medium-sized businesses have adopted broadband," said Chakravarty.

Internet penetration among small businesses is also set to rise. Almost 50 per cent of South Korea's small businesses said in an AMI survey that they plan to boost network bandwidth in the next 12 months.

The government has played a supporting role and deregulated the telecom sector. This has fostered rapid growth in the country's internet and wireless markets, according to AMI.

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