Finance: Why won't Europe get with the programme?

The US has proved that e-commerce is the way ahead for business. So what's holding us back?
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The Independent Culture
Few issues have a bigger "wait-and-see" aura among business executives than electronic commerce.

According to the latest contribution to the welter of research on the subject, most European senior executives believe their companies will be much more reliant on e-commerce in five years. They see it transforming the way they do business, offering a competitive edge and providing a gateway to the global market.

And yet, says Andersen Consulting's European e-Commerce Report, Europe's business leaders are generally unwilling to exploit e-commerce today. Only 39 per cent of executives agree that this way of doing business "forms a significant part of the way we currently operate".

Sweden is the only country in the survey where nearly half of executives interviewed said they were aiming to address key company issues through using the Internet. In Germany, that was true of only 3 per cent, while in Italy it was 6 per cent.

The contrast is made - not for the first time - with the United States, where fully 77 per cent of US executives are said to be signed up to the concept already. But the picture in Europe is not all gloomy. The report points to how in France and Spain - hardly traditional strongholds of technology usage - great strides have been made. The French Minitel system is credited with using an earlier generation of e-commerce to enable 20 million people to carry out such tasks as shopping, paying bills and make train and airline reservations on line, while in southern Spain social security claimants use smartcards to register, look for jobs and obtain advice. In Britain, of course, First Direct leads the way in virtual banking with the addition of 12,500 customers every month.

But Andersen sees the slow take-up of e-commerce as closely wound up with the introduction of the euro and with the hotly debated issue of European competitiveness. It points out how the US high-technology sector has created well-paid jobs without fuelling inflation, but that Europeans have so far failed to do likewise.

"They have faced high telecommunications costs, low levels of consumer take-up and a fragmented European marketplace. An unwillingness to take risks has too often prevented them from exploiting the business potential of technological developments very often initiated by Europeans.

And they have failed to develop venture capital markets adequate to finance the small, innovative firms which have so often acted as catalysts to the development of e-commerce in the rest of the world. Across Europe, unemployment is rising, while competitiveness is in decline."

Vernon Ellis, Andersen's managing director for Europe, the Middle East, Africa and India, said his message for clients was to "go for it". Business leaders do recognise the importance of this matter but they are not yet really grasping it, he adds.

Since the popularity of telephone banking and similar developments is growing, Europe is well positioned to take advantage of this new way of doing business.

What is needed now is a change of attitude. The importance of realising that is set out in the report's conclusion, where it states that "Europe faces a stark choice between two very different visions of the future".

The first sees e-commerce becoming a major factor in an explosion of trade that dramatically improves lifestyles and generates new employment. The second is a "dead end" in which the wait-and-see attitude prevails, allowing other parts of the world to extend their lead in this area.

Rather than encouraging the exploitation of the technology, Andersen reports, governments are more likely to opt for "restrictive regulations, which are inconsistent in implementation and protectionist in effect".