As tens of thousands of businesses raced during the second half of the 1990s to electrify their bottom lines through the implementation of e-business strategies, one huge Hong Kong-based conglomerate was taking the long view, and proceeding at a much more measured pace. That company - Hutchison Whampoa Ltd - is no fledgling dot-com enterprise; it has been in business since 1828 and boasts a market capitalisation of approximately US$55 billion.

The dot-com mania that swept the world was driven in part by skyrocketing share prices, and many company directors felt pressure to realise what appeared to be easy money for shareholders, money that could seemingly be had simply by creating a web site and announcing an e-commerce strategy.

We know now that easy money is never that easy, but a few years ago, the Hutchison executives found themselves trying to decide to what extent the Internet would influence the forward movement of a gigantic organisation that had achieved enormous success through what are now termed Old Economy ventures.

Following a series of internal strategy sessions, some involving the heads of all of Hutchison's businesses, Executive Director Dominic Lai was given the responsibility for overseeing the e-commerce strategies that could shape the future destiny of the Group.

Focusing on Core Business
Some 10 years ago, the Hutchison Group reorganised itself to focus on five core activities: Ports; Property; Telecoms; Energy and Infrastructure; and Retail and Manufacturing. Since this reorganisation, the Group has become the world's largest private container-port operator, accounting for around 10% of the world's container traffic, and a global player in the telecommunications arena, with mobile interests not only in Hong Kong, but also around the world, including India, Israel, Europe, Australia, North America and Thailand.

Hutchison's retail and manufacturing arm in Hong Kong (which operates Park 'N'Shop, Watsons Your Personal Store and Fortress) has increased its market share significantly, and is expanding in Europe via Watson's Water, as well as in the UK through a health and drug store retail chain. This diversity has helped to cushion the Group from volatile market trends.

But it is also this diversity that makes the Group's policies, by default, more wide-ranging. The onset of the dot-com mania prompted many organisations to rush headlong into New Economy makeovers but Hutchison chose a different path. "Over the past year, Hutchison has not just followed the herd and added 'i', 'e' or 'net' to our existing businesses simply in order to see our stock prices skyrocket," says Mr Lai. Instead, the Group's policy has been one of enhancement rather than replacement, a concerted effort to realise synergies between the "old" and the "new" economies.

Hutchison's e-commerce strategy has primarily been to adopt relevant best practices in order to increase efficiency and productivity - provided they makes sound business sense. One of the Group's important goals is to be a leader in every business that it is involved in, to maintain best corporate practices and best corporate governance, and to use the best available technologies - all to gain competitive advantage. "Technology is one of the most important factors in efficiency and profitability," says Mr Lai.

So the Group certainly did not ignore the "e" revolution. In fact, in September 1999, Mr Canning Fok, Hutchison's Group Managing Director, held the company's first e-business forum, during which he told the directors of all the various Hutchison businesses to prepare e-business plans and strategies for the future. Partly as a result of this, all Hutchison businesses now have their own e-strategies and individual web sites through which they can directly reach customers. The Group also created a new company, Hutchison E-Commerce Ltd, to help the organisation's wide-ranging businesses plan and implement their e-strategies.

Technology as a Means to an End
One of the first sectors of the Hutchison empire to adopt the e-commerce treatment was the Ports division, where the Group has been involved in using specialised software to streamline its container port business for some years. Shipping documentation is also electronic these days, further cutting costs and saving time. For example, Hongkong International Terminals (HIT) has established an Electronic Data Interchange (EDI) link to connect its billing system with the payment systems of its shipping line customers. This link reduces costs and increases efficiency by sending invoices and transaction records online. "We've tried to make the ports as paperless as possible, but also as interconnected as possible," says Mr Lai.

In the Retail and Manufacturing sector, the major advantage of the electronic age is the ability to manage the supply chain more efficiently. Of course, the Internet has also enabled Hutchison to market directly to its customers, as well as allowed its customers to place orders directly, via a web site.

Hutchison has also formed a number of partnerships with companies around the world. For example, they have a partnership with Priceline.com, and have recently moved into the online equities trading world by working with CSFBDirect to create HutchCSFBDirect.

Asking 'What's Right for Us?'
With the global upsurge in e-commerce at the end of the '90s nipping at its heels, Hutchison held an internal review of trends and the Group's leaders looked at future e-planning for Hutchison. "Everything was analysed and considered. One question that was raised was, 'Shall we concentrate all of our efforts online?' The real question was, 'Does the Internet mean the end of high street shops," says Mr Lai.

The brainstorming focused closely on whether a decision made good business sense. "We are, after all, businessmen," notes Mr Lai. "In the end, we decided that the Internet is above all a very powerful and effective tool, and we recommended a cautious approach to the online revolution, especially since at the moment many systems are not ready, particularly in terms of functionality and security." He also notes that every action or investment made by Hutchison has a goal, arrived at by means of the ubiquitous question: "What do we want to achieve?"

What Hutchison wants to achieve is defined by sound business sense. As Mr Lai points out, Hutchison is not a technology company per se. "Our task," he says, "is to source the best technologies, to deliver these to our customers through our product offerings." And, in evaluating these technologies, he adds, "We are of a single mind: 'Does the customer want it?'; 'What will it do to our profit and loss statement?'; and 'How highly do we think that the customer will value this technology?'."

Three Pillars of Hutchison's e-Strategy
Certainly, Mr Lai acknowledges that e-commerce is here to stay, but he remains adamant that business sense comes first, pointing out that the Hutchison approach to the growing importance of the "e" revolution is three-pronged.

First, to "quietly and progressively e-transform all Hutchison businesses using the best technologies available, to change the way of thinking, tighten the supply chains, broaden the customer base, and promote online trading and purchasing - all to increase our revenues and cut costs," he says.

Secondly, Mr Lai notes that it is Hutchison policy to form joint ventures or partnerships only with financially strong companies that have proven track records and business models, while acknowledging that Hutchison brings definite advantages to the table, too. Hutchison's long and well-respected standing in the Asian community is an obvious plus when dealing with outside companies looking to secure a foothold in the region.

Thirdly, Hutchison is looking at creating new businesses, based on currently available technological capabilities. BigBoxx.com, the Group's highly successful online office supplies arm, is the perfect example of this. "There is a HK$5-billion market for office supplies alone in Hong Kong," says Mr Lai. "More, if you also take in the printing side of the business."

Mr Lai notes that the success of BigBoxx.com is in part due to the realisation that it takes time for people to become accustomed to doing business online. "Which is why," he adds, "we have a sales force that physically goes to our clients and helps them to understand the online options available - or, if they are either not comfortable with that or not technically equipped to do so, we simply take orders the 'old-fashioned' way ... on paper, by hand ... at least as a start." Nevertheless, he adds, "We want to show our customers how easily they can do business with us. Our ultimate goal is to not have to send our sales reps out the door, and to not receive fax orders, but to have customers trade with us online. We're investing now in a partnership with our customers."

Each Business is Customer-Driven
According to Mr Lai, each Hutchison business drives its own e-strategy, although there is a certain amount of knowledge sharing. "Hutchison is a customer-driven, focused and cohesive group, and our job is to use the best proven technology available in order to satisfy our customers. Everyone is trained to be business-oriented because, after all, stability does not mean standing still, but progressing, too. There must be a balance between the two."

Although Hutchison currently has some 1,000 technology personnel who can be mobilised to work on various projects, the Group's policy is to encourage a range of e-commerce solutions. Why? "We know that each of our businesses is different. Each one has to drive its own strategy," emphasises Mr Lai.

As Mr Lai takes pains to point out: "'E' is simply an enabler to 'commerce'. After all, of the nine letters in 'e-commerce', eight of them spell 'commerce'," he says.