In just a few short years, the global business community has embraced e-commerce - doing business online. It is, however, still early days, and for e-commerce to achieve its potential, the terms under which transactions are conducted must become uniform and universal - and that means the development of an internationally accepted regulatory framework.

One basic problem is establishing a foolproof method of validating documents and transactions - or, to put it another way, finding a cyberspace replacement for the hand-written signature. The leading candidate for this job is the "electronic signature", a unique electronic code that achieves two critical goals: it both identifies and authenticates the signatory, and indicates that person's approval of the information in the message.

As electronic signatures gain legal acceptance, online documents will gain the same legality as their "hard-copy" counterparts, but a number of issues remain unresolved. The problems associated with electronic signatures are perhaps best understood in the context of the most common electronic transfer of information: e-mail. Verifying the true origin, receipt and completeness of an e-mail is notoriously difficult, which is why your daily exchange of e-mail bears little legal validity.

Ultimately, electronic-signature legislation must accomplish two things: the removal of major barriers to e-commerce and the predictability and trust required for online business. This is particularly relevant to Hong Kong - one of the world's great trading centres - and to China, the world's largest exporter of goods and fast becoming one of its largest importers. How quickly, and in what form, a framework is evolved to enable routine e-commerce in these trading centres will bear directly on their future direction and competitiveness.

Hong Kong has long established its readiness for e-commerce, particularly in the form of electronic document exchange, electronic-data services and Internet financial transactions, but it remains largely limited to local activities. Surprisingly, Mainland adoption of e-commerce has been more forward-looking. While online techniques and procedures are still limited, and paper-cluttered offices and a ponderous bureaucracy still predominate, Mainland authorities, led by Guangdong province, are making strides in creating an internationally accepted foundation for e-commerce - led by recognition of electronic signatures.

Already, some Mainland electronic-signature legislation leads that of Hong Kong. For example, Certificates of Authorisation (CAs) - one type of electronic signature - receive compulsory recognition in Guangdong; in Hong Kong that recognition is only voluntary. Furthermore the Hong Kong government recognizes only the more restrictive "digital signatures", as opposed to the more open electronic signatures.

Without the legal infrastructure for international e-commerce, including compulsory recognition of CAs, it's unlikely that locally based Internet purchasing - especially using Hong Kong CAs - will grow significantly. Cyber exchange will have to rely on CAs from elsewhere, leaving Hong Kong trailing the rest of the world.

At a recent Hong Kong General Chamber of Commerce seminar on IT in Hong Kong and Guangdong, Stephen Mak, Hong Kong's Deputy Director of Information Technology Services, defended current legislation. "The government's Electronic Transactions Ordinance does support electronic signatures in general," he said. "The key is that in dealings with government¡K [only] digital signatures are recognized. This is for international security¡K when citizens deal with government and vice versa, they want certainty in terms of the ability to trace transactions and to avoid repudiation."

Hong Kong did not compel recognition of CAs, he said, because many private companies had their own certificates. Forcing them all to go public would be counterproductive, and voluntary recognition had proved to be successful.

Mr Mak said the Immigration Department issued between 8,000 and 10,000 ID cards every day, many with a digital certificate that could boost e-business. Observers, however, doubted this would have much effect, pointing to the business community's reluctance to embrace e-commerce despite Hong Kong's widepsread Internet connectivity.

By comparison, Guangdong, and a host of SAR competitors including Taiwan, South Korea, Singapore and Malaysia, are moving ahead rapidly. And while Guangdong legislation remains limited to the province, it is China's leading legal framework and could easily become the national standard.

The significance of this, as Guangdong seeks to establish itself as a great trading hub to rival the Yangtze basin, can't be underestimated. The aspirations of southern China are high, and the massive commitment to achieving their goals is very obvious. Already coming into place is a highly-sophisticated transportation infrastructure that includes great highways reaching into the more remote areas of the province; a network of giant bridges linking the major commercial centres of the Pearl River estuary; huge, technically-advanced airports; and several of the biggest and best container terminals in the world. For Guangdong province to be right at the international forefront with its e-commerce infra-structure will undoubtedly get this whole network working at maximum speed and efficiency, and may see the province leapfrog its northern rivals in the very near future.