South Korea tops Internet ranking published by The Boston Consulting Group

Date: Tue, 09/06/2011 - 18:30 Source: The Boston Consulting Group press department

The BCG e-Intensity Index highlights national differences in Internet activity and the need for strong regulatory, payments, and consumer-protection schemes
South Korea tops Internet ranking published by The Boston Consulting Group UN Photo. Evan Schneider

South Korea is the nation with the most far-reaching and deepest digital activity, according to the most recent BCG e-Intensity Index. 1 Denmark, Sweden, the U.K., and Iceland round out the top five nations, and the U.S., the birthplace of the Internet, comes in tenth.
The Boston Consulting Group (BCG) originally created the BCG e-Intensity Index in 2010 in order to compare Internet activity across nations. It was calculated for all Organisation for Economic Co-operation and Development (OECD) members, the BRICI nations of Brazil, Russia, India, China, and Indonesia, and other noteworthy economies, such as Hong Kong, Saudi Arabia, Singapore, and South Africa.

The three es of intensity
The index measures enablement (how well-built is the infrastructure and how available is access?); expenditure (how much money is spent on online retail and online advertising?); and engagement (how actively are businesses, governments, and consumers embracing the Internet?). It captures, in other words, both a nation’s supply of Internet infrastructure (enablement) and the demand for and use of Internet services (expenditure and engagement).
Other Internet indices and rankings tend to focus on network speeds and penetration but neglect how people, businesses, and government actually use the Internet. Hong Kong, the economy with the highest enablement, or infrastructure, score, ranked twelfth overall because its people, businesses, and government are not power users.
“It is not enough to have great pipes,” says Paul Zwillenberg, a BCG partner based in London. “To improve Internet intensity, investments in infrastructure need to be accompanied by other strengths, such as a favorable regulatory environment, strong payments systems, and consumer protections for e-commerce transactions.

The Internet is going local
Overall Internet intensity has improved over the past year, with the average score moving up by 17 percent in this year’s calculation. The overall average, however, masks the local character of the Internet, which increasingly is a reflection of—or response to—the physical world. In China and Russia, where English is less common than in Western Europe, local Internet companies have successfully competed against the likes of Google and Amazon.
In the U.K., traditional shops have embraced the Internet, creating a nation of “digital shopkeepers,” while in the Czech Republic, online-only retailers are filling a void created by the underdevelopment of traditional retail channels. Hong Kong, on the other hand, has a low level of online sales, given the quality of its broadband infrastructure, a reflection of a well-established retail footprint.
“As the Internet becomes increasingly enmeshed in commerce and society, its evolution is influenced by the physical world,” says David Dean, a BCG senior partner based in Munich. “Traditional companies that embrace digital technologies, such as social networking, can enhance their existing strengths. A real-time blending of the real and online worlds is occurring. The winners will be companies and countries that can successfully marry bricks and clicks.”
Traditional U.K. businesses have been especially successful at building businesses on the Internet—a transition that Zwillenberg calls “paving over the wagon trails.”

 

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