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Economic Watch: Chinese e-commerce firms break ground in international trade

Xinhua, April 11, 2017 Adjust font size:

Jon Arregui, a salesman in Spain, was thinking about buying a smart phone as a gift for his mother. Rather than going to a local electronics store, he went to AliExpress.com, an e-commerce site owned by China's Alibaba Group.

Holding the new Lenovo phone in his hand days after the order, Arregui was impressed by how fast Chinese goods are delivered to the overseas market.

More than 100 million overseas buyers like Arregui are now using AliExpress as a platform to buy Chinese goods, Alibaba announced on Monday. From electronics to wedding dresses, global customers are getting a fresh taste of "made in China" online.

Data show that, on average, more than 20 million overseas buyers purchased goods on AliExpress each day. International customers from Spain, Russia, Thailand,and Indonesia were among the most active buyers.

In fact, it is not just Alibaba eyeing the foreign market through cross-border e-commerce. Alibaba's major domestic rivals JD.com and Suning Commerce Group, along with a growing number of smaller startups, are all trying to take a slice of the lucrative overseas consumer market.

According to data from the Ministry of Commerce, cross-border e-commerce in China has been growing around 30 percent year on year from 2008 to 2015 in terms of business turnover. In 2016, total turnover reached 6.3 trillion yuan (about 914 billion U.S. dollars).

The rising industry is also changing the pattern of how small businesses trade. YI Technology, a Shanghai-based startup that develops high-definition cameras and drones, sold 600,000 U.S. dollars' worth of products in a single day on November 11 last year with the help of AliExpress.

"Traditional trade in China is changing to a new pattern which allows information and resources to be shared online, thus making product information more transparent to foreign buyers," said Roy Luo, general manager of technical services and R&D for German firm TUV Rheinland's China operations.

According to Luo, cross-border e-commerce is actually cutting China's trade costs. Under the traditional trade pattern, buyers need to come to China before they make any purchase decisions. Thanks to e-commerce platforms and third-party quality check agencies, overseas buyers only need to review the products online.

By 2020, trade volume through cross-border e-commerce will account for 37.6 percent of China's total exports and imports, making it a significant part of China's foreign trade, research agency CIConsulting predicted.

Still, challenges remain for China's e-commerce platforms. One comes from logistics. According to Shen Difan, AliExpress's general manager, the current international logistics system is mainly designed for the traditional trade pattern, which needs to be improved for e-commerce trade.

Realizing the problem, Alibaba is already working on solving it. Cainiao, an Alibaba-backed logistics firm, has been working with local companies to speed up product delivery. In Spain, Cainiao has set up warehouses where Chinese goods are stored so that products could be sent out upon request. In Russia, Cainiao has been cooperating with local postal service on data exchange, which shortened the delivery time from 50 days to 15 days.

Alibaba is also tackling another challenge for cross-border e-commerce using what it's best at -- payment systems. Alibaba's online payment platform Alipay, already with 400 million global users, allows global customers to pay in 18 different currencies.

China's Belt and Road Initiative is offering even more opportunities to e-commerce platforms like AliExpress. According to reports published by iResearch and CIConsulting, total turnover through cross-border e-commerce trade will hit 12 trillion yuan (about 1.74 trillion U.S. dollars) in 2020 with the help of purchasing power from countries along the Belt and Road.

For Spanish customers like Jon Arregui, that means more high-quality Chinese goods to be delivered in a shorter time.

"Spain is already AliExpress's third-biggest market," said Alfonso Noriega Gomez, economic and commercial counsellor at the Spanish Consulate General in Shanghai. "Through the Belt and Road Initiative, Spain and China will have more close ties." Endit