Report: Development and Prospects of Cross-border E-commerce

| By The Policy Research Center of eWTP, Alibaba Group


As a new format and model for the development of China's foreign trade, China's cross-border e-commerce still maintains a rapid development trend, with increasing resilience and vitality, and has achieved outstanding results in brand cultivation, strategic global expansion, supply chain optimization, business model innovation, and compliance construction. According to data from the General Administration of Customs of China, China's cross-border e-commerce imports and exports will be 2.11 trillion yuan in 2022, an increase of 9.8%. Among them, exports were 1.55 trillion yuan, an increase of 11.7%, and imports were 0.56 trillion yuan, an increase of 4.9%.

1. Characteristics of China's cross-border e-commerce development in 2022

1.1 Cross-border e-commerce exports accelerate "brands going abroad". Brand strategy has become an important condition for the development of major cross-border e-commerce platforms and helping Chinese SMEs enhance their competitiveness.

In the B2C field, domestic cross-border e-commerce platforms rely on their own advantages to assist enterprises in building brands. For example, in 2021, AliExpress launched the "G100 Overseas Plan", which aims to help Chinese enterprises and Chinese brands give full play to their supply chain advantages, establish brand mentality in overseas markets, and allowing for the expansion to new markets and new users. In 2022, AliExpress will continue to launch "Domestic Products Going Overseas", which is a new track for brand merchants to help China's high-quality products go global and create a strong brand image among consumers.

In the B2B field, under the new situation of global trade, the demand for overseas procurement has undergone new changes, and brand incubation has become the focus of B2B cross-border e-commerce development. For example, in 2021, Alibaba International released the Digital Overseas 4.0 Plan, aiming to incubate start-up brands and advantageous brands, and open up the road for brands to go global. At the end of 2022, Alibaba International released the methodology for Chinese B2B brands going overseas for the first time, which will integrate the resources of the whole site, focus on supporting a number of competitive and high-quality products, and tailor a complete set of brand internationalization strategies. It is planned to incubate 100 Class B cross-border benchmark brands in the coming year.

1.2 Cross-border e-commerce imports continue to optimize the global supply chain.

With the rapid penetration of online shopping, China's cross-border e-commerce imports have accelerated the optimization of the global supply chain to further meet residents' yearning for a better life. First, through the big stage built by the China Import Expo, cross-border e-commerce platform, Tmall Global, has built a "fast lane" for global brands and small and medium-sized enterprises to enter the Chinese market. Through actively introducing new global brands and enriching cross-border e-commerce with more imported goods, the growing demand of Chinese consumers for high-quality foreign products is being catered to. As a result, the number of overseas brands on Tmall participating in the Double 11 sales event has grown rapidly. From November 1 to 3, 2022, the sales of 750 overseas brands on Tmall Global increased by more than 100% year-on-year. Second, eWTP cooperates with global eHub countries to introduce more high-quality overseas goods to Chinese consumers. For example, Malaysia's Musang King durian has been exported to China, under the eWTP framework, and through bilateral cooperation between the Chinese and Malaysian governments.

1.3 The process of cross-border e-commerce compliance has been accelerated.

Under the combined effect of the standard system and platform rules, the compliance process of cross-border e-commerce in China has been accelerating. First, the Chinese government attaches great importance to the initial formation of a standardized cross-border e-commerce system. Since 2021, China has actively promoted the standardization of cross-border e-commerce, and there are currently 41 national, industry, local, group and enterprise standards in the field of cross-border e-commerce. Second, digital platform enterprises actively act to build one-stop digital compliance solutions for small and medium-sized foreign trade enterprises through digital technology. For example, the eWTP compliance platform helps cross-border exporters solve trade policy interpretation, provides HS customs code query and conversion in 175 regions around the world. The platform’s features include origin determination, intelligent tax calculation, destination country market analysis, inspection testing and certification, standardization with technology institutions and integration of third-party services, etc., to help small and medium-sized enterprises reduce compliance costs and guide small and medium-sized enterprises to go overseas through cross-border e-commerce compliance.

1.4 The new model of cross-border e-commerce is developing rapidly.

In 2022, the new model of cross-border e-commerce developed rapidly. Firstly, the usage of "live broadcast + cross-border e-commerce" continues to accelerate. In terms of exports, in August 2021, Kuaishou Internationalization Division merged Kwai Middle East, Kwai Latin America and Snack Video, which focuses on the Southeast Asian market, into a product named “Kwai”, which commenced the commercialization of overseas live streaming e-commerce. Secondly, the number of overseas independent stations are booming. According to statistics from the Ministry of Commerce, Chinese enterprises have established about 200,000 independent websites overseas, and the market share of independent stations in cross-border e-commerce continues to increase. For example, the independent station Shein has become a brand benchmark for cross-border e-commerce fast fashion. According to data released by eMarketer, in the 2021 US e-commerce APP download ranking, Shein, a cross-border e-commerce platform specializing in women's clothing, jumped from 7th in 2020 to 2nd in 2021, with 32 million downloads.

1.5 Focus on social responsibility and sustainable development.

Digital technology enterprises have a shared obligation to integrate social responsibilities into business design and promote sustainable development. According to Alibaba's 2022 ESG report, energy conservation and carbon reduction have become objectives of many small and medium-sized enterprises. Alibaba Cloud's "Energy Consumption Treasure" optimizes electricity consumption through algorithms, reducing energy emissions for the environment and saving energy by an average of 10% for enterprises, and has been used by nearly 1,700 enterprises.

2. The development trend of China's cross-border e-commerce in 2023

2.1 Towards refined digitization. In the era of big data, multi-channel refined operation will be the main theme of cross-border e-commerce development in the future. With the continuous expansion of global online consumption, cross-border e-commerce will use user behavior data to find target customer groups, analyze user journeys, locate business pain points, and deeply explore the value of user data. The marketing method will gradually change from the traditional scale to the refinement, and complete the transformation from the pursuit of scale to the pursuit of quality. In terms of channels, it will shift from single advertising to multi-channel digital delivery such as social shopping, live shopping, and VR shopping. In the future, opening up multiple channels and realizing the digitalization of the whole process will become the foothold of China's cross-border e-commerce development.

2.2 The cross-border service market has increased.

With the rapid development of digital trade, the transaction scale of cross-border e-commerce service products in China will increase. On the one hand, the deepening reform in the field of service trade has injected new impetus into the development of cross-border e-commerce service products. In 2021, the pilot project of comprehensively deepening the innovation and development of trade in services has been steadily advanced, and 110 of the 122 specific measures have been implemented, with a landing rate of more than 90%. A growing amount of policies and measures to support the high-quality development of service outsourcing and special service export bases have been introduced. Foreign investment access in the service sector continued to relax, and the business environment continued to improve. On the other hand, the rapid development of digital technology has spawned a large demand for digital services. Online services such as audiovisual, healthcare, education, and online retail have grown significantly worldwide. According to statistics from the Ministry of Commerce, China's knowledge-intensive service trade maintained double-digit growth in 2021, of which the areas with faster export growth were personal cultural and entertainment services, intellectual property royalties, and telecommunications, computers and information services, which increased by 35%, 26.9% and 22.3% respectively. At present, the international economic and trade situation is complex and ever-changing. Digital trade is still facing many uncertainties, and how to rapidly promote the development of cross-border e-commerce service products in the future still needs further exploration.

2.3 The scale of cross-border e-commerce imports continues to expand. In 2022, Chinese President Xi Jinping's speech at the opening ceremony of the 5th China International Import Expo once again emphasized that China will promote all parties in all countries to share China's large market opportunities and expand the import of high-quality goods. In 2023, with the further improvement of import policies, the adjustment and optimization of the positive list of cross-border retail imports, and the increase in consumer demand of Chinese residents, China's large market will fully release consumption dividends, and the scale of cross-border import markets will be further improved.

2.4 The cross-border e-commerce ecological chain will continue to be optimized and upgraded. The development of digital technology will bring innovation to the cross-border e-commerce industry. For example, the traceability, non-tampering, point-to-point transmission technology, and smart contract technology of blockchain will help solve the problems of cross-border logistics monitoring, cross-border payment and cross-border e-commerce product quality traceability; Big data technology and cloud computing technology will make marketing more precise and personalized, and improve the speed of supply chain operation. In 2022, digital RMB has begun to be applied to cross-border e-commerce payment scenarios. With the deep integration of digital technology and cross-border e-commerce scenarios, an intelligent and green cross-border e-commerce digital ecological chain will be formed in the future.

2.5 International cooperation in e-commerce will accelerate. The "Silk Road E-commerce" circle of friends continues to expand, promoting the expansion of bilateral cooperation, and the construction of multilateral mechanisms such as BRICS, the SCO, China-Central and Eastern Europe, and China-Central Asia has continued to advance. China has actively promoted the WTO e-commerce negotiations, formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA), and actively explored and promoted trade and investment liberalization and facilitation cooperation with Europe, Africa, Latin America and other countries. The layout of multilateral and bilateral e-commerce cooperation has been expanding, the level of cooperation has been continuously enriched, and has continuously improved.