Even these days, when "high-tech" is a taboo word in the investment market, the high-speed growth of the Internet continues to amaze many analysts. E-mail, online banking, ICQ and other online endeavors have already gained footholds in our everyday life, and became important communication tools for people around the world. In a broader sense, IT development has had an equally profound impact on the business world. New and improved communication channels allow companies to establish more direct and responsive links with customers, thereby increasing efficiency.

With this in mind, we decided to take a look at how local SMEs are applying IT to their own operations and talked to three local companies to see to what extent they are using IT in their businesses.

Going Along With the Trend - Success Plastic Industrial Ltd
The plastics industry has always been a strong force in the local manufacturing sector. The industry enjoyed a boost in the 1970s when light industries were booming in Hong Kong, and contributed considerably to the rise of the local economy. Founded more than 10 years ago, Success Plastics Industrial Ltd is a testament to this particular piece of history.

In order to enhance its competitiveness, Success has moved its production lines to Dongguan in China. By harnessing the cheaper production costs in China, Success has been able to produce all sorts of plastic products (such as toys, household items, bathroom utilities, dining utensils, etc) under stringent cost-control.

K C Li, Sales Manager of Success, says they always keep a close eye on the trends in IT development and it is their policy to adopt appropriate IT tools to boost the company's operation. He says: "We have to stay in touch with these developments, otherwise we will lag behind other companies in this industry." In fact, Success employees already rely on e-mail to communicate with their clients and, by creating a company web page, Success has discovered another great channel through which it can promote its products.

However, when asked whether he agrees that advances in IT bring in more business, Li admits that he is skeptical. "Actually, the advent of new technologies, such as e-commerce, has had only a mild impact on our profitability. It is true that the Internet has expanded our exposure in the market and more clients have shown an interest after visiting our web site, but the increase in sales that can be attributed directly to our online operation is still very limited," he notes.

Nevertheless, Li agrees that IT tools do have a positive effect on increasing the efficiency of everyday operations. By employing Tradelink's electronic declaration service, for example, Li says that Success not only saves a huge amount of time in processing declaration lodgements, but also can plan in advance how often lodgements should be made, enabling employees to prioritise their tasks efficiently and increasing productivity.

Li believes that the most important factor a manufacturing company must consider is the quality of its products. He says that without the ability to develop high-quality products it is impossible for a company to attract more customers, even with the help of advanced IT technologies. Success therefore puts great emphasis on product development, and has already invested more than HK$10,000 in CAD software to enhance the technical sophistication of their product design team. As Li plainly puts it, faced with fierce competition from mainland manufacturers, Hong Kong enterprises can take the lead only by being innovative in product design.

It's All About Technical Support - Union Design Furniture Co
Union Design Furniture Co was founded in 1998 and, as its name suggests, specialises in furniture production, as well as interior design services. With a production base in Dongguan, Union Design uses imported machinery and raw materials to manufacture high-quality furniture. To promote its products and keep a close watch on the latest trends in furniture styles, the company participates actively in local and overseas furniture trade shows.

To M W Tong, Manager of Union Design, the Internet's rapid development over the past few years has meant an increase in interaction with customers. In the past, for example, customers seldom made comments about Union Design's products unless it was to complain! Now, however, as people become more accustomed to online discussion forums, consumers are more likely to leave comments - positive and negative - on various consumer-groups web sites. And it is these comments that enable Union Design to get a better understanding of consumers' needs and allows them to develop products that truly cater to consumers' tastes.

New IT technologies also help to reduce the operating costs of local SMEs. For instance, Union Design now employs "Internet phones" (based on "voice over IP" technology) to maintain communication with their production plant in China, thus reducing considerably the cost of long-distance phone calls.

However, Union Design's road to IT nirvana has not always been a smooth one. As Tong explains: "Our company is willing to employ more IT tools to enhance our operations, but as our employees do not have the relevant knowledge, it is quite difficult for us to implement a full-scale IT strategy." The effect of such a lack of knowledge was exemplified when the company's design team, which is based in Hong Kong, tried to send a design layout via e-mail to the production plant. The original idea was that sending layouts electronically would be much cheaper and more efficient than sending them by fax. However, electronic transmissions never succeeded because the production plant did not have the correct settings configured.

Obviously, the lack of technical support is a major factor behind local SMEs' reluctance to adopt IT tools and Union Design still has some way to go in its IT venture.

Full Speed Ahead - Intergroup Far East Ltd
Founded in 1979, Intergroup Far East Ltd is a service organisation providing sourcing, order follow-up and quality control functions for non-food products stocked by hypermarket chains in Scandinavia, Italy and Spain. With a main office in Hong Kong, Intergroup also has regional offices in Bangladesh, India, Indonesia, Pakistan, Shanghai and Vietnam. The company concentrates primarily on procuring two types of products: textiles and hardware. These goods include both knitted and woven garments, toys, tools, electrical and electronic appliances, camping and sporting goods, household goods, accessories, bags and shoes, as well as gift items.

By operating all over the Far East, Intergroup has succeeded in finding quality suppliers for this vast arrays of products, but the complexity of the task involved is clear. As Christian Jakobsson, Managing Director of Intergroup, explains, IT tools have greatly enhanced efficiency in this area.

In order to make full use of the power of the Internet, Intergroup has provided every employee with access to the Net so that they can research much-needed data. Moreover, e-mail is the standard tool for communication with colleagues and clients. In addition, Intergroup has created a centralised database for all its business data and authorised employees can keep track of the progress of every order. Using the Internet, Intergroup employees can also log on to the company database from remote locations, enabling them to answer clients' enquiries any place, any time.

Apart from the benefits of creating a more efficient workforce, Jakobsson believes IT has strengthened the relationships between Intergroup and its clients. He says: "In the trading business, personal contact is still an important way to maintain good relationships. In this aspect, e-mail and other electronic communication tools simply cannot replace phone calls or face-to-face meetings. However, IT allows us to handle business information much better than before. Not only can we provide our customers with more accurate information, but also the processing of their orders becomes more efficient, contributing to increased customer satisfaction and reinforcing our relationship."

To Jakobsson, "going online" is certainly the future for the trading business. But unlike others who prophesise that the next big change is just around the corner, he is not so sure about when fully online procurement will be possible. For one thing, the international business community must first develop a technical standard for traders and their clients to perform transactions online. Without this common platform, Jakobsson notes, the efficiency of online trade transactions is bound to suffer. In addition, given current technological levels, not all procurement functions can migrate easily into online operations. For instance, a garment merchandiser needs to physically feel the texture of a fabric before knowing whether it is the right product. And such operations as factory audits and quality checks still require the human touch.

Given these restrictions, it looks as if total conversion to e-commerce is in the distant future for the trading business. Jakobsson states clearly, however, that Intergroup will continue to look for appropriate IT facilities that will enable the company to explore more business opportunities.

Our spotlight on these three companies shows that local SMEs are participating to different degrees in the IT revolution, each according to its own pace and need. For those companies that decided to get an instant boost with IT, it seems inevitable that they will encounter difficulties. However, the impact of IT is so profound that no local business can fail to recognise it. And, in a time when competition is tougher than ever, IT may well turn out to be the magic bullet that local companies can use to hit the bull's eye.