Cross-border trading booming on global scale
China’s cross-border e-commerce market is growing rapidly. In 2016, the business is expected to reach 6.5 trillion yuan ($770 billion), achieving a 30 percent growth rate and a 20 percent increase in China’s total import-export trade ratio, according to the Ministry of Commerce.
Cross-border e-commerce is booming on a global scale as well. It is estimated that by 2021, 15 percent, or $424 billion, of global e-commerce revenue will be generated by cross-border transactions.
The expansion of e-commerce is creating more opportunities for Chinese businesses. According to the second Global Cross-Border e- Commerce Survey conducted by PayPal and market research company Ipsos, 19 percent of global online consumers shopped on Chinese websites in 2015, making China the second-most popular cross-border e-commerce destination globally.
Chinese merchants are also tapping into a global trend by tailoring their business models and products to appeal to millennials internationally. According to the PayPal Cross-Border 2015 Millennials Report, the millennial population is significantly more likely to shop online than the general population, and nearly half of millennials surveyed purchased across borders in 2015.
China remains the secondmost popular cross-border destination among millennials globally, with clothing, digital entertainment, education and consumer electronics among the most popular categories.
As China continues to accelerate as an e-commerce powerhouse, we’re seeing the country increasingly move from manufacturing to innovation. Looking to the future, there are three major cross-border e-commerce trends that have been benefiting the development of the market.
Chinese merchants choosing to develop quality products, and own brands, are increasingly receiving recognition in overseas markets:
First, as the cross-border online purchasing preferences of consumers in Europe, the United States, and other developed countries shift from lower prices to better quality, a growing number of large Chinese businesses are shipping higher quality products and creating their own brands, thereby gaining recognition in overseas markets.
StyleWe is a perfect example. It’s a fashion platform that focuses on the European and American mid- to high-end market, and has attracted hundreds of talented Chinese designers to provide consumers with original, high-quality and unique products from all over the world. Its mobile phone app has set a new benchmark for Chinese cross-border e-commerce merchants trying to break into the European and American mobile markets.
Second, vertical operations and new category development are breakthrough points for small and mediumsized merchants.
Along with traditionally popular categories such as clothing and consumer electronics, online services and technological innovations are also growing, creating more diverse opportunities. Besthairbuy.com focuses on making seamless connections between manufacturers and traders of exported goods and various overseas small and medium buyers. Companies like this also contribute to making Chinese brands more visible in international markets.
Shenzhen Maker Works Technology has built an open source project platform, MakeBlock, offering one-stop solutions for enthusiastic DIY robot builders around the world.
Third, social media platforms have become a battleground for merchants seeking cross-border business.
The increasing prevalence of mobile technology has made social media an essential part of everyday life for millennials. Compared with conventional sales models, social media naturally generates “strong interaction” and close links between companies and consumers, thereby helping companies advertise their brands at a lower cost.
As a result, Twitter, Facebook and other social platforms have become a fiercely competitive battleground for Chinese businesses trying to explore overseas markets. Along with advertising directly on social media, Chinese businesses are also exploring new approaches, such as working with online celebrities. These celebrities have become virtual ambassadors for brands and products and their online influence among fans helps create potential buyers.
As the cross-border e-commerce environment has continued to grow and evolve, the payment industry has also transformed at a rapid pace. Payment methods are fundamentally changing.
Mobile technologies now represent the fastest-growing payment trend. Physical money is digitizing before our eyes. Trends show that 40 percent of the money passing through consumers’ wallets today is in the form of either checks or cash. In 2017 that figure is predicted to plunge to 25 percent.
Security has become a key consideration for consumers and new financial services companies as software is prone to being attacked. Good risk analytics and security are crucial.
The author is vice-president and general manager of PayPal’s cross-border business for the Chinese mainland, Hong Kong, Taiwan and South Korea. The views do not necessarily reflect those of China Daily.
The opening ceremony of an international container port for cross-border e-commerce in Hangzhou, Zhejiang province.