The development of e-business in property agency industry

The development of e-business in property agency industry in Greater China

• Introduction What is E-commerce? It is the integrated use of the computing and communications technologies for commercial transactions, including the transfer of information, products, services or payments via electronic networks.

Types of E-business operations 1. B-B (business to business) § § § most common type today transactions take place between business partners in the internet environment e. g. GE (General Electric) EC system 2. B-C (business to customer) • retail business in the internet • e. g. Amazon. com environment

3. C-B (customer to business) • provision of “Marketplace” for customers to buy their products in the internet environment. • e. g. priceline. com 4. C-C (customer to customer) • • Customers sell directly with other customers in the form of auctions or classified ads in the internet environment. e. g. e. Bay. com

Marketplace / Marketspace • A virtual market place where buyers and sellers can interact with each other to complete a commerce transaction. • It is a Agent Based System - dbase engine - searching engine - Internet logistic implementation system - Internet payment gateway

Technology Factors • Telecom Infrastructure (e. g. broadband internet network, set-top box) • Privacy & Security (e. g https, cryptograph, encryption) (e. g e-cert, digital signature, public key) • Payment gateway (e. g. SSL, SET) • Intelligent (Cookies, servlet program) I, C

Sociology Factors • Privacy • Lifestyle Change • Mobility from rural area to metropolitan • PRC join WTO • Population growth • Consumer behavior change • Open market information • Timely Information I, C I, U I, U

Economics factors • Social economic growth I, U • Second hand property I, C • PRC join WTO I, C (non zero sum game, increase 4. 6% GDP) • Currency control in PRC I, U (capital inflow/outflow) • International Banking I, C (arranging bank mortgage) • Lower transaction cost I, U • Eliminate agency theory problem I, C

Political Factors • • Government regulation on internet Law implementation by Government control on internet access Transparence on property transaction information I, C I, U

Scenario One Good prospect for e-business Navigation of marketplace (Property Agency) in terms of 1. Reach • A platform collects a lot of variety property sites in major cities. Clicks and Mortar Strategy would be relevant. e. g. Centaline Agency property makes use of web platform to deal with potential customer. • The ability to deal with huge amount of customers locally and from Overseas in the platform. Bounded Rationality could be overcome from doing business in physical location to virtual platform.

Scenario One 2. Affiliation • Customer preference would be the trend and customer relationship Management is the core success factor of property agency. • In Post-modernization, sign and virtual reality is important and it changes the people lifestyle. Individualism of metropolitan citizen enhance the importance of customer relationship management. Social mobility of different class in China would demand the fairness and class identity and Internet could provide the relevant marketing information to satisfy their needs. • Tailor-made service for particular customers e. g. business and commerce customer of foreign companies may need statistic and property dealing transaction for decision making - a reducing of transaction cost.

Scenario One 2. Affiliation (cont’) • A united platform of financial service, registration, payment and property features together with analysis is the basic requirement of a successful marketplace / Portal in the property transaction. 3. Richness • • The infrastructure that can provide relevant marketing information to the consumer is a competitive advantage of a property agency platform. Marketing information relies on Government policy in PRC for the regulation to govern the Internet business and it is certainty that PRC government would provide a competitive telecommunication environment.

Scenario One 3. Richness (cont’) • Relevant and timely marketing information would reduce the impact of opportunism of the company managers in control the source of Information in order to maximize personal interest at the expense of the Company - agency theory

Scenario One • E-business is the non-zero sum game as it provides business opportunity. The transaction cost in terms of cost saving and efficiency improve the productivity of the society as a whole. • The trend of e-business in different direction provide more opportunity for agency business as strategic alliance with expertise in different area would join together in a marketplace for business. Centaline is typical success example to form alliance with Microsoft in set up Intranet and Internet web (i. e. a market place ). • The "brand" of "belief" would be the marketing strategy of property agency since Sony is very success in the brand of belief. Consumer recognize the technology of Sony in buying walkman and CD player is a good example. • Conclusion : good prospect of property agency in e-business of Greater China.

Scenario Two § The fast growth of E-business is susceptible • Based on the recent trend of e-business especially the Dot. Companies, many of them are unstable and face to be closed down. • Hit rate is no longer cared by customers and bankers. Instead, their burn rate are utmost concern. • Regarding the lifestyle of Chinese, such as Hong Kong people, they are still not accustomed to buying through internet or trading through e-business. It will take longer time to proceed the e-business which may be more than 5 years.

Scenario Two • Politically, the China Government exert influences or controls on ISP to deliver some of sensitive information to Mainland's people so that e-business may not stretch fully in China market instantly. • Existing interest parties or Pressure Groups will try their best efforts to stop the adverse effects of e-business on them or their supporters. • China government may exert their influence when the e -business arise serious unemployment problems or social instability. • Game Theory

Conclusion (scenario 2) Among the above factors, the effects of e-business on Property Agency Market are only sudden or new at the start. After many web sites are formed, people will commence to disseminate the information and the actual effects will be exposed. It seems that the effect will not be so substantial in short run since people like Chinese cannot adopt the e-Business very fast. We do agree the agency companies to spend money and efforts on exploring the e-business. However, one cannot rely solely on it. The traditional way to run property agency business is still very important and acceptable by most people. On the other hand, although web sites may help reduce the cost of advertisement, it is hard to measure whether users will really base on the said information to search for housing units and approach to respective company.