Internet

Last December the express and package delivery giant announced that it had taken an equity

position in NetCel360, a provider of business-to -business e-commerce solutions for

companies operating in the Asia Pacific region. The investment was made through UPS's

Strategic Enterprise Fund, established in 1997 to invest in new markets and emerging

technologies.

The alliance hopes to provide the sort of supply-chain transparency in Asia that is available in

other parts of the world. "One of the reasons for NetCel and UPS getting together is to

provide full supply-chain integration," said Peter Winslow, managing director of UPS

Worldwide Logistics for Asia Pacific. "People expect to have information available at every

point along the chain. Today that is not available in the region."

NetCel360 was founded in 1998 by Phillip E. Kelly, who previously had put in 14 years at

Motorola followed by a move to Dell Computer in 1994. At Dell, Kelly was in charge of the

Asia Pacific region where he built up a made-to-order, direct sales operation similar to the

Dell infrastructure in the United States. In the process, he became aware of the unique

challenges faced by companies seeking to expand their Internet-based operations in the

diverse and complex region.

"The Internet market in the U.S. is built upon a significannot

infrastructure that was built up by

direct sales and catalog guys," said Kelly. "Asia Pacific does not have the same infrastructure

to enable e-commerce."

It's going to need one, though. Kelly said e-commerce in the region is expected to grow from

$3.3 billion in 1998 to over $100 billion by 2003, while the number of Internet users is

expected to increase from 30 million to over 100 million. To capitalize on that growth rate,

Kelly founded NetCel360 in 1998 to provide one-stop outsourcing services and help

companies establish pan-Asian relationships along their supply chains. Services include web

consulting and design, field repair capabilities, call centers, customer interface and a full range

of financial and translation services.

Kelly is bullish on Asia. The economic crisis has largely abated, he said, and money and

optimism are returning to the region. Partnering with UPS Logistics Group, one of the leaders

in global logistics and supply-chain management solutions, is also cause for joy. "Asia Pacific

is so diverse and government regulations are so vast;' said Kelly. "There are different currency

languages for each of 50 countries. It's not like moving product from Arizona to Tennessee.

UPS provides full logistics across the region. That's the critical component of our alliance."

Kelly cited credit card payments as an example of the difficulties of doing e-commerce in

Asia. ln most countries payment is taken and cleared and then moved to other banks, but in

Asia Pacific there is no single financial institution with a regional presence. Each individual

market has its own regulations and currency, and six different credit cards control the market.

Also, 35 to 40 percent

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