Home-based e-business - an
option for the self-employed?
Chapter 1 – Introduction
1.1. Background
The Asian financial crisis in 1997 and the consequent effect on the global economy after the terrorist attack on US on September 11, 2001 has given Hong Kong one of the longest period of economic instability. The rapidly deteriorating external economy and domestic structural problems have made the Hong Kong economy suffer significantly despite the fact that there have been interest rate cuts since 2001. With slackened domestic demand and asset depreciation, deflation continued, further restraining consumption and investment. The unemployment rate in Hong Kong has reached to a high level at 7.7% in June 2002 [6] and was expected to climb to more than 8% by the end of 2002.
The situation is extremely worrying as the redundancies are not only limited to the low skilled workers under the typical economic restructuring that appeared in the early 90's. Many professionals, experienced workers and managerial grade people were involved in the recent layoffs. According to the figures released by the Census and Statistics Department [19] & [20] (June 21, 2002), vacancies fell considerably in March 2002 from a year earlier. For all the selected major sectors taken together, the total number of vacancies in the private sector dropped by 31%. Decreases were observed mainly in the manufacturing sector and the wholesale, retail and import/export trades, restaurants and hotels sector, as well as at construction sites. Analysis of major occupation categories revealed that private sector vacancies were mainly observed for associate professionals, clerks as well as service workers and shop sales workers. Vacancies for these three major occupation categories taken together accounted for 74% of the total. Job vacancy figures by major occupation category and by selected major sector are shown in ( Appendix 1) .
The Government of the HKSAR has tried to boost the economy by increasing jobs or encouraging people to set up their own business. Many unemployed people have no choice but to work outside the territory (mainly in China ), or to consider setting up their own business. However, as the internal economy is still weak and there are limited resources for most individuals. Building up a home-based e-business is an attractive proposition for many individuals since the initial investment cost is low and also the risks involved. Home-based e-business has been developed for quite a long time and is very popular in the US and European. However, the rate of adoption of home-based e-business is not that high in Hong Kong which is surprising considering that Hong Kong is a well-known international city, with a well established IT infrastructure.
``The government should trigger more jobs by formulating policies to enhance employment. It could improve the business environment by simplifying procedures and thus encourage more people to start up their own business ,'' Henry Tang [18], the new Secretary for Commerce, Industry and Technology said on June 25, 2002. The “Self-Employment Enterprise Scheme” [33] sponsored by the Hong Kong Jockey Club Charities Trust aimed to provide re-training program for the self-employed individuals. At present, it concentrates on the training of some labor-intensive work such as house cleaning, baby-sitting, beauty care or hair dressing. The encouragement of these occupations can only help the low-skilled workers but it cannot create initiatives for the unemployed professionals, experienced workers and managerial grade people. As there is a significant decrease of vacancies at the administrative level since 2000, it would be difficult for a laid-off professional to resume his profession.
There are few options for these individuals except to be employed overseas or self-employed. For those who do not want to take high risks and prefer to spend more time with their families, setting up a home-based e-business may be a more viable and attractive option.
1.2. Statement of the Problem
The advantages of e-commerce seems to be obvious but there are still a lot of reservations when individuals or companies try to set it up, either as an adjunct to their current business, or as a pure online operation. This is especially true in Hong Kong where it can be reflected by the low adoption level and low capability of e-business in the SAR region. Unless the key inhibitors behind can be fully addressed, the situation can not be improved.
1.3. Aim of the study
The purpose of this study is to examine the difficulties e-business start-ups face, identify the criteria for setting up a home based e-business. It also investigates strategies for running a successful e-business in Hong Kong and assesses the options available for a self-employed person to set-up a viable home-based e-business in Hong Kong .
1.4. Research Methodology
In this paper, comparison studies are made on the different home e-business opportunities available, and the existing e-commerce supporting services between Hong Kong and overseas, in order to explore the opportunities and hurdles of e-commerce in Hong Kong environment. For the purpose of this study, a home-based e-business is defined as business that is performed at home and is conducted through the Internet. Much of the research in this study was carried out in the course setting up a true home-based e-business by the author. In fact, since the end of the study, the business has now grown to four full-time and two part-time staff, it is no longer a home business.
1.5. Structure of the dissertation
There will be a literature review on e-business in chapter two. In chapter three, different opportunities available for home-based e-businesses will then be explored. In chapter four, the essential components which goes into a successful e-business will then be examined and discussed with regard to the different types of e-business opportunities. In the final chapter, the different types of e-business opportunities are compared with particular regards to the situation in Hong Kong and conclusions are reached on whether and what type of home-based e-businesses are suitable for Hong Kong residents
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