Cross Border e-commerce is an increasingly significant component of China’s economy and its growing share of foreign trade. This increasingly expanding sector is valued at US$26 billion which comprises a growing share of China’s total foreign trade, contributing almost 5% of 2019’s overall foreign trade growth. e-commerce platforms of China have significantly grown their user base in first half of this year. Users of Alibaba grew to 695 million (20% increased) and second most popular platform, i.e. Pingduoduo, grown its users by 40%.
Cross-border e-commerce holds a specific distinction in China. Various Multinational companies such as Alibaba, Tmalletcare allowed to sell certain goods to Chinese consumers online at preferential duty rates and without a license to operate a business in China. According to Deloitte report, from 2015 to 2018, China’s cross-border channel had witnessed compound annual growth rate of 76%, while adding RMB 78.5 billion in Gross Merchandise Volume (GMV) last year which is approximately 2.2% of China’s online retail sales. It means there is considerable room for long-term growth for brands and retailers. Moreover, the number of successful cross-border market cases are increasing gradually where international companies are encouraged by optimistic signals from brands which also caused leveraging cross-border success to win significant in-country distribution.
These days, E-commerce is considered as essential part of modern regime where shopping through online stores remain a fraction of overall retail sales. The number of successful cross-border market entry cases is increasing. International brands are encouraged by positive signals from brands
The COVID-19 outbreak in China accelerated the existing trend of increasing reliance by Chinese consumers on e-commerce platforms, and also expanded the user base to an older demographic. Some E-Commerce companies in china are creating new growth opportunities in E-Shopping amid trade tensions between China and other western countries as well as during pandemic situation. Manufacturers stepped up efforts to sell to other markets, recording double-digit gains in exports to France, Canada and other economies.
This trend is expected to expand in china and worldwide. More companies and businesses are tapping E-Commerce platforms for direct sales rather traditional style store distribution systems. According to Suresh Dalai, a senior director at consulting firm focusing on retail operations in Asia: “There is a trend towards more direct shipping out of China through digital cross-border shopping channels, which helps alleviate some of the downtrend in Chinese exports driven by the trade wars and increasing political tensions between China and other countries”.
Evidences show that this trends comes from the upsurge in cross-border shopping websites like Alibaba.com and Aliexpress particularly in Asia.
In Long Run, it is expected that change in consumer behavior after Covid-19 will lasts its impact on E-Commerce sector of China. Particularly the transformation of traditional styles shopping to online shopping of essential commodities will grow by an estimate of more than 60% by next year.
So after the international consumer confidence returns and spending on discretionary goods increases, China’s Cross Border Trade will further accelerate.
Furthermore, there remains significant room for business-to-consumer online retail to expand in other countries under One Belt One Road. As such, the success of the Chinese government’s ongoing drive to strengthen the trade with neighboring countries under OBOR and improve new infrastructure will be crucial for continued growth in the e-commerce market.
