A study on the application of EDI and DIP in international trade in Hong Kong

Pao Yue-kong Library Electronic Theses Database

A study on the application of EDI and DIP in international trade in Hong Kong


Author: Chan, Mun-keung Paul
Title: A study on the application of EDI and DIP in international trade in Hong Kong
Degree: M.Sc.
Year: 1994
Subject: Business -- China -- Hong Kong -- Communication systems
Business -- China -- Hong Kong -- Data processing
Electronic data interchange
Document imaging systems
Hong Kong Polytechnic -- Dissertations
Department: Dept. of Computing
Pages: 109, [13] leaves ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b1151324
URI: http://theses.lib.polyu.edu.hk/handle/200/3676
Abstract: Purpose The purpose of this study is to get an idea of (1) the extensiveness and sophistication of EDI and DIP applications in Hong Kong importers and exporters; (2) the difference in the perceived roles of EDI and DIP between different sizes of importers and exporters; (3) the perceived significance of the two technologies as a trading document transmission tool for carrying on international trade more efficiently and effectively; (4) what Hong Kong importers and exporters perceive to be the greatest problems in applying EDI and DIP in carrying on international trade in Hong Kong; and (5) which of the two technologies is preferred by Hong Kong importers and exporters in general as a solution for document transmission in carrying on international trade, and why. Methodology This research seeks to describe the present situation with regard to EDI and DIP usage by Hong Kong importers/exporters. The study is therefore descriptive in nature. Descriptive research deals with questions that are based on the current state of affairs with implications beyond the limits of the elements studied. The approach of experience survey (which is deemed to be productive in descriptive research) was adopted. The other approach of selected case study with interviews, which is frequently used in descriptive research, was not adopted for this research because it is considered doubtful whether interviews on assessing future technological possibilities are useful. In the experience survey, questionnaires were mailed to 180 importers and exporters enlisted in Dun & Bradstreet (HK) Ltd.'s "Dun's Guide - Registry of Hong Kong Traders 1991/92" to tap their experience and opinions on EDI and DIP applications. The data collected were compiled and tabulated to provide a descriptive answer to the research purpose set out above. Results and Conclusions A total of 44 questionnaires were returned, out of which four were ignored due to the fact that answers given were incomplete. The final samples consisted of 40 companies, reflecting a return rate of 22.22% (i.e. 40/180 x 100%). Based on the findings from the analyses of the data generated in the survey, the following conclusions are drawn: (1) Very few Hong Kong importers and exporters have implemented EDI and DIP. Only 17.50% and 7.5% of the samples indicate that they have implemented EDI and DIP respectively. Thus, EDI and DIP are not being applied extensively at present in Hong Kong. (2) Applications of EDI and DIP among Hong Kong importers and exporters are not sophisticated since only one sample company has used EDI, and only two sample companies have used DIP, for more than one year, respectively. (3) When a comparison is made of the two technologies, most of the sample companies recognise the following as two of the main reasons why EDI would be less accepted than DIP as a document transmission tool: (a) It is difficult to set, and to agree to, international standards for document data structure and communication on an EDI network. (b) For the users themselves, capital investment in EDI is larger than that in DIP. (4) On the other hand, most sample companies regard DIP easier to manage than EDI, and therefore more widely accepted than EDI, since an optical disk is a tangible physical object while EDI is a complete paperless trading practice, and they find it more comfortable to handle tangible physical objects than things in intangible electronic forms. (5) 57.5% of the sample companies prefer to use EDI and 42.5% of them prefer to use DIP when they are asked to choose between the two technologies. Although more companies prefer EDI to DIP, the number of potential DIP users is not insignificant and therefore development in that area should not be ignored. (6) Large and multinational companies prefer to use EDI while smaller and local companies prefer to use DIP. (7) Most of the sample companies handle and transmit fewer than 200 trading documents a day, and the documents most frequently dealt with are business contract, Letter of Credit (L/C) application, L/C, commercial invoice, packing list, transportation document (such as bill of lading, airway bill, etc.), Certificate of Origin, export licence, import licence, export declaration, import declaration, shipping order and shipping advice. Implications To Importers and Exporters For importers and exporters who have not been using EDI or DIP, they can plan their computer applications along those factors critical to the success of applying EDI or DIP with specific reference to the nature of their own operations. For current EDI or DIP users, they may compare their existing EDI or DIP systems with those of their competitors and may also gain an insight into the problems and development concerning training, cost, hardware, software, data management and security, etc. in their operating environments. When planning EDI application in their organisations, importers and exporters should also pay more attention to the current trends of moving towards EDI-based trading. EDI can be especially significant for them because there is a threat of major overseas buyers demanding that suppliers communicate through EDI. Importers and exporters have to start thinking now if they plan to introduce EDI to their businesses. However, importers and exporters also have to keep themselves aware of the developments in using DIP instead of EDI, especially when it is felt that EDI starts to lose popularity due to its fundamental underlying difficulty of getting "the critical mass" to participate in an EDI network. People may then turn to DIP as an alternative solution for document transmission in carrying on international trade. To Computer Vendors and EDI Providers Computer vendors and EDI providers may apply the findings of this study to develop sector-specific approaches for selling computer hardware and software, and EDI networking services to importers and exporters. The findings of this research can also assist marketing people by providing them with additional information pertaining to the needs and difficulties of the individual sectors as well as the requirements of the importers and exporters in general. This study has also revealed that DIP can be the second best solution to EDI as a tool for transmitting international trading documents. It follows that computer vendors and EDI providers should start to allocate certain resources to develop DIP as a document transmission system preparing in advance for the possible event that EDI fails to bring about complete international paperless trading. To Trade Organisations / Associations Trade organisations / associations may assist importers and exporters, through lectures and seminars, to better understand the EDI and DIP technologies, and to keep them informed of any further developments in these two areas. Trade associations, in collaboration with academic institutions, may render technical assistance or consultancy services to importers and exporters in acquiring software, hardware as well as education and training. Recommendations Despite the large amount of promotional efforts put in by the Government and Tradelink, and the many other success reports on applying EDI in various countries, this study indicates that quite a number of importers and exporters are doubtful of the success of applying EDI in Hong Kong, especially those smaller local companies, due to various reasons. Surprisingly, more than 40.00% of the sample companies regard DIP as a better solution than EDI, and it seems that there can be a significant potential market for using DIP as a document transmission technique among importers and exporters. Therefore, for academic and practical purposes, the following recommendations are put forward: (1) Academic institutions should perform further researches to build up the appropriate concepts and theories for using DIP as a document transmission technique. (2) Although the findings of this study point to a potential market for DIP, the details of successfully using DIP as a document transmission technique have not been investigated by the study due to the limitation of time and scope. Further researches can be directed to find out the specific areas in which importers and exporters would most probably be looking for support when planning to apply DIP, and what particular difficulties they would most probably encounter when preparing for, and in the course of, applying DIP. The identification of difficulties will serve as input for academic institutions, trade associations, and / or the Government to possibly devise some programs to assist importers and exporters. (3) Trade associations, standards organisations and computer vendors should start to perform research on establishing generally accepted international standards for using DIP as a document transmission technique, for example, such standards on what optical disks to be used (WORM disks only?), what DIP software to be used, what indexing method to be adopted, etc.

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