China must win more overseas markets by improving quality and technology
The European Commission recently announced that it has launched a formal investigation to assess whether Alibaba’s AliExpress violated the Digital Services Act, and France and Germany have also introduced or plan to introduce measures targeting Chinese e-commerce platforms.
After the outbreak of the COVID-19 pandemic, people in European countries and the United States turned to online shopping, and the ensuing inflation further stimulated their demand for cheaper goods. During this period, Chinese crossborder e-commerce operators went global in a big way, extending their Chinese goods at competitive prices to consumers around the world. It also facilitated China’s transformation from “the world’s factory” to “the world’s shopping center”.
However, when implementing the mature market tactics they have developed in the domestic market and policy environment into foreign markets, China’s cross-border e-commerce operators encountered some challenges. At home, they quickly draw e-commerce users through tactics such as low-price marketing and cheaper goods. Some problems have also emerged in product quality control, the application of user data and digital marketing.
The ballooning cross-border deals via e-commerce platforms have had an impact on the retail ecosystem in the West. In the West’s services-dominated economy, small and medium-sized retailers create many jobs and tax revenues, and they have their own trade organizations to defend their interests. Behind them also are a large number of local manufacturers, who have formed a basic business network to counter the external shocks. For example, the French government has decided to impose environmental taxes on cheap textile products because it believes the influx of cheap imported clothing has led to the bankruptcy of some local brands. Therefore, considering potential influences on local employment and concerns about the rise of Chinese e-commerce platforms, even pure commercial issues could be politicized.
At present, a so-called investigation has been launched against China’s e-commerce companies in Europe and the US for suspected tax avoidance. In addition, they are also paying attention to the quality and safety of e-commerce goods. Given that Chinese automobile, electronics and other sectors are now making accelerated efforts to go overseas, to win more international market share, they should launch more e-commerce goods that meet safety and quality standards of foreign markets. However, most Chinese e-commerce operators have got accustomed to price competition in the domestic market, and not developed full awareness on quality and safety standards. Also, relevant supervisions are not always put in place.
All this means China should consider establishing a strict export commodity inspection and testing system to help the sustainable and healthy development of its cross-border e-commerce business. Platform enterprises and suppliers should also work hard for their long-term and sustainable development.