BRICS-wide e-commerce effort can boost trade
At the Meeting of the BRICS Trade Ministers held in early August, ministers unanimously approved the BRICS E-Commerce Cooperation Initiative. The initiative suggests that strengthening e-commerce cooperation will help promote trade growth, industrial upgrading and job creation in member countries.
It will also help some developing countries and small enterprises integrate into the global value chain. Clearly, the BRICS have reached a consensus on the promotion of crossborder e-commerce cooperation. By shortening distribution channels and linking production with consumption, e-commerce can distribute the cooperation benefits among the BRICS’ citizens and promote trade cooperation by lowering costs and raising efficiency.
The development of e-commerce varies among the BRICS countries, but all of them have advantages in this sector. They have all been named as among the world’s most promising e-commerce emerging markets by various international agencies. China is the world’s largest e-commerce market with $3.3 trillion in transactions in 2016, up about 20 percent year-on-year.
In the same year, the Russian and Indian e-commerce markets were worth $15.6 billion and $13 billion, respectively, with gains of 21 percent and 32 percent. The figures for Brazil and South Africa were also amazing last year, with e-commerce transactions of $12.8 billion and $2.4 billion, representing respective gains of nearly 20 percent and 15 percent.
In recent years, cross-border e-commerce turnover between China and other BRICS countries has grown by more than 20 percent. These figures show that there is already strong e-commerce cooperation among the BRICS. In my view, there are three important aspects of promoting e-commerce cooperation among the BRICS.
First, a BRICS e-commerce cooperation mechanism must be established. In framing a cross-border e-commerce credit system, there must be mutual protection of creditors. This requires credit databanks, a mechanism for credit checks, guarantees and so on. A mutual recognition mechanism should be set up for information collection and exchanges, standardized data storage and full tracking capacity. The logistics mechanism must be integrated to smooth customs clearance, electronic document transmission, cargo transport and foreign exchange settlement.
Second, there must be a focus on strengthening mutual cooperation among BRICS countries. At present, cross-border e-commerce among these countries is mainly realized through platforms such as Amazon, eBay and AliExpress. Although each country has its own platform, each platform is mostly domestic. If platform cooperation can be reinforced and resource complementarity can emerge, more space can be created for enterprises in the BRICS countries.
Cooperation can be conducted online, like establishing common platform standards for counterfeit product complaints and returns. Offline resources can be utilized by building overseas warehouses, setting up service platforms and sharing big data. Platforms based in other BRICS countries should be welcomed to China’s cross-border e-commerce comprehensive pilot area, the e-commerce park, to work with local enterprises.
BRICS countries can also jointly build a BRICS cross-border e-commerce platform to encourage BRICSbased companies to market on it. Through this kind of cooperation, the BRICS can help establish a new international ecommerce order. Third, we must promote a BRICS-wide ecosystem for cross-border e-commerce. This will ultimately occur along supply chains. Many of China’s cross-border e-commerce enterprises have emphasized their overseas supply chains, but they have faced various problems, such as logistics in Russia or payment and tax issues in Brazil. The priority for the BRICS in strengthening cross-border e-commerce cooperation is to build up two chains. One is a cross-border e-commerce logistics chain. Most e-commerce among bloc members is now carried out by postal services, which is a costly, time-consuming and complicated process. According to data from SF Express, it takes four to seven days for a package from China to arrive in the US, and five to eight days to get to the EU. But it takes 12 to 14 days to reach Russia. Shippers must be weaned from the postal delivery system. The second chain involves payments. Due to different regulations, there are no common cross-border e-commerce payment channels. As long as this problem persists, it will be difficult to say that the BRICS have achieved optimum e-commerce cooperation. Governments and companies must work together to establish these two chains.
There is already strong e-commerce cooperation among the BRICS. In my view, there are three important aspects of promoting e-commerce cooperation among the BRICS.