kowin.jpgBusiness-to-business
trading platforms were among the many casualties of the dotcom
collapse. But the B2B vision refuses to die and in the automotive
sector, the conditions are looking more favourable as more of the
industry's sourcing shifts to China.

We were thus intrigued last week's announcement from GlobalAutoIndustry.com, a US-based B2B site for the car industry, and Shanghai Kowin Automotive Components, the global sourcing division of China's Chery Automotive.

At the Hi-Tech Fair in Shenzhen , the two firms signed a letter of intent to create what they claim is the “world's largest” online B2B automotive sourcing portal.

The
portal aims to bring buyers and sellers in the automotive industry
together and, more importantly, allow them to post the necessary
information for completing transactions, including RFQs,
specifications, drawings and parts catalogues.

This is hardly a
new idea. Six years ago, the internet was awash with similar
initiatives focussed on transforming trading in a bewildering range of
“old economy” industries, including leather, paper, automotive and
chemicals.

The car industry announced one of the most ambitious
B2B e-commerce projects in which car giants Daimler Chrysler, Ford and
General Motors agreed to create a massive trading exchange, called Covisint.

The
aim was to create a “neutral” exchange that would operate independently
of its three big backers and embrace 50,000 suppliers. There were even
plans to floated as a separate public company.

The business
plans of many of the B2B initiatives were hopelessly naive and the
business processes too simplistic. Unlike a consumer buying a digital
camera on the internet, procurement offices are interested in a lot
more than just price. So, when the VC-backed marketplaces, with names
such as PaperX, MetalSite and MetalSpectrum, could not raise new funds,
the B2B bubble popped.

Covisint survived although it has hardly thrived and in 2004 it was sold to US software company Compuware.

What
about today? Many lessons have been learnt and the greater availability
of broadband makes it more feasible to reach small suppliers and
exchange bandwidth-hungry data such as technical drawings.

In
the automotive sector, the conditions look more promising than before
as the centre of gravity for the industry's supplier base shifts
inexorably east. Kevin Chen, CEO of Kowin, says:

Sourcing
from emerging markets, especially China, has become imperative for most
players in mature automotive markets. With thousands of suppliers in
China, and varying terms of quality and service capability, it creates
significant challenges for global buyers to find appropriate suppliers
in China.”

Kowin was founded in 2004 as a
purchasing platform. It is now the sole sales agent for Chery's tier 1
and tier 2 suppliers as well as the distribution agent of spare parts
for Chery's global operations.

The two organisations expect to
sign the formal agreement creating the portal, as yet unnamed, during
the Beijing Auto Show next month.

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