Platform for profit

China sees boom in cross-border e-commerce

Selling goods to overseas markets has become much easier in recent years thanks to e--commerce, according to Wang Wenjun, who has been engaged in foreign trade since 2000 in Yiwu, a city in East China's Zhejiang Province that is famous for its trading of small commodities.

"We no longer need to wait for the middlemen to come to us, and we don't have to send out salesmen to seek business opportunities at trade fairs. With just a few computers and a fast Internet connection, we can directly reach our end users anywhere and at any time," Wang told the Global Times Sunday.

Wang is the president of Sumsoar Group, which sells accessories and bags, and it started selling most of the goods online in 2005. It has raked in $50 million in orders so far this year, up 50 percent year-on-year, reflecting China's robust cross-border e-commerce industry.

Cost-effective

Cross-border e-commerce is a cost-effective trading method that has become popular not only with domestic entrepreneurs, but also with overseas retailers who can save the effort and cost of visits to China, said Wang, adding that the recent economic slowdown has made this cost saving even more vital.

As well as business-to-business trading, cross-border business-to-consumer sales are being driven by increasing demand from overseas users for small commodities made in China that are both cheap and of good quality, Wang noted.

This demand trend was evident in Alibaba's performance during this year's November 11 Singles' Day sales promotions, which attracted overseas purchases from 217 countries and regions.

Jack Ma Yun, the founder of Alibaba, said during a press conference on November 11 that the national sales event could become a global shopping festival in five years time, indicating his confidence in growing demand from online shoppers.

According to data released by the Ministry of Commerce (MOFCOM) in late October, cross-border e-commerce transactions exceeded 3.1 trillion yuan ($505.3 billion) in 2013, accounting for 12.1 percent of the total trade volume over the same period, while the ratio five years ago was 4.6 percent.

This sector is expected to grow further, as the government is eager to encourage the online shopping industry.

On November 19, during his visit to Qingyuanliu, a village in Yiwu that is home to over 2,800 online stores, Premier Li Keqiang emphasized the importance of cross-border e-commerce in boosting employment as well as exports.

MOFCOM has forecast that cross-border e-commerce transaction volumes will rise to 6.5 trillion yuan in 2016 at an average annual growth rate of 30 percent.

Do it yourself

Well-established e-commerce platforms are generally preferred by domestic traders for connecting with the outside world, given their brand recognition and experience.

As of 2013, over 200,000 trading companies in China were selling goods online mainly via third-party platforms, according to MOFCOM.

Amazon.com Inc has opened up its shopping platforms in the US, EU and Asia, enabling 250 million retailers to sell goods around the world, Doug Gurr, president of Amazon China, said during the World Internet Conference held from November 19 to November 21 in Wuzhen, East China's Zhejiang Province.

But some retailers have not been satisfied with third-party services, leading them to build their own platforms.

"Third-party e-commerce platforms usually set complicated and unclear rules for entrance and marketing, which obstructs retailers' autonomy and hinders their development in the long run," said Wang, who set up his own international shopping platform in 2013.

Wang also said he intended to construct warehouses abroad so as to shorten delivery times and enhance user experience, as Alibaba and Amazon have not been able to offer satisfactory and cost-effective international shipping services.

Wang is not the only one with this opinion. Ding Kai, executive president at Yiwu-based Jimao Electronic Technology Co, also believes the platforms run by companies like Alibaba and Amazon are not good enough.

"Foreign online shoppers usually find what they want to buy via search engines instead of directly turning to e-commerce platforms like Chinese consumers. So we have to advertise our goods on search engines, but third-party e-commerce marketplaces have yet to offer this kind of marketing service," Ding told the Global Times Sunday.

In addition, Amazon does not allow sales of jewelry on its marketplaces, prompting Ding's company to set up its own e-commerce shopping platform, eozy.com, which sells beads and jewelry to foreign consumers.

Government support needed

Although vendors' establishment of their own shopping platforms may make it easier to reach targeted customers, companies still face obstacles to overseas sales such as customs barriers, said Tang Jia, an industry analyst with Beijing-based market research firm Analysys International.

Domestic online vendors do not have the strength to overcome these barriers on their own, and support from governments around the world is needed, Tang told the Global Times Monday.

Liu Qiangdong, founder of NASDAQ--listed e-commerce site jd.com, told the Global Times on the sidelines of the World Internet Conference that some countries have tightened controls over imports of small packages, which he believes is a major barrier for cross-border e-commerce.

Cao Yinglin, a tattoo machine vendor in Yiwu, has suffered from this kind of policy.

Cao told the Global Times that countries including Italy, Thailand and Russia have imposed import taxes on small packages in the last two years, resulting in a fall in overseas purchases.

In December 2013, the Ministry of Finance of the Russian Federation reportedly announced that it would reduce the duty-free threshold to 150 euros ($186) or 10 kilograms from the previous limit of 1,000 euros or 31 kilograms, effective from July 2015.

During the Internet conference, Alibaba COO Zhang Yong called for more cooperation between government departments to facilitate cross-border e-commerce.

As well as government support, Gurr and Ding said retailers also need to overcome language and cultural barriers.

"Many domestic online retailers cannot speak fluent English and have difficulty adapting their marketing and product design," said Ding.

Sometimes, their products are even copycat versions of foreign brands, which hinders the establishment of their own brands and even runs the risk of intellectual property infringement, he noted.