Revolution poses SME risks, rewards
The cross-border e-commerce revolution in Thailand this year is broadening opportunities for small and medium-sized enterprises (SMEs), but differentiation and innovation is key to survival in a game dominated by Chinese players.
Global platform players are increasing their efforts to attract local SMEs. Chinabased Alibaba, led by founder Jack Ma, is collaborating with the Thai government to empower SMEs to export products, particularly rice and durian to China.
Meanwhile JD.com is working with Central Group and US-based Amazon to establish a local team — Amazon Global Selling Thailand — to attract select local SMEs to export to the US market via its platform and fulfilment service.
The Malaysian government has become the latest player to empower businesses to go cross-border, collaborating with Thai businesses in Asean.
“Alibaba hopes to use innovation and technology to help Thai SME products reach the global market. We believe in the future, 80% of global SMEs will go online,” Mr Ma said in a signing ceremony with the Thai government at the Smart Digital Hub in the Eastern Economic Corridor.
Alibaba wants to set up global hubs creating an electronic world trade platform (eWTP), complementing the World Trade Organization framework. Users in the hubs can enjoy minimal tariffs, speedy customs clearance and state-of-the-art logistical support.
“With the eWTP, our vision is to make the world more inclusive, sustainable and supportive of developing countries, SMEs and young people,” he said.
The South China Morning Post recently reported Alibaba had launched a Malaysian hub for eWTP, and plans to build a “new silk road or e-road” logistics centre in Kuala Lumpur.
Pawoot Pongvitayapanu, founder of Tarad.com, a local e-commerce pioneer, said cross-border trade is the next trend in e-commerce, particularly in Asean where everyone is interested in the overseas market.
The Malaysian government has a business stimulation plan to export through e-commerce players in various targeted countries, while Thailand is still primarily dominated by the Alibaba platform, said Mr Pawoot.
“Instead of relying only on China’s platform, we need to have multiple choices for online platforms and sales channels,” he said. Alibaba is heavily investing in Thailand’s Smart Digital Hub and Malaysia’s new Digital Free Trade Zone as part of its global expansion for sustainable growth.
“Thailand needs to synchronise its strategy with a national e-commerce master plan rather than addressing a redundant support policy,” said Mr Pawoot.
Thai SMEs can export to China through online platforms, but Chinese products
can also be sold in Thailand via Lazada.
“A monopoly by a Chinese player is a concern for Thai manufacturers, distributors and retailers as they have to compete with the Chinese products sold online, which pay few taxes and bypass middlemen,” he said.
“Local SMEs need to learn how to operate their businesses online as a primary channel instead of using it as a complimentary outlet.”
Mr Pawoot and other Thai business operators have recently signed agreements on three projects.
Tarad.com is set to connect with SiteGiant, a leading Malaysian e-commerce
shopping cart software provider, to promote cross-border trade.
Thailand-based e-logistic aggregator SHIPPOP formed a joint venture with Malaysia’s Commerce.Asia to set up SHIPPOP Malaysia, which began operations last year.
Siam Outlet Co, a warehouse and logistics provider for online merchants in Thailand, invested in LetMeStore in Malaysia to enhance cross-border fulfilment.
“To survive, local business operators need to find ways beyond domestic [venues] to tap into cross-border trade opportunities and improve competitiveness,” said Mr Pawoot.
Jarit Sidhu, head of operations of IDC Thailand, said local businesses need to bear in mind that adding value to and differentiating their products through innovation is important.
Alibaba, the dominant player, has already invested in logistics infrastructure. Mr Ma is further angling to increase access for Chinese sellers on the export market.
Thailand needs to hammer out a strategy to boost local competitiveness and grow exports, he said. The country has advantages exporting to the Indochinese market, and does not need to merely serve as a hub for products passing from China to the region, said Mr Jarit Sidhu.