ICT Policies & Global Supply Chain Penetration in Developing Countries WSIS Facilitation Meeting on « E-Business and E-Employment » UNCTAD, ITC and ILO

ICT Policies & Global Supply Chain Penetration in Developing Countries

WSIS Facilitation Meeting on« E-Business and E-Employment »UNCTAD, ITC and ILOPalais des Nations , 24 May 2007

Claudine Bichara de OliveiraneTune, Executive Director (Brazil)

| Claudine Bichara de Oliveira | neTune Ltd, Brazil2

ICT Policies & GSC Penetration in Developing Countries

Plan

• Global Supply Chains in Developing Countries– How it Works?– Main Obstacles– ICT Requirements and Trends

• Policies & Practices in Latin America– Business Environment Policies– ICT related Policies and Practices– Innovation and IT Adoption by SMEs

• General Assessment



Global Supply/Value Chains: What is it?

“Global Value Chains cover a full range of interrelated productive activities performed by firms in different geographical locations to bring out a product or a service from conception to complete production and delivery to final consumers”

Global Value chains for Building National Productive Capacities UNCTAD – TD/B/COM.3/79



GSC: How it Works?

Competitiveness based on cost reduction through:

• Just-in-time manufacturing

• Cost of labour in developing countries

Manufacturerss Distributors Retailers Consumers Suppliers

Competition between chains Source: VOLLMANN, T.E., CORDON,C. Making supply chain relationships work . M2000 Business

Briefing, n.8, Lausanne , IMD, 1996.



Attractive Factors to FDI

83%

54%

52%

43%

41%

30%

29%

28%

23%

23%Access to export market

Local Government Support

HR Cost & quality

Profit Repatriation

Quality of Infrastructure

Presence of Competitors

Macro-Economic Stability

Legal Environment

Political Stability

Market Share

Source: A. T. KEARNEY



Global Competition Challenges

For TNCs

• Management• Real time data sharing• Delivery Delays• High demand on technology• Infrastructure

For SMEs

• Economic Globalisation /New Markets and Competitors

• New Products and Services• Speed of Change• Exponential Multiplication of

Information • Production Capability

ICT: Key Ingredient to Enhance Competitiveness



Main Obstacles in Developing Countries

• Lack of strategic vision and/or concrete actions

• Red Tape and Informal economy

• Lack of Venture Capital

• Lack of technology infrastructure and logistics

• Human Resources Capabilities

• Legal Framework

- Taxes- Consumer rights- Intellectual property- Self-regulation

- Telecommunications- Security (payment, delivery…)- Electronic contracts and signatures- Internet crimes



ICT Requirements & Trends

• Ubiquitous Communication– High Speed– Wireless Technology– IPv6

• Interoperability and Convergence– Multi-channel operation– XML language

• Management Support Applications– SCM applications– PLM (Product Life Cycle Management)

• Security, Confidence and Trust Aplications and Services



ICT Trend - Example

• RFID - Radio Frequency Identification Technologyfor contactless identification of objects.– Barcode: product identification

– Tag: product description (what it is, where it has been, when it expires ..)

– Antenna: always turned on, wirelessly

– Biosensor chip: information on physical condition of materials in transit



Business Environment Policies

• Infrastructure: Transport, Warehousing, Logistics

• Regional/Int’l Trade Agreements

• Free Trade Zone• Tax incentives• Financial system; Royalty

remittances & loans• Venture Capital and funds• Public Private partnership• SMEs competitiveness

• HR: Development of capabilities & educational system

• Entrepreneurship and entrepreneurial culture

• Simplification of bureaucracy• Intelectual property,

Trademarks• Industrial Clustering• International Standards

adoption • Arbitration system adoption



ICT Related Practices and Policies

• Telecom privatisation• National Strategy for ICT &

Development• Technology clusters• FOSS• E-Gov Policies: online

services & e-procurement• Skill development

– Public Awareness– Technical support training– High level IT education

• E-Business enabling environment– PKI: data protection, digital

signatures & certification– Interoperability of PKI oper. – Acceptance of digital

transactions– Business data online

validation & verification– Transport & logistics – E-payment– Customs automation– Self regulation for high

quality of online services



Innovation and IT Adoption among SMEs

• Tax incentives to stimulate IT adoption, purchase & production

• Funding for R&D and innovation• University - Enterprise cooperation• E-network / linkage to int’l iniciatives• Business Telecenters



Mexico: “Innovation for Competitiveness” Programme

• Business Innovation Programme / CONACYT + World Bank– Consortia and research networks

– Venture capital fund

– Pre-competitive fund

– Sectoral funds

– Researchers and technologists in industry

• HR: Financing scholarships Programme / CONACYT

• Technology and innovation policy framework + international integration



Chile: Customs Modernization / ISIDORA

• Integration of Customs procedures with those of other public and private participants of the international supply chain such as:– Other Government agencies (Single-Window)– Seaports– Warehouse administrators– Shippers– Transport agents– Consolidators

Internet-Integrated Systems for the Development of Customs Operations and Regulations



What is Brazil doing ?



Brazil : Governmental Programs

• Governmental Programs towards technological development and innovation adoption in the private sector (specially among SMEs)

– PAC: Program of Acceleration of Growth– PROGEX: Program of Technological Support to Exportation – PITCE: Industrial, Technological Policies & Foreign

Commerce – PROTEC: Brazilian Society Technological Pro-Innovation– Program for the Development of the national industry of Sw &

related services– Profarma: production, R,D&I for cies of National control



Brazil : Financial support

– Fiscal exemption: Lei do Bem

– Wages: PDTI; PDTA,for R&D&Inovation, and University/enterprise cooperation: PAPPE, RBT

– Funding: Pró-Inovação (technology for supply chains); Juro Zero (inovation in SMEs)

– Private Equity and Venture Capital: Inovar, Bovespa Mais, Forum Brasil

– 16 sectoral funds



Brazil : Enhancing Online Services

• ICP-Brasil / PKI• E-Ping / Interoperability• FOSS• SPB / Sistema de Pagamento Brasileiro• SISCOMEX – Sistema Integrado de Comercio Exterior + Export

Fácil Web• Sinmetro & ABNT (Certification) procedures via WEb• NF-e : Nota Fiscal Eletrônica• Procomex: customs modernization• BraziltradeNet• Business Telecenters into SMEs Clusters



General Assessment

• Red tape and high taxation• Security concerns• Informal economy not integrated,

micro enterprises still lacking in everything

• Connectivity in remote rural areas • Underdeveloped transportation

infrastructure• Lack of a “go abroad” culture• Latin America: distinct trading

groups, not a single trading block• More emphasis on import

substitution than international market integration

• Segmented efforts

• High potencial local market

• New multinationals emerging from the developing countries

• New business areas: biotech, energy, environment, etc. in traditional sectors empowered by ICTs

• Successful associative initiatives

Still remaining obstacles Assets



How is Brazil in the picture ?

Goods Services

Lo

cal

Head

Rem

ot

e

CSN

Embraer

SADIA

Grandene

SMEs Clusters

Petrobras Pão de Açucar

Mendes Junior

Monsanto (soy)

Automotive PIM-Manaus(Assembling electronics)

Unilever (food)

Telmex

Telefônica

Tata

Walmart

Petrobras



Role of International Organizations

• Situation analysis and strategy definition for e-trade practices

• International standards and norms

• Research and information exchange with other regions

• Capacity building at all levels



Is the World Flat ?

“Globalization has bound people, countries, markets closer than ever, rendering national borders relics of a bygone era – or so we’re told”“[But] In fact, more than 90% of all phone calls, web traffic, and investment is local”

“Why the world isn’t Flat”- Pankaj Ghemawat, Harvard Business School Foreign Policy, March-april 2007 pp.54-60

“Obviously, the world is not yet flat. ….This is about trend lines and a scale of change brought on by these “flattening” new technologies.

Answer from Thomas L. Friedman – “The World is Flat” authorForeign policy, May-June 2007 p.4 - Letters



THANK YOU !

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Rio de Janeiro, BrazilTel/Fax: +55 21 2511-3129

www.netune.com.br

Documents

ICT Policies & Global Supply Chain Penetration in Developing Countries WSIS Facilitation Meeting on « E-Business and E-Employment » UNCTAD, ITC and ILO