Connect with new forces in international trade!

Connect with new forces in international trade!

Supporting new forms of foreign trade, policies are blowing warm air frequently. The People's Bank of China recently issued a notice on supporting cross-border RMB settlement for new forms of foreign trade, which will be implemented from July 21, 2022. Industry experts have stated that cross-border e-commerce, as the fastest-growing, most promising, and most powerful new form of foreign trade in China, has become a new driving force for foreign trade development, a new channel for transformation and upgrading, and a new lever for high-quality development. Recently, a series of policies have been intensively introduced to encourage the development of cross-border e-commerce. We look forward to further refining the relevant measures and nurturing the growth of new trade formats and industrial forces.

In 8 months, ordinary canvas bags and leather bags were sold to more than 20 countries and regions including the United States, the European Union, Japan, South Korea, Brazil, etc., earning nearly $200000 in sales - this achievement was achieved by Anqing Linwo Trading Co., Ltd., which has only been established for one year and has only two employees.

According to a recent survey by a reporter from China Securities Journal, despite the complex and volatile trade environment, cross-border e-commerce, a new trade form, is still growing tenaciously. A large number of "micro multinational enterprises" have emerged, becoming a new force in the field of international trade that cannot be ignored, and are also making contributions to stabilizing foreign trade, economy and industry.

During the interview, it was learned that in the process of developing new forms of trade and new forces, there are obstacles, difficulties, and pain points such as insufficient brand power, rising logistics costs, difficulty in returning goods, and inconvenience in cross-border settlement. Experts suggest that targeted policies should be formulated and refined to help resolve the "growing pains" of cross-border e-commerce.

Small businesses engage in cross-border transactions

Last year, there were tens of millions of registered users here, and the total service revenue exceeded 100 billion yuan. Speaking of the development of the platform, Feng Jianfeng, Chairman of Dalongwang Group, was full of joy. Dalong.com was established in March 2010 and is one of the first pilot enterprises for cross-border e-commerce in China. It is also currently the largest cross-border e-commerce industry service platform in China that focuses on helping Chinese manufacturing go global.

The majority of registered users on Dalong.com are cross-border e-commerce export enterprises, also known as "micro multinational enterprises" in the industry. According to research conducted by professional consulting firms, the profile of this group is roughly as follows: typical small and micro enterprises, many of which are start-up companies; Even with only one or two people, they can manage their business in an average of three or more overseas markets; By making good use of digital platforms, one can quickly complete complex businesses such as product selection, procurement, sales, logistics, customs clearance, payment collection, foreign exchange settlement, and tax refund that only large enterprises could handle in the past.

Anqing Linwo Trading Co., Ltd. in Anhui Province is such an enterprise. Established in June 2021, just over a year ago, the company mainly engages in the export of luggage, electronic products, and home goods. Including myself, there are two employees, "said Zhu Huaqing, the head of the company, to a reporter from China Securities Journal. In October last year, by joining Amazon and AliExpress platforms, the company sold its products to more than 20 countries and regions including the United States, the European Union, Japan, South Korea, Russia, and Brazil. Within eight months, the sales revenue approached $200000.

New Newton International Trade (Tianjin) Co., Ltd. is a company specializing in the export of logistics handling equipment. In 2020, New Newton accelerated the development of overseas markets through Alibaba International Station, and within two years, sold "Made in China" to more than 70 countries and regions including Canada, Mexico, Chile, Poland, Italy, etc. The general manager of the company, Qiu Yibo, said, "In the past two years, the company's overseas new customers have grown at a rate of 10% to 15% per year, and the annual sales have exceeded 50 million yuan, which is more than 20 times larger than the previous annual sales of around 2 million yuan

In recent years, cross-border e-commerce companies such as Linwo Trading and New Newton have emerged like mushrooms after rain, becoming a new force in the rise of the foreign trade industry. According to data from the Ministry of Commerce, as of the end of the first quarter of this year, over 46000 enterprises have registered on the online comprehensive service platform of the cross-border e-commerce pilot zone.

With more small and medium-sized new players joining, the cross-border e-commerce market is shifting from mainly involving large enterprises to a diverse pattern of large, medium, and small enterprises. With the help of modern sales, logistics, and payment systems, a large number of small and micro entities that used to be "unable to do, unable to afford, and unable to do" foreign trade have not only been able to do it, but have also gradually grown into "micro multinational enterprises", playing an important role as participants and promoters of cross-border e-commerce, a new type of trade.

In the past, the model of a single small and micro enterprise doing multi country export business was unimaginable, "said Zhang Jianping, Deputy Director of the Academic Committee of the International Trade and Economic Cooperation Research Institute of the Ministry of Commerce. Cross border e-commerce platforms can connect various links such as procurement, sales, and logistics, providing a very good development platform for small and micro enterprises and entrepreneurs to expand overseas markets and create unprecedented new development opportunities. Some small and medium-sized enterprises and entrepreneurs seize the opportunity to become new players in the field of cross-border e-commerce.

The new business model is highly favored by policies

The granary needs fertile soil for cultivation. The new business model of cross-border e-commerce, as well as the rapid growth of a group of new players, cannot be separated from the support of policies.

The reporter learned that since 2015, China has successively established 132 cross-border e-commerce pilot zones in six batches, covering 30 provinces (regions, cities) across the country, gradually forming a development pattern of linkage between land and sea, and mutual assistance between the east and the west.

In July 2021, the General Office of the State Council issued the "Opinions on Accelerating the Development of New Forms and Models of Foreign Trade", which clearly proposed to solidly promote the construction of cross-border e-commerce comprehensive pilot zones. In February 2022, the State Council issued the "Reply on Agreeing to Establish Cross border E-commerce Comprehensive Pilot Zones in 27 Cities and Regions including Ordos", marking the continuous expansion of the scale of pilot fields for cross-border e-commerce. In May, the General Office of the State Council issued the "Opinions on Promoting the Stability and Quality Improvement of Foreign Trade", further proposing to accelerate the development, quality and efficiency improvement of cross-border e-commerce.

In recent years, facing a complex and ever-changing trade environment, cross-border e-commerce has grown against the trend and has increasingly become an important force in stabilizing foreign trade and promoting high-quality development of foreign trade. Cross border e-commerce has made significant contributions to the high-quality development of foreign trade and played a new engine for foreign trade growth, "said Zeng Jinhui, Director of the E-commerce Department of the Shenzhen Municipal Bureau of Commerce. Since the outbreak of the epidemic in 2020, the global online consumer market has continued to grow, and cross-border e-commerce has taken advantage of the situation to develop and significantly expand its scale.

According to data from the Ministry of Commerce, the import and export volume of cross-border e-commerce in China reached 1.92 trillion yuan in 2021, a year-on-year increase of 18.6%. Among them, exports amounted to 1.39 trillion yuan, a year-on-year increase of 28.3%. In the first quarter of 2022, China's cross-border e-commerce import and export volume was 434.5 billion yuan, and the proportion of cross-border e-commerce exports in foreign trade exports has increased from less than 1% in 2015 to 4.6% at the end of the first quarter of 2022.

From a market perspective, China's exports to traditional markets such as the United States and Australia continue to maintain high-speed growth. According to data under the customs supervision code, China's exports to the United States and Australia increased by 97.9% and 1.4 times respectively in the first quarter of 2022. At the same time, emerging markets developed rapidly, and cross-border e-commerce exports to ASEAN and countries along the the Belt and Road increased by 98.5% and 92.7% respectively.

From the perspective of commodities, the types of exported goods are becoming more diverse, gradually upgrading from labor-intensive products such as clothing and accessories to technology intensive products such as 3C digital and smart homes, with a significant increase in product added value. According to statistics from the Ministry of Commerce, cross-border e-commerce exports such as semiconductors and integrated circuits increased by 95.4% and 1.8 times respectively in the first quarter of this year.

Cross border e-commerce has expanded the development space of foreign trade, opened up markets that cannot be reached under general trade forms, and formed new growth points for foreign trade. Through policy innovation, some goods that are difficult to 'go global' can be conveniently and efficiently exported abroad, "said Zhang Guanbin, Deputy Director of the Foreign Trade Department of the Ministry of Commerce recently.

Encountering the 'growing pains'

Cross border e-commerce is now widely popular among consumers in various countries and is in a window of innovative development. However, it should also be noted that with the changes in the epidemic prevention and control situation in various countries, the factors driving the rapid growth of new formats such as cross-border e-commerce are also changing. "Recently, Li Xingqian, Director of the Foreign Trade Department of the Ministry of Commerce, pointed out.

The low brand value has become a recognized prominent weakness in the industry. A recent report released by EO Think Tank shows that many cross-border e-commerce enterprises in China have begun to take shape due to the continuous policy support and improvement of digitalization level. However, low brand value and profit pressure are becoming obstacles to the further development of some enterprises. The report states that Chinese cross-border e-commerce brands often focus more on product level effect marketing, while neglecting "meaningful" spiritual level marketing, such as environmental protection and health concepts, making it difficult to establish emotional connections with overseas consumers.

How to establish the core competitiveness of products and brands is a problem that platforms are particularly concerned about, "Feng Jianfeng said." We have found that there are many good specialty products in some places, such as Kaizhou potatoes, which have excellent quality. However, when companies sell to the market, they often focus on price issues rather than how good potatoes are. We are considering starting from quality standards to help guide companies tell the story of products and brands well, and using financial empowerment methods in the backend to help local industries establish barriers, that is, the core competitiveness of products and brands. In this way, even if the market environment changes in the future, these specialty products can rely on the brand influence they have established to achieve sustainable development

Supply chain pressure and rising logistics costs are also "pain points" faced by many enterprises. The COVID-19 is spreading all over the world, affecting both sea, land and air transportation. Supply and demand are tight, and freight rates are rising. According to a report by Huachuang Securities, the freight rates for routes from Asia to North America and Europe in 2021 have increased by more than three times compared to the beginning of the year, and reached their peak in mid-2021. Although freight rates have declined since the end of 2021, the Baltic Dry Index remains high.

The combination of maritime pressure and repeated tariffs has led to a 'double kill' for China's cross-border e-commerce, "said Qin Yichao, a home appliance industry analyst at Huachuang Securities.

As buying and selling become more extensive and larger, the problem of "difficulty in returning goods" has caused many cross-border e-commerce export enterprises to face difficulties. Due to the inconvenience and high cost of returns, some companies have to resort to discount promotions or even "refund without return" methods to handle returned goods. During the interview, multiple companies expressed their demand for the prompt introduction of cross-border e-commerce export return and exchange policies.

In addition, cross-border settlement is also an unavoidable topic for the development of cross-border e-commerce enterprises. Yu Weiqing, Deputy General Manager of Qiuyuan International Group (Khorgos) Co., Ltd., told China Securities News that due to different cross-border settlement methods and currencies in different countries, the cross-border settlement, purchase and settlement of foreign exchange on the platform have not yet been facilitated. We hope to improve the layout of global e-commerce infrastructure such as payment and data, and introduce policies to facilitate cross-border settlement related industrial and supply chains.

Make efforts to solve the problem of "difficulty in blocking pain"

The Ministry of Commerce recently clarified that it will focus on industry pain points and address common issues in the development of cross-border e-commerce.

Regarding the issue of "difficult returns", Li Xingqian stated that the Ministry of Commerce will start with improving support policies and quickly introduce policy measures to facilitate cross-border e-commerce export returns and exchanges.

Regarding the issue of improving brand competitiveness, Zhang Guanbin stated that the Ministry of Commerce will continue to carry out special actions such as cross-border e-commerce "Ten Million, Ten Thousand", rule and standard construction, brand cultivation, and high-quality development of overseas warehouses this year, focusing on cultivating and building a group of enterprises, brands, and standards.

Regarding the issues of supply chain and logistics transportation, experts have stated that overseas warehouses, as a new type of foreign trade infrastructure, are increasingly becoming a service complex that integrates warehousing, logistics, customs clearance, returns and exchanges, processing and maintenance, packaging, distribution, finance and insurance. It is suggested to accelerate the layout of overseas warehouses, improve the global service network, make up for the shortcomings of cross-border logistics such as cargo aviation, and strengthen the ability to respond quickly and provide emergency support.

According to data from the Ministry of Commerce, China's overseas warehouse area has exceeded 16 million square meters, with 90% of it distributed in the North American, European, and Asian markets.

Accelerating the layout of overseas warehouses, on the one hand, can leverage its own advantages, actively expand after-sales maintenance services, and improve the after-sales support capabilities of exported products. For example, Beijing Cyberport E-commerce Co., Ltd. achieves secondary sales of some products by providing after-sales maintenance services, reducing the losses caused to sellers due to returns. According to statistics, the proportion of secondary sellable products after repair reaches 72%. Among them, 44% can be sold as brand new products, and 28% can be sold as unboxed products. The comprehensive after-sales guarantee measures not only improve the online shopping experience of overseas consumers, but also establish a good brand image for Chinese enterprises and products, "said Liang Ming, director of the Institute of Foreign Trade at the Research Institute of the Ministry of Commerce.

On the other hand, by stocking up goods in advance to overseas warehouses, enterprises can effectively avoid sudden risks such as transportation interruptions, significantly shorten logistics distribution cycles, and reduce logistics costs.

In response to the issue of cross-border settlement, the Ministry of Commerce and other departments jointly released the "14th Five Year Plan for the Development of E-commerce" in October last year, which proposed to support the use of RMB settlement for new trade formats such as cross-border e-commerce. The People's Bank of China recently issued a notice on supporting cross-border RMB settlement in new foreign trade formats, proposing to improve policies related to cross-border RMB business in new foreign trade formats such as cross-border e-commerce; Expand the scope of cross-border business processing for payment institutions from goods trade and service trade to current account, etc. The People's Bank of China stated that it will provide good supporting financial services for market entities in new forms of foreign trade, support and guide the healthy and sustainable innovation and development of new forms and models of foreign trade, and help stabilize the macroeconomic situation.

E-commerce platforms are an important support for promoting the development of cross-border e-commerce, an efficient and convenient way for traditional manufacturing enterprises to achieve brand internationalization, and an important support for small and medium-sized enterprises to open up international markets. Lv Gang, Deputy Minister of the Foreign Economic Research Department of the Development Research Center of the State Council, suggested that efforts should be made to enhance the capabilities and levels of China's cross-border e-commerce platform enterprises, and to address the prominent problems they face in their development in a targeted manner. For example, scientifically defining the platform's regulatory responsibilities towards merchants, achieving data sharing between the platform and regulatory authorities in areas such as customer creditworthiness, customs declaration, export tax rebates, and foreign exchange settlement, and better encouraging cross-border e-commerce platform enterprises to participate in international competition.