Trade with­out fron­tiers

How e-com­merce breaks down bar­ri­ers to world­wide shop­ping

China Daily (USA) - - ANALYSIS - By CHEN YINGQUN cheny­ingqun@chi­nadaily.com.cn

Mother-to-be Zhang Yuan has been busily buy­ing things for the baby and her­self — but al­most all of them are be­ing mailed from over­seas. They in­clude feed­ing bot­tles from Ja­pan, milk pow­der from New Zealand, body lo­tion from the United States and clothes from the United King­dom.

“I want safety and good qual­ity for my­self and the baby. Some prod­ucts from over­seas are quite good and easy to get now. I just bought them from var­i­ous e-com­merce plat­forms and in a few days, or a few weeks, they will ar­rive in Bei­jing,” she said.

Zhang, 30, is one of the many Chi­nese con­sumers who are pas­sion­ate about over­seas brands and prod­ucts. The lat­est an­nual global cross-bor­der sur­vey by on­line pay­ments ser­vice PayPal and French mar­ket re­search firm Ip­sos found that 35 per­cent of Chi­nese on­line shop­pers looked over­seas for goods last year, com­pared with 26 per­cent in 2014.

Safety, con­ve­nience and au­then­tic­ity are the top driv­ers for Chi­nese con­sumers who do cross-bor­der shop­ping, said Patrick Foo, vice-pres­i­dent and gen­eral man­ager of PayPal’s cross-bor­der busi­ness for the Chi­nese main­land, Hong Kong, Tai­wan and South Korea.

Chen Tao, a se­nior e-com­merce re­searcher at Analysys, a Bei­jing in­ter­net con­sul­tancy, said that China’s cross-bor­der e-com­merce is still at an early de­vel­op­ment stage.

“It has not reached the rapid-growth stage yet, but there will def­i­nitely be big­ger po­ten­tial in the fu­ture,” he said.

Chen said that in the past Chi­nese con­sumers mostly bought ma­ter­nity, child and beauty prod­ucts through cross­bor­der on­line shop­ping, but now they buy a wide va­ri­ety of items, such as health prod­ucts, elec­tronic goods and clothes.

“Chi­nese con­sumers’ de­mands have been up­graded. They now have higher re­quire­ments for qual­ity, safety and va­ri­ety, but at present do­mes­tic prod­ucts still can’t fully meet their re­quire­ments. That is why more peo­ple are turn­ing to cross-bor­der shop­ping,” he said.

China’s cross-bor­der e-com­merce has been grow­ing over the past few years. Sta­tis­tics from the China E-Com­merce Re­search Cen­ter show that, in 2015, China’s cross-bor­der e-com­merce trans­ac­tions to­taled 5.4 tril­lion yuan ($800 bil­lion), a year-on-year in­crease of 28.6 per­cent. In the first half of 2016, trans­ac­tions to­taled about 2.6 tril­lion yuan, rep­re­sent­ing year-on-year growth of about 30 per­cent.

Ama­zon China said re­cently that since it launched its cross­bor­der e-com­merce strat­egy, Chi­nese con­sumers placed more than 10 mil­lion or­ders, sent di­rectly from Ama­zon’s over­seas sites. In the first half of this year, pur­chases by Chi­nese cus­tomers from Ama­zon’s over­seas sites were four times the fig­ure for the pre­vi­ous year.

A large num­ber of Chi­nese e-com­merce com­pa­nies, such as Alibaba, JD.com and NetEase Koala, have de­vel­oped their cross-bor­der e-com­merce busi­nesses to help con­nect global sell­ers with Chi­nese con­sumers.

Rafael Jimenez, a busi­ness de­vel­op­ment ex­pert at the EU SME Cen­ter, says that world­wide in­ter­est in China’s e-com­merce Jack Ma, mar­ket has grown sig­nif­i­cantly in the past few years. Take search vol­ume on Google as a sim­ple ex­am­ple. There was a spike in the num­ber of times that the term “China e-com­merce” was searched for in April this year, quite pos­si­bly fol­low­ing the gov­ern­ment’s re­cent tax pol­icy changes ap­plied to cross-bor­der e-com­merce trans­ac­tions, and then again the in­tro­duc­tion of the “pos­i­tive list”, he said.

Var­i­ous coun­tries have es­tab­lished part­ner­ships with Chi­nese e-com­merce plat­forms to reach the coun­try’s con­sumers. Canada launched its pavil­ion in Alibaba’s Tmall Global plat­form ahead of the G20 lead­ers’ sum­mit in Hangzhou, pro­vid­ing Chi­nese con­sumers with ac­cess to Cana­dian brands, in­clud­ing yoga ap­parel-maker Lu­l­ule­mon and Clear­wa­ter Seafoods.

Cana­dian Prime Min­is­ter Justin Trudeau at­trib­uted the huge po­ten­tial of on­line shop­ping to the rapid growth of the Chi­nese mid­dle class.

“That means a big­ger mar­ket for qual­ity Cana­dian food, like beef and pork, but also for lob­ster and cher­ries,” he said dur­ing his of­fi­cial visit to China in Septem­ber.

Rus­sia also launched its pavil­ion in Alibaba’s Tmall Global plat­form in Septem­ber, fea­tur­ing Rus­sian com­modi­ties such as food, toys, tourism and many oth­ers. Alibaba now has 16 coun­tries’ pavil­ions on its plat­form.

Re­search by con­sul­tancy Ac­cen­ture and Alibaba shows that the value of cross-bor­der busi­ness-to-cus­tomer e-com­merce is set to grow from $230 bil­lion in 2014 to $994 bil­lion in 2020, ac­count­ing for al­most 30 per­cent of all B2C e-com­merce.

The Min­istry of Com­merce has fore­cast that the vol­ume of cross-bor­der e-com­merce in 2016 will reach 6.5 tril­lion yuan and will soon ac­count for 20 per­cent of China’s for­eign trade.

Gian­franco Casati, group chief ex­ec­u­tive for emerg­ing mar­kets at Ac­cen­ture, said that in Jan­uary the State Coun­cil ap­proved the es­tab­lish­ment of 12 more zones in China, in­clud­ing Tian­jin, Shang­hai and Chongqing. These are des­ig­nated ex­clu­sively for the de­vel­op­ment of the cross­bor­der e-com­merce in­dus­try and have pref­er­en­tial tax poli­cies and stream­lined cus­toms clear­ance pro­ce­dures.

Chen said that to bet­ter reg­u­late cross-bor­der e-com­merce, the Chi­nese gov­ern­ment has also un­veiled sev­eral poli­cies this year, such as the pos­i­tive list of cross-bor­der e-com­merce prod­ucts in April, reg­u­la­tions on milk pow­der and cer­tain cos­met­ics later.

“These reg­u­la­tions are nec­es­sary for a healthy mar­ket and fair com­pe­ti­tion,” he said.

Cross-bor­der e-com­merce has also been rec­og­nized as hav­ing huge po­ten­tial to boost global eco­nomic ac­tiv­ity, es­pe­cially the de­vel­op­ment of small and medium-sized com­pa­nies.

Jack Ma, ex­ec­u­tive chair­man of e-com­merce gi­ant Alibaba Group, has called for the es­tab­lish­ment of an elec­tronic world trade plat­form (eWTP). The aim is to re­duce bar­ri­ers to make it eas­ier for small and medium-sized en­ter­prises to ex­pand their trad­ing ca­pa­bil­i­ties world­wide.

Ma views the eWTP as an in­ter­na­tional co­op­er­a­tion mech­a­nism, led by the pri­vate sec­tor and driven by busi­nesses with sup­port from gov­ern­ments. Through pub­lic-pri­vate di­a­logue, and by dis­cussing, ex­plor­ing the best prac­tices to pro­mote cross­bor­der e-trade and build­ing up re­lated reg­u­la­tions and stan­dards, it can cre­ate a fer­tile soil for the de­vel­op­ment of the in­ter­net econ­omy and e-com­merce world­wide.

The plat­form “is go­ing to be fun­da­men­tal for the world econ­omy for the next 20 or 30 years, and for this cen­tury”, Ma said be­fore the 2016 B20 Sum­mit in Hangzhou in Septem­ber. Rec­og­nized by many in­dus­try ob­servers as an ef­fec­tive way to boost the de­vel­op­ment of small and medium-en­ter­prises, the eWTP ini­tia­tive ap­pears in the fi­nal B20 Pol­icy Re­port.

Luigi Gam­bardella, pres­i­dent of Chi­naEU, said he en­dorsed the pro­posal to es­tab­lish an eWTP.

“The so­lu­tion for to­day’s eco­nomic slow­down is to in­crease in­clu­sion in global trade and im­prove the in­volve­ment of SMEs,” he said. “The eWTP will pro­vide SMEs with a trans­par­ent and open plat­form to sell their goods and ser­vices glob­ally, thus fa­cil­i­tat­ing their in­clu­sion in cross-bor­der e-trade.”

But he also said the fi­nal goal should be e-com­merce with­out bor­ders that gives con­sumers free­dom to shop on­line with­out lim­i­ta­tions.

Chen added that the eWTP would be a sup­ple­ment to the cur­rent global trade sys­tem and reg­u­la­tion, which could re­duce pro­tec­tion­ism. For SMEs glob­ally, it could help re­duce costs and help them com­pete in a fairer en­vi­ron­ment with big com­pa­nies.

“The eWTP has been ini­ti­ated by Chi­nese com­pa­nies and will build a trade frame­work that Chi­nese com­pa­nies are fa­mil­iar with, so it will also pro­vide op­por­tu­ni­ties to speed up glob­al­iza­tion,” he said.

The plat­form (eWTP) is go­ing to be fun­da­men­tal for the world econ­omy for the next 20 or 30 years, and for this cen­tury.” ex­ec­u­tive chair­man of e-com­merce gi­ant Alibaba Group

GONG XIANMING / FOR CHINA DAILY

Em­ploy­ees ar­range parcels in cross bor­der e-com­merce in Yiwu, Zhe­jiang prov­ince.

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