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1 st APEC e-Commerce Business Alliance Forum TRADELINK: A SUCCESSFUL CASE STUDY OF PAPERLESS 1 st APEC e-Commerce Business Alliance Forum TRADELINK: A SUCCESSFUL CASE STUDY OF PAPERLESS TRADE AND ELECTRONIC COMMERCE Wednesday 16 June 2004 Justin YUE Chief Executive Officer Tradelink Electronic Commerce Limited

Agenda Tradelink Highlights Tradelink’s Electronic Services Pan Asian e-Commerce Alliance Digital Trade and Transportation Agenda Tradelink Highlights Tradelink’s Electronic Services Pan Asian e-Commerce Alliance Digital Trade and Transportation Network

Tradelink’s Mission u To help Hong Kong maintain its international competitiveness through the use Tradelink’s Mission u To help Hong Kong maintain its international competitiveness through the use of Electronic Commerce u To jump start HK’s adoption of Electronic Commerce

Tradelink’s Shareholders u u u u The HKSAR Government 42. 49% The Hongkong and Tradelink’s Shareholders u u u u The HKSAR Government 42. 49% The Hongkong and Shanghai Banking Corporation Ltd (HSBC) 8. 78% Pacific Century Cyber. Works (PCCW) 8. 78% China Resources (Holdings) Ltd 5. 30% Hong Kong Air Cargo Terminals Ltd (HACTL) 5. 30% Modern Terminals Ltd (MTL) 5. 30% Swire Pacific Ltd 5. 30% TAL Apparel Ltd (TAL) 4. 73% Hongkong International Terminals Ltd (HIT) 4. 69% The Hong Kong General Chamber of Commerce (HKGCC) 4. 08% The Federation of Hong Kong Industries (FHKI) 3. 48% Standard Chartered Bank 1. 55% Hong Kong Association of Freight Forwarding and Logistics Ltd (HAFFA) 0. 22%

Tradelink Highlights u 7 year franchise (1997 - 2003) for specified Government trade documents, Tradelink Highlights u 7 year franchise (1997 - 2003) for specified Government trade documents, with license confirmed for 2004 - 2008 – – 17 million transactions/year – u Over 53, 000 company subscribers All documents digitally signed & encrypted for open network transmission Customer Hotline and Training – Dual call centers – Three tier with 100 + staff – Sophisticated Customer Relation Management System – Dedicated training centers

Tradelink Highlights u Network of 26 Service Centers – u Conversion of Paper documents Tradelink Highlights u Network of 26 Service Centers – u Conversion of Paper documents to electronic form Certification Authority – Signature and Encryption Certificates – Subsidiary “Digi-Sign Certification Services” recognized under the ETO

Agenda Tradelink Highlights Tradelink’s Electronic Services Pan Asian e-Commerce Alliance Digital Trade and Transportation Agenda Tradelink Highlights Tradelink’s Electronic Services Pan Asian e-Commerce Alliance Digital Trade and Transportation Network

Typical HK Business Process (3 )R Regional Supplier aw M at (4 )A Government Typical HK Business Process (3 )R Regional Supplier aw M at (4 )A Government Export Documents (5) (5 dv )I nv oi er ce Sh ls + Pa in g o Go d Co n fir t. N ot ice Li st P ds m O ds Logistics Providers Terminals Banks PRC Border Checkpoint Customs Documents (6, 7) at io n (2) Factory Order Hong Kong Trader o Go e ed nt sh ish me ini F Fin hip S (1) 8) ( Overseas (US/Europe) Buyers + m en Overseas Government Import Documents PO ip ck Regional Government ia an ce HKSAR Border Checkpoint (6) Raw Material Shipment Documents (7) Finished Goods Shipment Documents Government Trade Documents (5, 8) HKSAR Government PRC Factory Processing Contract Pre-Declaration (Customs) PRC Government Tradelink’s Electronic Services Aim to Facilitate this Process

Tradelink’s Role as e-Business Magnet in International Trade Transactions Air Terminals Insurers (ECIC) Establish Tradelink’s Role as e-Business Magnet in International Trade Transactions Air Terminals Insurers (ECIC) Establish Market Channel -Web Hosting -Pan Asian Portal Inspection Agencies Govt Depts Tradelink & Partners Negotiate Contract -Export Credit Insurance Declaration -Purchase Order Prepare Products -Production Notification -Certificate of Origin -Outward Processing Arrangement -China Cross Border Documentation -China Processing Contracts Arrange Logistics HK Traders - Current Connections China Traders & Manufacturers Banks Comply with Regulations -Carrier -Textile Quota Licenses Notification -Electronic Visa Copy -Shipping Order to US Customs -Bill of Lading / -Trade Declaration Forwarder Cargo -Dutiable Commodity Receipt (Draft) Permit -Packing List -Manifest -Advanced Shipment-TTRS Notification Notice Pan-Asia E-Commerce Alliance Overseas Buyers Sellers US Customs Settle Payment -Commercial Invoice -Packing List -Insurance Certificate* -Inspection Certificate* -Proof of Delivery -Bill of Lading (Title) Bolero Container Terminals - Future Connections Carriers Forwarders * Under Development

Tradelink’s Electronic Services Trade Related Government Services as the Basic Building Block Textile Traders Tradelink’s Electronic Services Trade Related Government Services as the Basic Building Block Textile Traders & Manufacturers All Traders u u u Import & Export Declaration Certificate of Origin Dutiable Commodities Permit Shipping Order Service Trader Documentation Service for Regional/Global Trade China Processing Trade/Cross Border Documentation Service u u Restrained Textile Export Licence Carrier Notification and Electronic Visa Copy to US Customs Production Notification Textile Trader Registration Scheme (TTRS) Notifications Forwarders & Carriers u u Carrier Notification Shipping Order/AMS/ACI Manifest Textile Trader Registration Scheme Notifications

Benefits to the Hong Kong Trading Community Before After § Paper Documents § Electronic Benefits to the Hong Kong Trading Community Before After § Paper Documents § Electronic messages § Each document needed to be prepared separately § Same data can be re-used for different documents § Delivered to Government centers by post, by courier, or in person § Electronic documents sent via direct dial-up or Internet § Documents accepted only during office hours (9: 00 a. m. to 5: 00 p. m. ) on weekdays § § Manual processing of paper documents takes time § Automated computer processing of electronic documents is much quicker § Manual payment by cash, cheque or stamps § Computerised bank settlement process 24 hours x 7 days a week

Agenda Tradelink Highlights Tradelink’s Electronic Services Pan Asian e-Commerce Alliance Digital Trade and Transportation Agenda Tradelink Highlights Tradelink’s Electronic Services Pan Asian e-Commerce Alliance Digital Trade and Transportation Network

Pan Asian e-Commerce Alliance (1) Established in July 2000, aims to secure cross border Pan Asian e-Commerce Alliance (1) Established in July 2000, aims to secure cross border electronic services for efficient global trade and logistics Members No. of Customers CIECC (China) 10, 000 KTNet (Korea) 25, 000 Crimson. Logic (Singapore) 25, 000 Trade-Van (Chinese Taipei) 15, 000 Tradelink (Hong Kong) 53, 000 Dagang. Net (Malaysia) 2, 000 TEDMEV (Macau) 2, 000 TEDI Club (Japan) ______ 132, 000

Pan Asian e-Commerce Alliance (2) u Trust in cross border transactions through: – – Pan Asian e-Commerce Alliance (2) u Trust in cross border transactions through: – – Initiatives Legal framework for electronic Cross Border trade transactions Mutual Recognition of Digital Certificates amongst members of the Alliance, Six Certification Authorities recognized (HK, Taiwan, Korea, Singapore, Japan, China) u Secure Cross Border Trade Transaction Service between HK and Taiwan in operation with pilots in place between Japan, Korea, Singapore and Malaysia u PAA Portal (www. PAA. net) u Logistics Tracking

Pan Asian e-Commerce Alliance (3) Cross Border Transaction Services u Provides complete set of Pan Asian e-Commerce Alliance (3) Cross Border Transaction Services u Provides complete set of electronic commercial documents that meets the specific requirements of driving organizations in transacting with their local and overseas partners. e. g. PO, Invoice, Packing list, Advanced Shipment Notice, Inspection certificate, SO, SI, Waybills etc. u One platform to transact with all partners u Direct integration to operational systems

Pan Asian e-Commerce Alliance (4) Example Services In Operation u Hong Kong – Chinese Pan Asian e-Commerce Alliance (4) Example Services In Operation u Hong Kong – Chinese Taipei / China – Major garment manufacturer (TAL) & suppliers u Chinese Taipei - Japan / Korea – Formosa Plastics with Mitsubishi in Japan and Korean suppliers u Korea - Japan – Hyundai Motors in Korea with a division Mitsubishi in Japan u Japan - Singapore – Sumitomo Corporation with Pandai Steel

Agenda Tradelink Highlights Tradelink’s Electronic Services Pan Asian e-Commerce Alliance Digital Trade and Transportation Agenda Tradelink Highlights Tradelink’s Electronic Services Pan Asian e-Commerce Alliance Digital Trade and Transportation Network

Hong Kong’s Digital Trade and Transportation Network (DTTN) Public/private sector initiative under the Logistics Hong Kong’s Digital Trade and Transportation Network (DTTN) Public/private sector initiative under the Logistics Development Council to improve HK’s competitiveness that aims to: 1. Be A NEUTRAL, OPEN, NON-EXCLUSIVE, TRANSPARENT state-of-the-art electronic document exchange platform 2. Facilitate trade & transportation information flow and service integration through interconnections – Within Hong Kong/Pearl River Delta – Regionally – Globally 3. Stimulate growth of innovative value added e-logistics services 4. Promote SME e-business adoption 5. Provide 10 major trade and logistics Business Processes and over 60 business documents

DTTN 3 -Layer Model Valueadded Services Value-added services such as multi -modal integration, distribution DTTN 3 -Layer Model Valueadded Services Value-added services such as multi -modal integration, distribution & Layer 3 transportation management Core Messaging Infrastructure Standards and Protocols Open, neutral, secure, reliable and shared electronic infrastructure messaging Layer 2 Local and international standards for security, trade documents, Layer 1 codes, protocols

Community Role of the DTTN Sellers Value Adding Service Providers Regional/ Global Service Providers Community Role of the DTTN Sellers Value Adding Service Providers Regional/ Global Service Providers Buyers Freight Forwarders Carriers DTTN Core Messaging Infrastructure Communications Gateway Security Services Web Services Document Exchange & Transformation User Management Reporting Terminals Banks & Financial Institutions Inspection Agencies Government & Agencies Insurance Institutions

The Way Forward for HK’s DTTN 1. Appoint Tradelink as the DTTN service provider The Way Forward for HK’s DTTN 1. Appoint Tradelink as the DTTN service provider 2. Establish Standards Group and adopt standards to streamline local, regional and global interconnections 3. Identify cross border trade chains and organizations for pilot adoption 4. Develop and implement the DTTN 5. Implement DTTN Interconnections by Logistics Industry

Spearheading Hong Kong's Development of Electronic Commerce Spearheading Hong Kong's Development of Electronic Commerce