TRADES BY FIN­GER­TIP

E-com­merce to help avoid trade pro­tec­tion­ism

China Daily (Hong Kong) - - FRONT PAGE -

As China’s for­eign trade faces ris­ing costs at home and slug­gish de­mand abroad, flour­ish­ing e- com­merce ser­vices are ex­pected to boost cross-bor­der trade and change the im­age of Made- in- China prod­ucts, ex­perts said. China’s cross- bor­der e-com­merce com­pa­nies are be­ing con­fronted with chal­lenges of cred­i­bil­ity, vary­ing stan­dards, tal­ent short­age and in­suf­fi­cient in­tel­lec­tual prop­erty rights pro­tec­tion.

Wang Kaiyuan, deputy di­rec­tor of the China In­ter­na­tional Elec­tronic Com­merce Center of the Min­istry of Com­merce, said at a fo­rum on Nov 2 that the coun­try should pay more at­ten­tion to cross- bor­der e-com­merce ser­vices, which are de­vel­op­ing in line with China’s eco­nomic re­struc­tur­ing process.

“China’s for­eign trade is now fac­ing a diffi cult time, not only be­cause of a re­duc­tion in global de­mand but also be­cause of ris­ing trade fric­tion and trade seg­men­ta­tion due to re­gional eco­nomic in­te­gra­tion,” Wang said.

Over­all trade rose 6.2 per­cent year- on- year in 2012 and went up 7.6 per­cent yearon-year in the first 10 months of the year, com­pared with dou­ble- digit growth in the past decades, ac­cord­ing to the Gen­eral Ad­min­is­tra­tion of Cus­toms.

The au­tumn ses­sion of this year’s Can­ton Fair — a barom­e­ter of China’s ex­ports — posted the low­est ex­port vol­ume since the fair’s au­tumn ses­sion in 2009, sug­gest­ing weak over­seas de­mand and a grim out­look for the world’s largest ex­porter.

“Cross- bor­der e- com­merce will be an ef­fec­tive way for China to build a new com­pet­i­tive edge as it will di­rectly ship goods to con­sumers and avoid trade pro­tec­tion­ism,” Wang said.

Li Xiao­gang, chief engi­neer of the cus­toms agency, said that cross- bor­der e-com­merce has great sig­nif­i­cance in ex­pand­ing over­seas de­mand and trans­form­ing the coun­try’s trade de­vel­op­ing model, as well as up­grad­ing China’s econ­omy.

“Boost­ing cross- bor­der e- com­merce, es­pe­cially un­der the cur­rent cir­cum­stances, will help small- and medium-en­ter­prises re­duce costs and solve ur­gent chal­lenges such as tax re­bates,” Li said.

In late Au­gust, the State Coun­cil, China’s cab­i­net, is­sued poli­cies to sup­port the de­vel­op­ment of cross­bor­der e- com­merce. Those mea­sures in­clude in­creas­ing pay­ment ser­vices, eas­ing cus­toms in­spec­tions and im­prov­ing the tax re­bate reg­u­la­tions.

Plan­ning for the China (Shang­hai) Pi­lot Free Trade Zone also took into ac­count the ac­cel­er­a­tion of cross-bor­der e-com­merce ser­vices as well as the trial of a sup­port­ive sys­tem in­clud­ing cus­toms su­per­vi­sion, in­spec­tion and quar­an­tine, tax re­bates, and cross- bor­der pay­ment and lo­gis­tics ser­vices.

Data from the min­istry showed that the trade vol­ume of China’s cross-bor­der e-com­merce rose 25 per­cent to 2 tril­lion yuan ($ 328.4 bil­lion) from 2011 to 2012. Ex­perts es­ti­mated that the trade vol­ume will hit 3.1 tril­lion yuan in 2013 and 6.5 tril­lion yuan in 2016, with an­nual growth of about 30 per­cent and ac­count­ing for nearly one- fifth of the coun­try’s over­all trade vol­ume.

Surg­ing busi­ness

Zhang Guo­fang, chair­man of Qing­dao Mingyue Sea­weed Group Co Ltd, said that over­seas or­ders for the sec­ond half of the year were sig­nif­i­cantly lower than in the first half due to ris­ing costs for raw ma­te­ri­als, la­bor and fees and taxes.

“We started our cross-bor­der e- com­merce ser­vices a cou­ple of years ago, and the new busi­ness has brought us re­wards and will be our ma­jor busi­ness model in the fu­ture,” Zhang said.

“We’ve long been a pro­ces­sor and sup­plier of sea­weed prod­ucts for big over­seas buy­ers. Good qual­ity and low prices were the ma­jor com­pet­i­tive­ness fac­tors, but now we’re be­com­ing a man­u­fac­turer of new prod­ucts, such as cos­met­ics made of sea­weed and we di­rectly sell them to con­sumers with the help of e-com­merce ser­vices.

“As the com­pany grows, we must have our own con­sumer prod­ucts, our own brands and sales net­works. It’s not easy, but e- com­merce is the way for­ward,” he added.

Xu Cheng, ad­min­is­tra­tive deputy di­rec­tor of Bosi­deng In­ter­na­tional Hold­ings Ltd and Shang­hai Bosi­deng In­ter­na­tional Fash­ion Co Ltd, said that the down cloth­ing pro­ducer started its e-com­merce ser­vices in 2008. Sales surged from around 30 mil­lion yuan in 2008 to about 400 mil­lion in 2012 and are ex­pected to hit 500 mil­lion yuan this year.

“Cross-bor­der e-com­merce is still at an ini­tial stage in China, but it will de­velop very fast as long as the trust prob­lem is re­solved,” said Zhang Tian­ran, se­nior man­ager of Global Mar­ket Group, a global plat­form that con­nects Chi­nese man­u­fac­tur­ers with over­seas buy­ers and con­sumers.

A sur­vey made by the com­pany that polled 20,000 buy­ers showed that they spent more than 85 per­cent of their time on the plat­form sort­ing out the right sup­pli­ers as China has more than 42 mil­lion com­pa­nies, ac­cord­ing to Zhang.

“Over­seas buy­ers don’t lack in­for­ma­tion, but their main is­sue is sort­ing. The key is the cred­i­bil­ity of do­mes­tic sup­pli­ers. The cred­i­bil­ity is­sue is the most im­por­tant one to change the Made-in-China im­age,” Zhang Tian­ran said.

In 2005, the group launched a stan­dard known as the Global Man­u­fac­turer Cer­tifi­cate, join­ing hands with T0 5V Rhein­land AG and Un­der­writ­ers Lab­o­ra­to­ries Inc. The stan­dard eval­u­ates Chi­nese man­u­fac­tur­ers on eight ar­eas in­clud­ing ef­fec­tive qual­ity con­trol, stan­dard so­cial and en­vi­ron­men­tal re­spon­si­bil­ity and pro­fes­sional re­search teams.

“As for the M2B busi­ness, which con­nects Chi­nese man­u­fac­tur­ers with over­seas buy­ers, we now have 30,000 do­mes­tic man­u­fac­tur­ers, mostly SMEs, and 1.08 mil­lion over­seas buy­ers. The man­u­fac­tur­ers are all the lead­ing sup­pli­ers of dif­fer­ent in­dus­tries. When the buy­ers send us their full-year or­ders, we can get them the right sup­pli­ers within a week,” Zhang said.

Chal­lenges

Un­like China’s over­all trade per­for­mance in the past two years, the trade vol­ume of Chi­nese com­pa­nies, es­pe­cially small ones, en­gaged in cross­bor­der e-com­merce ser­vices has main­tained fast growth, said Yang Jianzheng, di­rec­tor of the In­sti­tute for Eco­nomic and Trade at the School of Com­merce of the Univer­sity of Shang­hai for Sci­ence and Tech­nol­ogy, not­ing a sur­vey of 1,009 trade com­pa­nies in the spring ses­sion of this year’s Can­ton Fair.

But most com­pa­nies en­gaged in cross- bor­der e- com­merce ser­vices have low-level lo­gis­tics ca­pa­bil­i­ties and poor abil­ity to use e-com­merce plat­forms for ef­fec­tive net­work mar­ket­ing, while they re­main un­fa­mil­iar with elec­tronic cus­toms clear­ance pro­ce­dures, Yang said.

“We don’t have enough pro­fes­sional tal­ent for cross­bor­der e-com­merce, which is a big chal­lenge. In ad­di­tion, it’s more dif­fi­cult to pro­tect our IPR dur­ing online trans­ac­tions,” Xu from Bosi­deng said.

Li Wenkai, di­rec­tor of Eco­v­acs Ro­bot­ics ( Suzhou) Co Ltd, added that the ad­ver­tise­ment costs on e- com­merce plat­forms are also be­com­ing higher.

Also, Ni Zu­gen, chair­man of Lexy Elec­tric Ap­pli­ances Co Ltd, noted that con­sumer loy­alty is not solid for brands that made their name in the e-com­merce space. Con­tact the writer at li­ji­abao@chi­nadaily.com.cn

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