BARRIERS TO INTERNATIONAL E-COMMERCE

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E-COMMERCE IT430

Lesson 40

BARRIERS TO INTERNATIONAL E-COMMERCE

E-commerce is a combination of three different areas of study, namely, technology, business and

law/policy. We have studied the technology and business side of e-commerce to a reasonably good extent.

Now, we have to start the law and policy side of e commerce. However, before we do that lets discuss

some interesting issues related to the international aspect of e-commerce.

Barriers to International e-commerce

Barriers to international ecommerce include lack of trust, lack of infrastructure, language and culture.

Lack of Trust

It is very important for online businesses to establish trusting relationships with their customers like in the

physical world where companies ensure that customers know who they are. However, it is difficult to build

trust because a kind of anonymity exists for companies trying to establish web presence.

There was, once, a famous cartoon used to depict that on the internet nobody knows whether you are a

dog. The issue of anonymity can be explained by the example that a visiting customer will not know in case

of an online bank as to how large or well-established the bank is, simply by browsing through its web site.

On the other hand, visitors would not become customers unless they trust the company behind the site.

Thus, a plan for establishing credibility of an online business is extremely crucial for its success. In this

behalf, attention to the needs of the site visitors is very important while designing the web site, since it can

be helpful in building trust with customers. For instance, there should be easy to find web pages that

answer questions of the visitors. Note that companies with established brands can build trust for online

business more quickly as compared to a new company/business without reputation, since a brand conveys

expectations about how the online business would behave. For example, how the seller online business

would react to a claim of refund by the customer.

Language

Only way to do business in other cultures is to be a part of such cultures. Language plays a very important

role in this regard. In the first step you should provide local language versions of your web site. Software

packages exist that can translate your web site content into different languages. Some sites translate all of

their pages, but if the web site is very large then one can be selective in translation effort. Usually, home

page, or pages related to marketing and product information or those related to any local

interest/advertisement are given higher priority from translation point of view. Mainly two approaches are

used for the translation of the content.

In the first approach, browser default language setting can be communicated to server when connection

establishes between browser and server through `http'. Server can thus detect default browser language

setting and automatically redirect the browser to those set of pages in that language. Second approach is to

include links to different language versions on the web site's home page. One can select any language by

clicking the appropriate link. However, the link should show name of that language in that language so that

the user can read/understand the information. It would be interesting to look at an estimate about the use

of different languages over the internet (see Fig. 1)

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Only 370 million of world's 6 billion population know English as

native language

70% content on web is in English but more than 50% of current

internet users cannot read English

Other languages used by people on the internet are:

· Chinese (9.8%)

· Japanese (9.2%)

· Spanish (7.2%)

· German (6.8%)

· Korean (4.4%)

· French (3.9%)

· Italian(3.6%)

· Portuguese(2.6%)

Fig. 1

Culture

It should be useful to know about different cultural issues surrounding international e-commerce. Firstly,

there is the issue of choice of name. For example, a famous car manufacturing company had chosen the

name `nova' for one of its car models, which could be understood by the people in Latin America in the

sense that `it will not go'. Similarly, a company selling baby foods in jars should not place the picture of a

baby on the jar while doing business in certain parts of Africa, since in such parts it is customary (or part of

the culture/tradition) to put on the jar the picture of contents contained in it.

Web designers must be careful about the choice of icons because they can have different meanings in

different cultures. For instance, in U.S shopping cart is a good symbol for selecting and putting your items

in a virtual place, whereas shopping basket is a more appropriate symbol or icon for the said purpose in

Europe. Similarly, in India it would not be appropriate to use the image of a cow in a cartoon. In Muslim

countries people can be offended by human pictures that violate the limit of Islamic parda. Use of colors in

the web design can also be troublesome. For example, white color denotes purity in Europe and America

but is associated with death and mourning in china and some Asian countries. Similarly, a web page divided

into four segments can be unpleasant to a Japanese visitor because no. four is a symbol of death in that

culture.

Some parts of the world have cultural environment that is not welcoming for ecommerce. For instance, in

certain Islamic countries the exchange of information that conflicts with Islamic values is forbidden. Then,

there are internet censorship activities of governments in certain parts of the world. For example, there are

complex registration requirements/regulations in china imposed by the government which a business must

comply with in order to engage in ecommerce.

The Chinese government conducts review of ISPs record. The ISPs have to maintain a record of their

customers and retain copies of all their email messages etc. In China a number of internet cafés were closed

down for violating the electronic record keeping procedures. Some countries do not have strict censorship

requirement as above, but have strong cultural requirements. For example, in France an advertisement for a

product or service must be in French, thus, an online business based in America wishing to ship products to

its customers in France must provide French version of its pages if it intends to comply with French laws.

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Infrastructure issues

Internet infrastructure includes computers and software connected to internet and communication

networks over which data packets can travel. In many parts of the world, telecommunication industry is

either owned by the government or is strictly regulated by the government. This government control or

regulations have retarded growth of infrastructure to a limit that sometimes it cannot fully support internet

data traffic. For example, there is the huge issue of low bandwidth (slow data communication) in most third

world countries.

In Europe, cost for internet connection is considered quite high, discouraging people to spend more time

on surfing the web while shopping. Moreover, international transactions mostly require physical handling of

goods by several freight carriers and shipping companies. This storage and handling normally requires

monitoring by government custom officers, which is not done in domestic transactions. A coordinated

effort is, therefore, required between customs brokers, freight agencies and government officials in such

cases due to complex government regulations.

According to an estimate, almost half of all businesses on the web turn down international orders because

of the lack of proper infrastructure to handle such transactions, thus losing millions of dollars.

Electronic Transactions Ordinance, 2002 (ETO)

ETO is the law introduced in 2002 which extends to the whole of Pakistan. It basically provides legal

recognition to documents in electronic form and to electronic signatures. To understand this law, it would

be useful to revise the concept related to the working of digital signature technology (refer to Lecture no.

23). We shall look at salient provisions/features of this law as it directly deals with e-commerce in Pakistan.

Section 2 of the ETO defines different terms used in it. For convenience these terms have been reproduced

here (you do not need to memorize these for exam).

"`Certificate' means a certificate issued by a Certification Service Provider for the purpose of

confirming the authenticity or integrity or both, of the information contained therein, of an electronic

document or of an electronic signature in respect of which it is issued".

"`Cryptography services' means services in relation to the transformation of contents of an electronic

document from its original form to one that cannot be understood or decoded by any unauthorized

person".

"`Accredited Certification Service Provider' means a Certification Service Provider accredited under

this Ordinance to issue certificates for the use of its cryptography services".

"`Certification Practice Statement', means the statement prepared by a certification service provider

specifying the practices it employs in relation to the issuance of certificates and matters connected

therewith".

"`Originator', means a person by whom, or on whose behalf, electronic document purports to have

been generated or sent prior to receipt or storage, if any, but does not include an intermediary".

"`Addressee' means the person intended by the originator to receive the electronic communication but

does not include an intermediary".

"`information system' means an electronic system for creating, generating, sending, receiving, storing,

reproducing, displaying, recording or processing information".

"`Electronic Signature' means any letters, numbers, symbols, images, characters or any combination

thereof in electronic form, applied to, incorporated in or associated with an electronic document, with

the intention of authenticating or approving the same, in order to establish authenticity or integrity, or

both".

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"`Authenticity' means, in relation to an electronic document or electronic signature, the identification

of and attribution to a particular person or information system".

"`Integrity' means, in relation to an electronic document, electronic signature or advanced electronic

signature, the electronic document, electronic signature or advanced electronic signature that has not

been tampered with, altered or modified since a particular point in time".

"`Appropriate authority' means

In relation to items contained in the Federal Legislative List of the Constitution of the

Islamic Republic of Pakistan, 1973, the Federal Legislature or Federal Government;

In relation to items contained in the Concurrent Legislative List of the Constitution of the

Islamic Republic of Pakistan, 1973, for which a Federal law is in force, the Federal

Legislature or Federal Government, and, in all other cases, respective Provincial Legislature

or Provincial Government;

In relation to the functions of the Federal Government or respective Provincial

Governments being discharged by a statutory body, that statutory body ; and

In relation to matters in respect whereof the Supreme Court or the High Courts are

empowered to make rules for the regulation of their proceedings, the Supreme Court or

High Court, as the case may be".

Section 3 of the ETO provides:

"No document, record, information, communication or transaction shall be denied legal recognition,

admissibility, effect, validity, proof or enforceability on the ground that it is in electronic form and has

not been attested by any witness".

Section 4 of the ETO provides:

"The requirement under any law for any document, record, information, communication or transaction

to be in written form shall be deemed satisfied where the document, record, information,

communication or transaction is in electronic form, if the same is accessible so as to be usable for

subsequent reference".

Note that by virtue of Sections 3 and 4 above, the requirement of law for a document to be in writing

shall be deemed satisfied if that document is in electronic form. Consequently, if a law requires that one

must send a legal notice before filing a case against a government organization and that legal notice is

sent in electronic form (e-mail attachment); it would be said that the requirement of law has been

fulfilled in terms of sections 3 and 4 above.

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