2017 china cross-border e-commerce (export b2b)...

DHGATE.COM | TSINGHUA UNIVERSITY, NATIONAL ENGINEERING LABORATORY FOR E-COMMERCE TECHNOLOGIES

| CENTRAL UNIVERSITY OF FINANCE AND ECONOMICS, CHINA CENTER FOR INTERNET ECONOMIC RESEARCH1

2017 China Cross-Border E-Commerce

(Export B2B) Report

DHGATE.COM | TSINGHUA UNIVERSITY, NATIONAL ENGINEERING LABORATORY FOR E-COMMERCE TECHNOLOGIES

| CENTRAL UNIVERSITY OF FINANCE AND ECONOMICS, CHINA CENTER FOR INTERNET ECONOMIC RESEARCH2

Table of Content

Preface .............................................................................................................................. 1

1. 2016 China Cross-Border E-Commerce Development Index .................................... 2

(i) 2016 China Cross-Border E-Commerce Development Index ......................................... 2

(ii) 2016 China Cross-Border E-Commerce Market Analysis, By Categories .................... 4 1. Capacity Index ................................................................................................................... 4 2. Growth Index ..................................................................................................................... 6 3. Penetration Index ................................................................................................................ 8 4. Support Index ................................................................................................................... 10

2. Overall Trading Partner & Products Traded ............................................................. 12

(i) Trading Partner ............................................................................................................... 12

(ii) Product Categories ........................................................................................................ 13

3. China’s Cross-Border E-Commerce Development & Distribution Analysis 2016 16

(a) Eastern Region ............................................................................................................... 16 1. Trade Volume & Growth ................................................................................................... 16 2. Trade Partners .................................................................................................................. 16 3. Trade Product Categories ................................................................................................... 18

(b) Central Region ............................................................................................................... 19 1. Trade Volume & Growth ................................................................................................... 19 2. Trade Partners .................................................................................................................. 19 3. Trade Product Categories ................................................................................................... 20

(c) Western Region .............................................................................................................. 22 1. Trade Volume & Growth ................................................................................................... 22 2. Trade Partners .................................................................................................................. 22 3. Trade Product Categories ................................................................................................... 23

4. China Cross-Border E-Commerce Development Trends & Outlook 2016 ............ 25

(a) The “Belt and Road” National Strategy: Constructing an Online Silk Road, Leading

Enterprises to “Make A Mark Globally” ................................................................................. 25

(b) Outstanding Development Potential of the ASEAN Market ........................................ 27

(c) Support for Product Branding, Putting “Chinese Brands” on the Map ...................... 29

(d) Nurturing of Local Industry Clusters, Connecting to Global Merchants .................... 30

(e) B2B as Key Driver, E-Commerce’s Transition from Consumers to Commercial ....... 31

(f) The Dawn of the Digital Trade Era ................................................................................. 33

5. Conclusion .................................................................................................................. 34

Appendix: Calculation Methodology ............................................................................ 37

DHGATE.COM | TSINGHUA, NELECT | CUFE, CCIER 1

Preface

Since 2016, China’s cross-border digital trade has been undergoing rapid growth, with

competition in the industry further intensifying. Production, The penetration rate of e-commerce

activities concerning production, demand, and distribution continued to proliferate, while user base

continued to grow as user experience is constantly improved. The “2017 China Cross-Border E-

commerce (Export B2B) Development Report" takes into account the performance of Chinese

provincial level administrative regions in cross-border e-commerce in 2016, by examining their

respective performance in market size, growth, penetration and market support mechanisms. Apart

from highlighting the scale of the cross-border e-commerce market, this index also places an

emphasis on the weightage of each province’s performance on China’s overall cross-border e-

commerce trade, as well its contribution towards the province’s international trade. This index was

created on actual statistics from Chinese cross-border e-commerce platforms, and was calculated

using a scientific approach, resulting in an objective and true reflection of the current situation and

future developments of China’s cross-border digital trade.

The index results from the 2017 report shows that major e-commerce hub provinces (or cities)

Guangdong, Zhejiang and Beijing are the top 3 performing players in cross-border e-commerce,

while Ningxia, Qinghai, Inner Mongolia and several other provinces have undergone remarkable

growth. Lastly, Tibet, Yunnan, Xinjiang and a few other provinces still have great room for

improvement pertaining to their cross-border e-commerce activities. Moving forward, under the

strategic backdrop of the “One Belt One Road” initiative, Chinese cross-border e-commerce

businesses and players shall capitalize on policy incentives to satisfy market demands, to further

enhance on supporting infrastructure, and finally to promote the acceleration of development for

cross-border e-commerce.

Rank Province

2016 Cross-border

E-Commerce

Development Index Rank Province

2016 Cross-border

E-Commerce

Development Index

1 Guangdong 65.294 18 Hebei 5.734

2 Zhejiang 46.556 19 Gansu 5.556

3 Beijing 38.003 20 Sichuan 5.531

4 Shanghai 29.209 21 Shaanxi 5.328

5 Fujian 25.179 22 Heilongjiang 5.041

6 Ningxia 20.549 23 Liaoning 4.906

7 Jiangsu 19.435 24 Jilin 4.759

8 Shandong 16.238 25 Tianjin 4.666


9 Qinghai 15.086 26 Guizhou 4.483

10 Henan 11.350 27 Guangxi 3.929

11 Hunan 9.877 28 Hainan 3.597

12 Inner Mongolia 9.477 29 Shanxi 3.142

13 Hong Kong 9.146 30 Chongqing 2.869

14 Jiangxi 8.929 31 Tibet 2.254

15 Anhui 8.119 32 Yunnan 1.844

16 Taiwan 7.584 33 Xinjiang 0.582

17 Hubei 7.543

1. 2016 China Cross-Border E-Commerce Development Index

(i) 2016 China Cross-Border E-Commerce Development Index

In 2016, the Chinese cross-border e-commerce market has continued to grow, albeit at a more

gradual rate, cross-border e-commerce has exerted a large impact (penetration) on each province’s

economic development, resulting in the continual improvement of market support mechanisms

provided by each province for the general e-commerce market landscape. The performance index

and rank of all provinces’ B2B cross-border e-commerce trade is presented in the following table 1.

Table 1: China Provincial Level Administrative Regions Cross-Border E-commerce Index 2016

Rank Province

Capacity

Index

Growth

Index

Penetration

Index

Support

Index

Cross-Border

Index

Rank in

2015

Change

in Rank

1 Guangdong 100.000 14.075 38.813 73.582 65.294 1 -

2 Zhejiang 60.276 16.397 39.538 56.293 46.556 2 -

3 Beijing 10.496 15.199 100.000 53.822 38.003 5 ↑ 2

4 Shanghai 26.432 14.477 33.372 45.331 29.209 4 -

5 Fujian 19.926 10.044 56.248 19.753 25.179 3 ↓ 2

6 Ningxia 0.008 100.000 0.039 2.689 20.549 33 ↑27

7 Jiangsu 22.971 7.274 12.863 31.096 19.435 6 ↓ 1

8 Shandong 8.075 32.914 16.285 15.844 16.238 13 ↑ 5

9 Qinghai 0.174 54.064 18.328 2.689 15.086 27 ↑18

10 Henan 5.364 13.353 24.077 8.593 11.350 7 ↓ 3

11 Hunan 2.183 12.232 26.020 6.769 9.877 9 ↓ 2

12 Inner Mongolia 0.349 33.834 6.908 5.942 9.477 31 ↑19

13 Hong Kong 0.808 16.514 17.600 10.000 9.146 32 ↑19

14 Jiangxi 2.550 12.794 20.207 6.545 8.929 11 ↓ 3

15 Anhui 2.105 9.735 16.966 9.685 8.119 14 ↓ 1

16 Taiwan 0.006 10.308 17.600 10.000 7.584 24 ↑ 8

17 Hubei 1.759 7.773 13.901 12.526 7.543 12 ↓ 5

18 Hebei 1.765 4.932 8.060 12.148 5.734 10 ↓ 8

19 Gansu 0.143 13.443 10.903 3.148 5.556 28 ↑ 9

20 Sichuan 0.847 3.973 5.444 16.545 5.531 15 ↓ 5

21 Shaanxi 0.379 10.508 5.097 10.277 5.328 20 ↓ 1

22 Heilongjiang 0.210 8.686 9.108 6.990 5.041 25 ↑ 3


23 Liaoning 0.212 8.639 0.213 15.252 4.906 30 ↑ 7

24 Jilin 0.238 7.167 8.257 7.893 4.759 18 ↓ 6

25 Tianjin 0.141 12.587 0.116 10.346 4.666 26 ↑ 1

26 Guizhou 0.199 12.543 6.672 2.802 4.483 29 ↑ 3

27 Guangxi 0.637 6.203 8.209 3.958 3.929 16 ↓11

28 Hainan 0.062 10.723 1.768 5.368 3.597 19 ↓ 9

29 Shanxi 0.098 8.201 1.605 5.708 3.142 21 ↓ 8

30 Chongqing 0.362 6.650 1.395 5.574 2.869 23 ↓ 7

31 Tibet 0.022 2.513 4.632 4.081 2.254 17 ↓14

32 Yunnan 0.193 3.965 1.604 3.263 1.844 22 ↓10

33 Xinjiang 0.030 0.000 0.000 2.852 0.582 8 ↓25

The 2016 China Provincial Level Administrative Regions Cross-Border E-commerce Index

indicates that the top 5 provinces for cross-border e-commerce trade activities are Guangdong,

Zhejiang, Beijing, Shanghai and Fujian. Notably, as the best-performing province in cross-border e-

commerce, Guangdong has promulgated new strategies consistently, made improvements on

regulatory measures to enhance the monitoring of cross-border e-commerce activities, and promoted

the Guangdong Free-Trade Zone cross-border e-commerce regulatory standard, to further propel the

development of cross-border e-commerce. In addition, Guangdong province’s focus and fostering of

the “Internet+” strategy in recent years, which aims to improve the industry and ecosystem

continually, have reaped substantial benefits on promoting cross-border e-commerce’s impacts on

the overall national economy.

Looking at the change in rankings, various provinces have performed exceptionally and risen

through the ranks in 2016: Ningxia (up 27 spots), Inner Mongolia (up 19 spots), Special

Administrative Region Hong Kong (up 19 spots), and Qinghai (up 18 spots). These four provinces

are relatively new to cross-border e-commerce, but have undergone more rapid growth, and have

strong potential for further development.


(ii) 2016 China Cross-Border E-Commerce Market Analysis, By

Categories

1. Capacity Index

The capacity index reflects the cross-border e-commerce export capacity in the respective

provinces. They are primarily calculated based on each province’s total volume of export B2B

transactions and their respective Gross Merchandise Volume (GMV). The evaluation results with

regards to the capacity index are presented in Table 2 below.

Table 2: China Provincial Level Administrative Regions Cross-Border E-Commerce

Capacity Index & Ranking 2016

Rank Province Capacity 2016 Rank in 2015 Change in Rank

1 Guangdong 100.000 1 -

2 Zhejiang 60.276 2 -

3 Shanghai 26.432 3 -

4 Jiangsu 22.971 4 -

5 Fujian 19.926 5 -

6 Beijing 10.496 6 -

7 Shandong 8.075 7 -

8 Henan 5.364 8 -

9 Jiangxi 2.550 9 -

10 Hunan 2.183 12 ↑2

11 Anhui 2.105 11 -

12 Hebei 1.765 10 ↓2

13 Hubei 1.759 13 -

14 Sichuan 0.847 14 -

15 Hong Kong 0.808 16 ↑1

16 Guangxi 0.637 15 ↓1

17 Shaanxi 0.379 18 ↑1

18 Chongqing 0.362 17 ↓1

19 Inner Mongolia 0.349 24 ↑5

20 Jilin 0.238 19 ↓1

21 Liaoning 0.212 21 -

22 Heilongjiang 0.210 22 -

23 Guizhou 0.199 23 -

24 Yunnan 0.193 20 ↓4

25 Qinghai 0.174 29 ↑4

26 Gansu 0.143 26 -

27 Tianjin 0.141 25 ↓2

28 Shanxi 0.098 27 ↓1


29 Hainan 0.062 28 ↓1

30 Xinjiang 0.030 30 -

31 Tibet 0.022 31 -

32 Ningxia 0.008 33 ↑1

33 Taiwan 0.006 32 ↓1

Some notable highlights of the capacity index:

1. Guangdong, Zhejiang, Shanghai, Jiangsu, and Fujian provinces took the first five spots on the

ranking. These provinces that are ranked higher on the index are all located along coastal areas,

and have entered into e-commerce activities relatively earlier, hence their experience and first-

mover advantage in cross-border e-commerce is substantial, while their unique traits and

strengths are apparent. The turnover in the provinces of Guangdong and Zhejiang accounted for

60% of the total turnover nationally. In terms of market size, those ranking lowest on the index

are mainly provinces in the Northwestern region. The gap between the best-performing and

weakest-performing provinces on the ranking is huge, with market size disparity between them

reaching a thousand times or more. The considerable gap can be attributed to factors such as

information technology, social awareness, standard of living, infrastructure, government

policies and so on. There is vast room for growth and improvement for these weaker players;

2. Over 50% of provinces did not undergo any change in ranks on the 2015-2016 capacity index.

Inner Mongolia recorded the largest move upward on the chart through the implementation of

effective measures such as establishing its own cross-border e-commerce platform, bringing in

e-commerce enterprises, organizing delegations to Zhejiang and other more developed

provinces to learn from their experiences in promoting a more conducive cross-border e-

commerce environment. The policy system of Inner Mongolia continues to improve, allowing

the overall e-commerce ecosystem to progress as well; this brings great opportunities and

prospects for the development of cross-border e-commerce businesses in the province.


2. Growth Index

The growth index measures and reflects the provinces’ prospects and potential, focusing on and

calculated with the growth rate of the volume of export orders and overall turnover. The growth index

evaluation results are presented in Table 3 below.


Growth Index & Ranking, 2016

Rank Province Growth Index 2016 Rank in 2015 Change in Rank

1 Ningxia 100.000 32 ↑31

2 Qinghai 54.064 33 ↑31

3 Inner Mongolia 33.834 31 ↑28

4 Shandong 32.914 23 ↑19

5 Hong Kong 16.514 30 ↑25

6 Zhejiang 16.397 28 ↑22

7 Beijing 15.199 26 ↑19

8 Shanghai 14.477 29 ↑21

9 Guangdong 14.075 24 ↑15

10 Gansu 13.443 21 ↑11

11 Henan 13.353 16 ↑ 5

12 Jiangxi 12.794 8 ↓ 4

13 Tianjin 12.587 14 ↑ 1

14 Guizhou 12.543 27 ↑13

15 Hunan 12.232 9 ↓ 6

16 Hainan 10.723 5 ↓11

17 Shaanxi 10.508 25 ↑ 8

18 Taiwan 10.308 11 ↓ 7

19 Fujian 10.044 18 ↓ 1

20 Anhui 9.735 19 ↓ 1

21 Heilongjiang 8.686 17 ↓ 4

22 Liaoning 8.639 20 ↓ 2

23 Shanxi 8.201 13 ↓10

24 Hubei 7.773 12 ↓12

25 Jiangsu 7.274 22 ↓ 3

26 Jilin 7.167 15 ↓11

27 Chongqing 6.650 10 ↓17

28 Guangxi 6.203 4 ↓24

29 Hebei 4.932 6 ↓23

30 Sichuan 3.973 3 ↓27

31 Yunnan 3.965 7 ↓24

32 Tibet 2.513 2 ↓30

33 Xinjiang 0.000 1 ↓32

Some notable highlights of the provinces’ growth index:


1. Ningxia, Qinghai and Inner Mongolia took the top three spots on the cross-border e-commerce

growth index; they are considered newer entrants to the e-commerce market but have massive

potential for development. The three major approaches adopted by the Western regions to

promote the growth of cross-border e-commerce activities are: nurturing cross-border e-

commerce business entities, improvements on supporting infrastructure and to foster an

ecosystem conducive for cross-border e-commerce activities;

2. Nearly 50% of the provinces have undergone a change of 10 positions or more, compared to their

ranking in the previous year. Shandong moved upwards 19 spots on the growth index, benefitting

from the establishment of policy and regulatory systems that are viable to the development of

cross-border e-commerce, efforts on resolving prominent issues that hinder the growth of cross-

border e-commerce, guiding enterprises to capitalize on “internet+ foreign trade” to realize

optimized import and export activities as well as to transform and modernize their business model,

to promote a systematic approach and standardization to the development of cross-border e-

commerce, and to enable steady growth through such a systematic approach.


3. Penetration Index

The penetration index reveals the impact exerted by each province’s cross-border e-commerce

activities, as a weightage on their overall import and export trade. The assessment results are

presented in Table 4 below.


Penetration Index & Ranking, 2016

Rank Province Penetration Index 2016 Rank in 2015 Change in Rank

1 Beijing 100.000 4 ↑ 3

2 Fujian 56.248 1 ↓ 1

3 Zhejiang 39.538 3 -

4 Guangdong 38.813 2 ↓ 2

5 Shanghai 33.372 7 ↑ 2

6 Hunan 26.020 6 -

7 Henan 24.077 5 ↓ 2

8 Jiangxi 20.207 9 ↑ 1

9 Qinghai 18.328 14 ↑ 5

10 Hong Kong 17.600 29 ↑19

11 Taiwan 17.600 28 ↑17

12 Anhui 16.966 8 ↓ 4

13 Shandong 16.285 12 ↓ 1

14 Hubei 13.901 10 ↓ 4

15 Jiangsu 12.863 13 ↓ 2

16 Gansu 10.903 21 ↑ 5

17 Heilongjiang 9.108 22 ↑ 5

18 Jilin 8.257 15 ↓ 3

19 Guangxi 8.209 17 ↓ 2

20 Hebei 8.060 11 ↓ 9

21

Inner

Mongolia 6.908 19 ↓ 2

22 Guizhou 6.672 20 ↓ 2

23 Sichuan 5.444 18 ↓ 5

24 Shaanxi 5.097 16 ↓ 8

25 Tibet 4.632 27 ↑ 2

26 Hainan 1.768 25 ↓ 1

27 Shanxi 1.605 23 ↓ 4

28 Yunnan 1.604 26 ↓ 2

29 Chongqing 1.395 24 ↓ 5

30 Liaoning 0.213 31 ↑ 1

31 Tianjin 0.116 30 ↓ 1

32 Ningxia 0.039 33 ↑ 1

33 Xinjiang 0.000 32 ↓ 1

Some notable highlights of the provinces’ penetration index:


1. The provinces that ranked higher on the penetration index are essentially the same provinces that

are placed higher on the capacity index. This signifies that the cross-border e-commerce activities

in these provinces have a larger impact on their overall trade. Cross-border e-commerce already

plays an important role in China’s export and import trade, and other provinces can draw on the

experiences of these successful players, to continuously improve the overall penetration rate of

cross-border e-commerce on the domestic economy;

2. Although Beijing is ranked at the sixth place on the capacity index this year, its ranking on the

penetration index has improved, moving upwards to the number one position. The penetration

index of Hong Kong and Taiwan has also advanced significantly. The improvements to

penetration rate can be largely attributed to local government policy support as well as the

optimization of the industry value chain;

3. The provinces that fared poorer on the penetration index are mainly landlocked inland provinces

such as Xinjiang and Ningxia, implying that cross-border e-commerce activities are affected by

economic development, and a degree of economic openness to a certain extent.


4. Support Index

The support index examines environmental factors to reflect the provinces’ overall market

landscape and mechanisms that support the development of digital trade, through assessing indicators

such as infrastructure, logistics framework, and human resources. The assessment results are

presented in Table 5 below.


Support Index & Ranking, 2016

Rank Province Support Index 2016 Rank in 2015 Change in Rank

1 Guangdong 73.582 1 -

2 Zhejiang 56.293 4 ↑ 2

3 Beijing 53.822 2 ↓ 1

4 Shanghai 45.331 3 ↓ 1

5 Jiangsu 31.096 5 -

6 Fujian 19.753 6 -

7 Sichuan 16.545 8 ↑ 1

8 Shandong 15.844 7 ↓ 1

9 Liaoning 15.252 15 ↑ 6

10 Hubei 12.526 12 ↑ 2

11 Hebei 12.148 13 ↑ 2

12 Tianjin 10.346 11 ↓ 1

13 Shaanxi 10.277 14 ↑ 1

14 Hong Kong 10.000 10 ↓ 4

15 Taiwan 10.000 9 ↓ 6

16 Anhui 9.685 21 ↑ 5

17 Henan 8.593 23 ↑ 6

18 Jilin 7.893 16 ↓ 2

19 Heilongjiang 6.990 19 -

20 Hunan 6.769 26 ↑ 6

21 Jiangxi 6.545 24 ↑ 3

22 Inner Mongolia 5.942 20 ↓ 2

23 Shanxi 5.708 18 ↓ 5

24 Chongqing 5.574 22 ↓ 2

25 Hainan 5.368 17 ↓ 8

26 Tibet 4.081 27 ↑ 1

27 Guangxi 3.958 30 ↑ 3

28 Yunnan 3.263 32 ↑ 4

29 Gansu 3.148 31 ↑ 2

30 Xinjiang 2.852 25 ↓ 5

31 Guizhou 2.802 33 ↑ 2

32 Qinghai 2.689 28 ↓ 4

33 Ningxia 2.689 29 ↓ 4


Some notable highlights of the provinces’ e-commerce support index:

1. The seven provinces Guangdong, Zhejiang, Beijing, Shanghai, Jiangsu, Shandong and Fujian all

have a viable environment for the development of growth of digital trade, with internet

penetration rate, capital flows and logistical networks presently in leading positions nationally.

2. Provinces in Western China fared relatively poorer on the support index. These provinces require

more support mechanisms in the forms of policymaking, financing and funding, for the

establishment of infrastructure, logistics network, and human resources.

3. Liaoning, Henan and Hunan climbed 6 positions upwards on the support index, and their progress

can be attributed to various factors. Liaoning had established a cross-border e-commerce public

service platform, focused on developing business logistics services and the overall e-commerce

sector, and accelerated on the establishment of the Liaoning cross-border e-commerce

demonstration area, to facilitate the rapid growth of its support environment. Henan has been

endorsed recently as a Free Trade Zone, and has been successfully approved for the

comprehensive pilot program; these facilitated the robust growth of Henan’s cross-border e-

commerce environment. Lastly, Hunan has gradually nurtured the growth of a core group of e-

commerce enterprises, through the establishment of exemplary e-commerce demonstrations and

the fostering of key projects. The core group of such e-commerce enterprises have a stimulating

effect on their respective market sectors, with e-commerce platforms competing healthily and

thriving together, forming a cluster effect, further boosting the entire province in its overall e-

commerce landscape development.


2. Overall Trading Partner & Products Traded

(i) Trading Partner

In 2016, the top three major countries of export for China’s cross-border e-commerce are United

States, Russia and Spain respectively. Russia accounted for 21% of the total export trade volume, up

from 16% in 2015, its performance is essentially on par with United States. Paraguay experienced

the highest year-on-year growth rate, with trade volume increasing by over 10 times, the following

chart below features the top 10 countries recording the fastest growth in 2016.

Chart 1: Top 10 Countries in Cross-Border Export Growth, 2016

Rank

Top 10 in Cross-

Border E-

Commerce By

Volume, 2015

Top 10 in Cross-

Border E-

Commerce By

Volume, 2016 Rank

Top 10 in Cross-

Border E-

Commerce By

Growth, 2015

Top 10 in Cross-

Border E-

Commerce By

Growth, 2016

1 United States United States 1 Latvia Paraguay

2 Russia Russia 2 Chile Dominican Republic

3 Brazil Spain 3 Slovakia Morocco

4 Spain France 4 Bulgaria Netherlands

5 United Kingdom United Kingdom 5 Slovenia Argentina

6 Canada Brazil 6 Lithuania Philippines

7 France Israel 7 South Korea Pakistan

8 Israel Canada 8 Kazakhstan Sri Lanka

9 Belarus Netherlands 9 India South Africa

10 Chile Ukraine 10 Moldova Ghana

From the composite index of export by continent, featuring the top 5 countries of respective

regions, Russia has surpassed United States at the number one spot this year, while Canada and Brazil

both recorded a larger drop from 2015.


Table 6: Composite Index of Export by Continent, Top 5 Countries, 2016

Region 2015 2016 Region 2015 2016

North America Africa

United States 83.49 81.14 South Africa 27.31 37.10

Canada 51.81 39.30 Morocco 25.97 32.06

Mexico 34.44 35.59 Ghana 27.86 27.12

Costa Rica 25.37 25.70 Nigeria 22.06 23.35

Honduras 18.22 24.67 Guinea 14.27 22.98

South America Europe

Brazil 61.28 45.48 Russia 77.48 88.20

Paraguay 10.71 40.92 France 50.61 54.01

Chile 46.84 39.84 Netherlands 41.26 52.80

Argentina 20.54 38.10 Spain 62.82 49.90

Colombia 28.03 32.62 Ukraine 36.45 47.74

Oceania Asia

Australia 38.17 39.31 Israel 49.07 47.65

New Zealand 35.34 36.99 Turkey 44.17 41.38

American Samoa 26.40 32.73 Indonesia 31.22 36.94

Fiji 17.24 23.49 Saudi Arabia 35.36 36.19

French Polynesia 12.73 22.06 Lebanon 37.80 35.70

(ii) Product Categories

Along with the development of the industry and shifts in the overall trade environment, there

have been significant changes in rankings on the product categories index in 2015-2016. In 2016,

cross-border e-commerce export product trade volume and growth have been registered primarily in

over 20 major product categories such as mobile phones & accessories, fashion apparel, maternity &

baby products, health & beauty, household items, consumer electronics, as well as sports & outdoor

products.

Looking at the composite index of market size and growth, (see Table 7), product categories

with the most marked improvements in ranking are gaming products and footwear, while product

categories recording the sharpest decline are luggage, bags & accessories, and fashion accessories.

Table 7: Major Product Categories Size & Growth Ranking 2016

Rank Product Category 2015 2016 Change in Rank

1 Mobile Phones & Accessories 89.38 91.69 -


2 Fashion Apparel 79.55 91.58 ↑ 1

3 Health & Beauty 73.96 89.62 ↑ 1

4 Maternity & Baby Products 58.35 80.07 ↑ 2

5 Household & Gardening 82.47 75.72 ↓ 3

6 Consumer Electronics 63.54 72.34 ↓ 1

7 Sports & Outdoor Products 47.70 56.73 ↑ 2

8 Hair Products 50.58 54.64 ↓ 1

9 Computers & Networking 41.28 51.56 ↑ 2

10 Jewelry 50.57 44.65 ↓ 2

11 Cars, Motorcycles 37.40 43.37 ↑ 1

12 Watches 29.33 38.72 ↑ 2

13 Commercial & Industrial 35.65 36.97 -

14 Footwear & Accessories 25.24 32.53 ↑ 4

15 Toys & Gifts 28.01 27.82 -

16 Luggage, Bags & Accessories 44.17 27.55 ↓ 6

17 Gaming Products 15.62 25.10 ↑ 3

18 Lighting 28.00 23.48 ↓ 2

19 Digital Camera, Photography Equipment 22.16 21.89 -

20 Security & Surveillance 14.42 18.97 ↑ 1

21 Bridal Gowns 11.28 15.62 ↑ 2

22 Fashion Accessories 26.69 12.79 ↓ 5

23 Musical Instruments 11.55 10.90 ↓ 1

With respect to specific product line (chart 2), the top 10 product sub-categories with the best

potential for growth are virtual reality headsets, sports & action cameras, kitchen accessories,

cosmetic bags, slippers, manicure tools & supplies, wearable devices, professional sports & outdoor

shoes, hair care products and outdoor equipment. With virtual reality headsets and wearable devices

recording rapid growth for two years consecutively.

Chart 2: Top 10 Product Sub-Categories, By Growth


Rank

Top 10 Product

Categories For

Cross-Border

E-Commerce,

By Volume, 2016

Top 10 Product

Categories For

Cross-Border

E-Commerce, By

Volume, 2016

– Weightage Rank

Top 10 Product

Categories For

Cross-Border

E-Commerce,

By Growth, 2016

Top 10 Product

Categories For

Cross-Border

E-Commerce, 2016 -

YOY Growth

1

Mobile Phones &

Accessories 10.1% 1 Computing Gaming 114.7%

2 Hair Products 9.3% 2 Health & Beauty 110.8%

3 Fashion Apparel 8.9% 3

Maternity & Baby

Products 75.9%

4 Health & Beauty 8.2% 4 Watches 73.6%

5 Maternity & Baby 7.7% 5

Digital Camera,

Photography

Equipment 52.0%

6

Consumer

Electronics 6.6% 6 Cars, Motorcycles 41.8%

7

Household &

Gardening 6.2% 7 Musical Instruments 39.3%

8 Watches 5.6% 8

Security &

Surveillance 37.5%

9 Jewelry 5.4% 9

Household &

Gardening 36.4%

10 Sports & Outdoor 4.9% 10

Mobile Phones &

Accessories 32.7%


3. China’s Cross-Border E-Commerce

Development & Distribution Analysis 2016

This section is an analysis on the development of China’s e-commerce (export B2B) sector through

three dimensions: regional development, product classifications, and trade partnerships.

(a) Eastern Region

1. Trade Volume & Growth

The Eastern region consists of 11 provincial level administrative areas including Beijing,

Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong and Hainan.

The Eastern region accounted for 93% of the total cross-border e-commerce export trade volume,

with a growth rate of 28%, outperforming both the Central and Western regions considerably. With

respect to trade volume, the top 5 ranking provinces – Guangdong, Zhejiang, Shanghai, Fujian and

Jiangsu remain unchanged. In terms of growth, the export trade volume of Tianjin surged by 208%,

making it the fastest developing province.

Chart 3: China Cross-Border E-Commerce (Export B2B) Regional Distribution: Size

2. Trade Partners

Statistics by country and region from respective provinces pertaining to their export trade


activities also reveals traits unique to each province. For instance, Guangdong, the leader of cross-

border e-commerce, exports primarily to two major trade partners, the United States and United

Kingdom, while their export trade volume with Slovenia and Turkey has experienced the most rapid

growth. On the other hand, Zhejiang’s trade volume with Philippines and Poland has experienced the

greatest growth.

Table 8: Eastern Region Export Composite Index, By Continent & By Country, 2016

2015 2016

North America

United States 84.78 83.84

Canada 70.81 65.65

Mexico 49.98 42.98

The Dominican Republic 27.74 30.49

Puerto Rico 30.48 28.19

South America

Paraguay 18.01 64.33

Brazil 36.32 47.48

Colombia 33.51 43.82

Argentina 21.73 37.62

Peru 28.27 37.27

Oceania

Australia 60.66 60.18

American Samoa 28.74 55.12

New Zealand 35.76 34.54

Wallis and Futuna 9.90 24.07

Independent State of Samoa 9.96 23.33

Africa

Egypt 24.34 39.85

Ghana 33.23 39.25

Nigeria 40.75 36.26

South Africa 43.58 33.07

Botswana 30.92 29.20

Europe

Russia 71.52 72.20

United Kingdom 70.69 67.40

Belgium 29.33 55.83

France 48.49 55.43

Spain 43.50 54.21

Asia

Republic of the Philippines 33.56 47.73

India 64.34 44.77

Saudi Arabia 38.51 42.35

Turkey 20.18 41.25

Israel 27.82 40.59


From the composite index exhibiting the region’s top 5 export trade partner countries from each

continent, United States is still the country accounting for the largest trade volume this year, with

Russia trailing closely behind in the second spot, narrowing the gap with the United States gradually.

3. Trade Product Categories

From the index of the Eastern region (table 9), the product categories undergoing the biggest

change in positions this year are footwear & accessories, bridal gowns, watches, and jewelry.

Table 9: Eastern Region Major Trade Product Categories, By Volume & Growth, 2016


1 Mobile Phones & Accessories 91.72 92.36 -


3 Health & Beauty 88.25 66.82 ↓ 1

4 Maternity & Baby Products 65.15 65.28 ↓ 1

5 Consumer Electronics 41.03 62.73 ↑ 3

6 Sports & Outdoor Products 59.31 60.12 ↓ 2

7 Household & Gardening 41.08 44.15 -

8 Hair Products 42.11 31.19 ↓ 2


10 Bridal Gowns 21.18 26.52 ↑ 8


12 Commercial & Industrial 33.55 23.12 ↓ 2

13 Fashion Accessories 26.94 22.86 ↑ 1

14 Watches 15.05 22.54 ↑ 8


16 Automobile, Motorcycles 21.04 21.06 ↑ 3

17 Digital Camera, Photography Equipment 29.71 19.57 ↓ 6

18 Jewelry 35.74 18.42 ↓ 9

19 Toys & Gifts 27.59 17.93 ↓ 6

20 Lighting 24.20 17.86 ↓ 5


22 Musical Instruments 11.06 13.38 ↑ 1

23 Security & Surveillance 16.09 13.31 ↓ 2

With respect to specific products, the product sub-categories with the most robust growth in

2016 (Chart 4) for the Eastern region are fairly consistent with the overall national findings on

product growth. In addition, underwear and LED light-up toys are also performing well.


Chart 4: Top 10 Product Sub-Categories, By Growth, Eastern Region

(b) Central Region


The Central region is made up of 8 provincial level administrative regions in total, comprising

of Shanxi, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei, and Hunan. The Central region

accounted for 5% of the total cross-border e-commerce export trade volume. With respect to growth,

Jiangxi province recorded a growth rate of 43%, while Hunan recorded a growth rate of 29%. And

in terms of trade volume, Henan and Jiangxi are the two best performing provinces in the Central

region. Henan’s trade volume weightage in the Central region remains unchanged in 2016, with India

being its fastest growing trade partner of the country that it exports to. Jiangxi’s fastest growing

export trade partners are Turkey, Poland and Israel respectively.

2. Trade Partners


continent (table 10), Russia has surpassed the United States to clinch the spot at the top of the table,

this is also due to the United States slight decline in performance compared to 2015.

Table 10: Central Region Export Composite Index, By Continent & By Country, 2016

2015 2016

North America

United States 82.48 82.07

Canada 70.22 63.28

Mexico 46.07 37.58

The Bahamas 14.57 27.76

Puerto Rico 34.78 25.03

South America

Paraguay 10.81 46.35


Brazil 36.16 42.96

Colombia 26.74 34.63

Peru 24.92 32.32

Chile 34.79 29.60

Oceania

Australia 62.02 72.93

American Samoa 23.41 46.96

New Zealand 37.42 33.45

Independent State of Samoa 9.98 20.63

Republic of Kiribati 21.10 12.86

Africa

Republic of Cape Verde 22.59 79.56

South Africa 46.08 49.89

Nigeria 37.40 29.22

Republic of Botswana 26.78 25.96

Republic of Sierra Leone 10.04 21.69

Europe

Russia 81.87 82.18

United Kingdom 74.58 66.44

Italy 42.80 50.42

Spain 39.73 49.48

Sweden 40.19 49.37

Asia

India 61.05 52.19

Saudi Arabia 33.46 48.87

Singapore 34.90 42.95

Iran 15.94 42.51

Israel 25.22 38.86


In the Central region’s trade product categories index (table 11), product categories that have

undergone relatively greater changes in position are footwear & accessories, gaming products, and

watches.

Table 11: Central Region Major Trade Product Categories, By Volume & Growth, 2016



2 Household & Gardening 89.17 82.53 ↓ 1

3 Sports & Outdoor Products 61.49 62.85 -

4 Health & Beauty 51.02 61.97 ↑ 2



7 Mobile Phones & Accessories 65.20 42.97 ↓ 3


8 Hair Products 42.21 38.42 ↓ 3


10 Watches 21.82 34.95 ↑ 11




14 Cars, Motorcycles 28.98 26.20 ↓ 3

15 Maternity & Baby Products 25.85 23.33 ↓ 3

16 Jewelry 37.22 23.23 ↓ 7


18 Musical Instruments 19.64 19.92 ↑ 4

19 Bridal Gowns 21.20 16.22 ↓ 2

20 Toys & Gifts 75.42 15.64 ↓ 1

21 Lighting 24.60 14.91 ↓ 7

22 Security & Surveillance 20.23 14.90 ↓ 2


With respect to specific products, product sub-categories that have undergone robust growth in

2016 (Chart 5) for the Central region are household slippers, computer accessories, as well as art &

craft & gift products. Out of the top ten major product categories, two of them, namely slippers and

festive & party supplies, are also in the top ten growing product sub-categories.

Chart 5: Top 10 Product Sub-Categories, By Growth, Central Region


(c) Western Region


The Western region consists of 11 provincial level administrative areas including Sichuan,

Chongqing, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Guangxi and

Inner Mongolia. The Western region accounted for 1% of the total cross-border e-commerce export

trade volume in 2016, constituting a relatively modest national market share presently. Sichuan and

Guangxi are the best performing provinces in the Western region with the highest cross-border e-

commerce trade volume, while Ningxia and Qinghai recorded the most rapid growth.

Chart 6: Western Region Cross-Border E-Commerce (Export B2B) Provinces Weightage, By Market Share

2. Trade Partners

Taking Guangxi as an example, its three major country of export are the United States, United

Kingdom and Germany, while their export trade volume with Indonesia and Germany has

experienced the most rapid growth.

In the Western region, the province that has recorded the fastest growth in the past year is

Ningxia. And with respect to primary country and region of export, export volume to Australia has

overtaken Canada, moving upwards to the number two spot, and at the same time, Australia is also

the country with the most rapid growth in the past year.

Table 12: Western Region Export Composite Index, By Continent & Top 5 Country

Region 2015 2016 Region 2015 2016

North America Africa


United States 82.09 79.15 Morocco 30.75 35.49

Canada 72.28 63.58 South Africa 46.13 33.58

Mexico 48.36 40.22 Nigeria 36.61 27.83

Dominican Republic 21.05 35.69 Ivory Coast 9.97 27.17

El Salvador 11.84 32.01 Republic of Liberia 10.02 27.06

South America Europe

Brazil 39.2 54.76 United Kingdom 73.67 67.35

Colombia 26.08 48.22 Germany 46.61 66.17

Chile 35.31 45.94 Spain 42.58 63.52

Peru 32.89 42.22 Russia 39.88 56.75

Venezuela 14.65 34.27 Norway 29.77 55.17

Oceania Asia

Australia 66.31 67.84 India 59.86 75.29

New Zealand 35.33 41.49 United Arab Emirates 51.69 49.51

American Samoa 22.4 29.56 Indonesia 32.11 45.28

Kiribati 21.6 26.33 Turkey 35.83 44.45

Papua New Guinea 13.81 19.30 Saudi Arabia 34.78 43.60


continent, European countries (with the exception of United Kingdom) have undergone the most

significant improvements on the index. Lastly, United States and India are the top two countries with

the highest index scores.


From the index of the Eastern region (table 13), the product categories undergoing the biggest

change in positions this year are bridal gowns, maternity & baby products and sports & outdoor

products. Export volume of jewelry products has been on the decline in 2016, resulting in its drop in

overall weightage.

Table 13: Western Region Major Trade Product Categories, By Volume & Growth, 2016


1 Household & Gardening 93.28 93.51 ↑ 1



4 Health & Beauty 46.22 51.65 ↑ 2

5 Sports & Outdoor Products 16.66 46.66 ↑ 18


7 Mobile Phones & Accessories 27.31 35.86 ↑ 6

8 Watches 97.69 34.64 ↓ 7

9 Bridal Gowns 20.86 30.91 ↑ 10

10 Cars, Motorcycles 32.01 30.42 ↑ 1


11 Maternity & Baby Products 19.86 28.07 ↑ 10




15 Toys & Gifts 31.07 19.88 ↓ 3


17 Jewelry 33.82 16.51 ↓ 8

18 Security & Surveillance 20.33 13.44 ↑ 2

19 Musical Instruments 24.14 12.64 ↓ 4


21 Lighting 23.00 11.34 ↓ 4

22 Hair Products 17.18 9.63 -

23 Gaming Products 23.00 9.32 ↓ 7

With respect to specific products’ growth rate in the Western region (chart 7), docks and stands

under the electronic products category, and massage products under the health & beauty product

category undergoing the most rapid growth. In addition, computer accessories, casual footwear, and

medical products are sub-categories with great potential for growth in the Western region.

Chart 7: Top 10 Product Sub-Categories, By Growth, Western Region


4. China Cross-Border E-Commerce Development

Trends & Outlook 2016

(a) The “Belt and Road” National Strategy: Constructing an Online Silk Road,

Leading Enterprises to “Make A Mark Globally”

Development Overview of Cross-Border E-Commerce Along the Belt & Road

The 18 provinces under the “Belt and Road policy initiative accounted for 78% of the total

national export B2B trade turnover, evidently they are key provinces for export trade activities. The

“Belt and Road” national strategy has developed extensively with far-reaching impacts, creating

massive opportunities and potential for enterprises to make a mark globally. It has also spurred the

growth of provinces benefiting under this policy initiative, bringing along substantial changes to the

growth index of various provinces in recent years, causing great changes to the positions on the index:

of which notably, Ningxia, Qinghai and Inner Mongolia has undergone massive development to

clinch the top 3 spots on the 2016 growth index.

Table 14: Growth in Trade Turnover, By Change in Rank, 2015-2016

Province Change in Rank Province Change in Rank

Ningxia ↑ 17 Fujian ↓ 2

Qinghai ↑ 15 Liaoning ↓ 1

Inner Mongolia ↑ 13 Guangxi ↓ 5

Gansu ↑ 7 Heilongjiang ↓ 4

Zhejiang ↑ 8 Chongqing ↓ 8

Shanghai ↑ 9 Jilin ↓ 10

Hainan ↓ 4 Yunnan ↓ 12

Shaanxi ↑ 6 Tibet ↓ 15

Guangdong ↑ 3 Xinjiang ↓ 17

Of the Chinese provinces under the “Belt and Road” policy initiative, the cross-border e-

commerce sector in the Central and Western region have the greatest potential for development. How

to best capitalize on the “Online Silk Road” strategy, and leverage on the platform’s strengths to

implement a digital trade strategy to facilitate on the transformation and modernization of local cross-

border trade activities, these are key issues that the local authorities, enterprises, and other relevant

industry players shall examine, brainstorm and strategize on together.

The “Belt and Road” Major Trade Partners Analysis

Central Asia, Russia, South Asia and South-East Asia are regions that the “Belt and Road”

policy initiative has pledged to prioritize; with the Middle Eastern and East African countries being

where the “Belt and Road” shall converge eventually, while trade cooperation with Europe,


Commonwealth of Independent States and various African countries shall be implemented in the

long-run. Of the over 60 countries involved under the “Belt and Road” initiative, 26 of them has

experienced year-on-year growth in sales by 30% and above. Looking at trade volume, Russia

continues its leading positing, with a boost in growth rate as well. And finally, looking at growth,

Bhutan, Kyrgyzstan and Qatar are the top three fastest growing trade partners. The table below

presents overview on the cross-border e-commerce (B2B) performance of countries under the “Belt

and Road” initiative.

Table 15: China’s Cross-Border E-Commerce (Export B2B),

Major Trade Partners & Growth: “One Belt One Road” Countries, 2016

Rank Market size Market growth

1 Russia Bhutan

2 Israel Kyrgyzstan

3 Ukraine Qatar

4 Poland Oman

5 Turkey Republic of the Philippines

6 Czech Republic Pakistan

7 Saudi Arabia Bangladesh

8 Belarus Sri Lanka

9 Hungary Bahrain

10 Slovakia Republic of Serbia

11 Kazakhstan Vietnam

12 India Russia

13 Latvia Nepal

14 Lithuania Jordan

15 Bulgaria Montenegro

16 Romania Turkmenistan

17 Estonia Indonesia

18 Thailand Egypt

19 Singapore Tajikistan

20 Indonesia Cambodia

With respect to specific products’ growth rate in countries under the “Belt and Road” initiative,

virtual reality headsets, kitchen products, wearable devices and health & beauty product categories

have undergone the most rapid growth (see Chart 8).


Chart 8: Top 10 Product Sub-Categories, By Growth, One Belt One Road Trade Partner Nations

(b) Outstanding Development Potential of the ASEAN Market

The ASEAN region is comprised of ten countries, including Indonesia, Malaysia, the

Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia. The Philippines

and Vietnam are the two fastest growing countries as China’s cross-border e-commerce export

partners this year. The chart below illustrates the top 5 ranking ASEAN countries with the most

significant growth in trade volume. Thailand’s growth in the past year has been sluggish, while

Malaysia’s year-on-year trade volume has declined from 2015.

Chart 9: China’s Cross-Border E-Commerce (Export B2B), Trade Partners’ Growth (ASEAN Region), 2016

Table 16: Composite Index of Cross-Border E-Commerce Export, ASEAN Nations

2015 2016

Indonesia 31.22 36.94

Singapore 24.18 29.28

Philippines 23.99 28.93

Thailand 39.36 25.26

Vietnam 22.42 22.46

Malaysia 30.96 20.62

Cambodia 22.19 19.89

Brunei 18.35 19.54

Myanmar 20.02 14.55

Laos 16.90 13.85


Chart 10: China Cross-Border E-Commerce (Export B2B)

Trade Product Categories, By Growth, ASEAN Region

From the trade product categories exported, consumer electronics (computing,

communication, and consumer) products accounted for the highest weightage of 29%, followed by

health & beauty and fashion accessories products. Fashion accessories registered the highest

growth this year, while luggage & bags, watches, and health & beauty products all recorded year-

on-year growth of over 80%.


(c) Support for Product Branding, Putting “Chinese Brands” on the Map

Since the reform and opening of China’s economy, foreign trade has been one of the three major

pillars in fostering the national economy. It has continually sustained growth higher than the growth

of China’s GDP, and is one of the major drivers in the rapid development of the Chinese economy.

Historically, Chinese foreign trade enterprises have been relying on the low cost of labor, raw

materials and resources to provide competitive pricing and competitive advantage – essentially

positioning itself as the “factory of the world.” However, as the cost of labor is rising and as resources

are gradually depleting, “Made in China” is currently on the brink of transitioning. The China

economy has a critical need to move upwards from the manufacturing industry value chain, and to

disassociate itself from the “low cost, cheap quality” label, to transition into providing value-added

products with branding. It has shifted from “exporting economical products” to “establishing

valuable Chinese brands”, and gradually eliminate products that are low in quality or counterfeits,

and reposition itself as provider of high quality, branded products to attract and retain customers, and

to sustain a high market share.

Through this process, cross-border e-commerce can certainly provide a diversity of options and

channels to promote Chinese brands to consumers globally. Through the synergy effect of platforms

established for the trading of goods and services, reducing the overdependence on the middlemen in

conventional wholesale business models, to consequently reduce on the need for large amount of

capital and liquidity for enterprises, and maximize on operational efficiencies to the greatest extent.

Current statistics on e-commerce B2B export indicates that since 2015, export weightage of Chinese

brands have been surging, and it is forecasted that the rapid development will continue in the coming

few years. To revitalize the significance behind the “Made in China” label, and to firmly establish

Chinese brands on the world map are what Chinese manufacturers and foreign trade enterprises shall

continually strive for in the coming days.


Chart 11: Sales Weightage of Branded Items in China’s Cross-Border E-Commerce, 2011-2018

(d) Nurturing of Local Industry Clusters, Connecting to Global Merchants

Each city shall anchor itself with its key industries and unique products, tapping on their local

expertise as the core driver of economic development. The key trait of local industry clusters is a

complete industry value chain, where raw materials are sourced, processed, manufactured locally,

while product marketing and logistics are also completed within the area. This generates momentum

and gives more focus for industry players to provide the market with quality products at the most

competitive pricing, right at the primary source. In the past two years, as Chinese internet industries

proliferate and as the digital economy undergoes rapid development, many industries are realizing

the shortcomings and inadequacies of traditional offline commerce business models, and have begun

developing their presence on online e-commerce platforms, utilizing cross-border e-commerce

platforms to promote their products to the vast overseas market, with a growing awareness and

emphasis on brand identity. This phenomenon brings two major benefits: firstly, to promote and

strengthen the development of local industry clusters, and secondly, to act as a catalyst for local

industries to develop and launch branded products. Export statistics from this report substantiates

this development trend and attribute.

Taking Suzhou for instance, the B2B export e-commerce trade data for 2016 indicates that bridal

gown products accounted for the highest weightage of Suzhou’s overall e-commerce exports at 68%,

followed by household products. Bridal gowns are almost synonymous with foreign trade in Suzhou

exports, with the bridal industry forming its own massive trade sector independently, catering to the

broadest segments of the market with the latest fashion trends at the most competitive pricing. From

branded bridal gowns to independent boutique designers, from exclusive tailor-made items to ready-

9%10%

12% 12%

19%

23%

30%32%

0%

5%

10%

15%

20%

25%

30%

35%

2011 2012 2013 2014 2015 2016 2017 E 2018 E


to-wear products, and in addition to bringing in renowned global brands, Suzhou has transformed the

traditional business model in the bridal industry into a value chain comprised of the trifecta of

professional standards, quality, and branding.

There are plenty of similar cases to Suzhou, with the local industry expertise bringing dynamic

growth in the area’s cross-border e-commerce. For instance, Fujian’s export e-commerce has a robust

presence in sports shoes products, accounting for 90% of its exports. Meanwhile, in Xuchang city,

which specializes in hair products, massive growth has been recorded, with trade turnover surging

by 93%, with the market share increasing from 90% to 94%. Other areas with industry clusters

include: printers and consumables in Zhuhai, stainless steel products in Chaoshan, furniture in

Foshan, luggage and bags in Guangzhou, toys in Chenghai, children’s clothing in Zhili, and so on.

These cities are focusing on establishing an entire value chain dedicated to products unique to their

locality and corresponding to their expertise.

Chart 12: Cross-Border E-Commerce Regional Product Distribution, 2016

(e) B2B as Key Driver, E-Commerce’s Transition from B2C to B2C

From export B2B statistics (chart 13), it is evident that the growth rate of large volume orders

far surpasses the growth in the quantity of overall orders. The trend of engaging in larger orders for

e-commerce, pursuing commercial clients shall become increasingly salient.


Chart 13: China Cross-Border E-Commerce B2B, Growth of Orders, 2016

How products from Chinese brands can be launched to the global market more rapidly and

consistently, how to add value for Chinese foreign trade enterprises and bridging them to more

resources, how to revitalize industries unique to a locality through clustering – these are all intricately

linked to the development and reform of cross-border e-commerce business models. They also

converge to further advance the development of the overall cross-border e-commerce sector.

Along with the impacts of supply-side reform policies nationally, and as industries transform

and modernize, there will be an increasing number of traditional enterprises embracing internet

technologies to dive deeper into the foray of digital trade activities; e-commerce is shifting from

targeting consumers to targeting industry players, and progressing from purely cross-border e-

commerce activities to conducting transactions completely via digital trade. In the future, purely e-

commerce enterprises and purely offline business entities will cease to exist, remaining foreign trade

businesses will adopt a highly-integrative online-and-offline business model. At the same time, as

transitions from B2C to B2B continues, trade transactions will be digitized and conducted online,

with service platforms catering to such functions being the development trend in the near future. In

the next 5-10 years, traditional enterprises will shift rapidly to online, while internet-based business

entities will continually make their presence felt offline. The market will no longer emphasize

whether the enterprise is online or offline, as the boundary will be blurred. Such far-reaching

integration shall permeate across all industries, with the successful adopters emerging as the business

leader in their field, along with the restructuring of the industry’s ecosystem. Under the “integration

and conducting large commercial transactions via online platform” strategy, the entire industry value


chain and periphery services along the chain shall be restructured; the shift to online platforms shall

connect with the relevant government authorities through a uniform channel, offering one-stop export

services for businesses, and offering them cost savings and increased efficiency. Using the digital

trade platform as its core, the value chain upstream and downstream shall integrate all relevant actors

from merchants, customs offices, service providers, government authorities, financial organizations,

industry clusters, buyers, overseas channels, industry associations, forming a brand new massive

digital trade ecosystem with the ability to develop to an even broader horizon.

(f) The Dawn of the Digital Trade Era

1. The Definition of Digital Trade

Digital trade is the crux of the digital economy, it is the evolution and development of cross-

border e-commerce. Digital trade is comprised of not only the trade transactions for goods through

e-commerce, it also encompasses comprehensive services pertinent to the delivery of goods, such as

marketing, payment, logistics, supply chain financing, customs clearance, goods inspection, tax

refunds, settlements of exchange, as well as all other services along the industry value chain. The

“Digital Globalization: The New Era of Global Flows” report published by McKinsey in 2016 stated

that approximately 12% of the global goods trade is conducted via e-commerce, with 50% of cross-

border services trade facilitated by digital means.

Four Key Traits of Digital Trade

Trade of both tangible goods and virtual economy; integrates online and offline

Synergy in the development of both goods and services trading platforms

Multilateral strategy and cooperation between various countries

Enhances the trading ecosystem, solves various issues of traditional trading business

models via a one-stop solution

2. The Interconnectedness of Digital Trade & the Online Silk Road

Under the Chinese “Belt and Road” policy initiative, the “online silk road” is declared as one of

the innovative strategy approach, hence by allowing the countries involved in the initiative to

leverage on the establishment of digital trade instruments, is an important step in accomplishing an

enhanced trade flow.


5. Conclusion

According to statistics from Accenture, it is forecasted that by 2020, global B2B e-

commerce will generate turnover of USD$6.7 trillion, with one-third of the figure contributed by

cross-border transactions (approximately USD$2.32 trillion). Of this figure, Chinese cross-border

B2B e-commerce activities will account for at least USD$1.24 trillion, accounting for over a half

of the global turnover. This is an impetus for the development of cross-border e-commerce in

China.

DHgate, as the first B2B cross-border e-commerce online platform in China, has been

dedicated in facilitating the growth of 1.4 million merchants on the platform since its establishment

in 2004. It aims to assist merchants in connecting with over 10 million overseas retailers from 227

countries globally, with the vision of “buy globally, sell globally”. Moving forward, DHgate shall

integrate with various cross-border e-commerce service providers globally, to empower small-and-

medium enterprises worldwide, and commence on a new chapter of digital trade together, creating

the global pioneer in the digital trade eco-system.

With regards to the development of B2B cross-border e-commerce in the future, DHgate

anticipates the three outlooks of forecasts as highlighted below:

1. Countries under the “Belt and Road initiative are primarily emerging markets, and they

shall be the key driver behind the growth of the global digital economy in the following

10 years

According to predictions from McKinsey, by 2050, the countries and regions under the

“Belt and Road” policy initiative shall account for 80% of the growth of GDP internationally,

indicating its massive potential for growth. Ministry of Commerce, International Trade and

Economic Cooperation Institute researcher Bai Ming has also elaborated, “The countries along the

One Belt and Road initiative comprises of almost half of the global population, hence there is a

vast untapped potential of ‘needs’ that are currently unfulfilled due to the constraints of current

level of economic development. But as cooperation with these countries strengthen, such ‘needs’

can be transformed into ‘demands’, which consequently acts as growth drivers and opportunities

for China’s foreign trade.”

Under the sluggish backdrop of the global economy, the turnover from the trade of goods

between China and its trade partners under the “Belt and Road” policy reached USD$ 947.8 billion

in 2016, accounting for 25.7% of the goods import and export turnover of China in the same period

of time. Service import and export with trade partners under the “Belt and Road” policy reached a


turnover of USD$ 122.2 billion, accounting for 15.2% of the services import and export turnover

of China in the same period of time, a year-on-year growth of 3.4% from 2015.

DHgate is currently the only cross-border B2B online platform with coverage of all

countries and regions under the “Belt and Road” policy initiative. According to statistics from

DHgate’s big data center, of the orders from the countries under the “Belt and Road” initiative, the

top 10 countries with the strongest purchasing powers are Poland, Russia, India, Saudi Arabia,

Israel, Czech Republic, Singapore, Ukraine, the Philippines, and Turkey. Looking at the Gross

Merchandise Volume (GMV) data from 2016, countries under the “Belt and Road” policy has

recorded a year-on-year growth of 31% from 2015, with transactions conducted via mobile devices

increasing by over 180%.

These statistics are evident that leveraging on the emerging markets of the “Belt and Road”

countries is already exhibiting massive potential for growth.

2. Cross-border e-commerce is undergoing extensive reform, moving from B2C to B2B

According to a report from Forbes, by 2020, the value of the B2B e-commerce market shall

reach up to USD$6.7 trillion, twice of the value of the B2C e-commerce market at USD$3.2 trillion.

From DHgate’s 12 years of commercial experience, it is in our view that the nature of the

transactions and the merchandise value from transactions are both transforming: overseas

customers are gradually changing from “large consumer, smaller business merchants”, and moving

towards medium-scale business buyers, while merchandise value of transactions are also growing

from a few thousand to tens of thousands in US dollar. In 2016, the largest order placed on DHgate

has exceeded USD$200,00 with over 50% of stores recording more than 4 repeat orders each

month.

This trend is compelling traditional manufacturers and professional wholesale marketplace to

adapt and undergo transition, and to further promote the integration of online and offline activities,

as well as import and export channels. Cross-border e-commerce’s shift from catering to

consumers to catering for industry players shall drive the trend of development in B2B instruments.

3. Digital trade shall drive conventional trade activities online, forming an ecosystem with

online service platforms at tits core, where service providers and merchants globally can

converge

As the vice president of the China International Electronic Commerce Center under the

Ministry of Commerce, Mr. Li Mingtao has discussed, “The next phase for cross-border e-


commerce must grow from rogue development to standardization and strategic planning. The

industry chain, service chain revolving around cross-border e-commerce actors shall gradually

expand its scope of service, to provide for conventional trade activities as well. Cross-border e-

commerce must strive for optimized imports and exports segments, which is to say that the cross-

border e-commerce of the future shall be a standardized channel, a channel that connects us to the

rest of the world.”

In the era of digital trade, as fragmentation of orders is achieved, traditional export enterprises

can receive instructions to fulfill a portion of an order placed from clients worldwide, at the lowest

customer acquisition cost possible. Redundant middlemen and other actors are removed, and the

transaction will be separated by just a click. At the same time, digital trade brings along not just

platforms for transactions, but also integration of platforms for service providers. In the future,

more services for the facilitation of foreign trade shall be integrated into online platforms, for

foreign trade enterprises to select from and to rate, it is projected that purchasing efficiency can be

improved by at least 30%.

In the past 12 years, DHgate has pioneered the business model for cross-border e-commerce.

And in the following 12 years, DHgate shall focus on bringing together and integrating service

providers globally, empowering small-and-medium enterprises worldwide, to commence on a new

era of digital trade. As the pioneer, integrator, and empowering catalyst in cross-border e-

commerce, it is DHgate’s vision in the following 12 years, to establish and foster the leading global

digital trade ecosystem.


Appendix: Calculation Methodology

The cross-border e-commerce market includes the four measures of capacity index, growth index,

penetration index, and support index. Of which, capacity index and growth index reflects the

development of the cross-border e-commerce sector in comparison to its past performance. The

capacity index focuses on the assessment of the current market conditions, the growth index evaluates

the developmental potential forecasted; the penetration index and support index reflects upon the

external factors that can influence the development of the cross-border e-commerce sector, with the

penetration index assessing the impacts exerted by the cross-border e-commerce sector on the overall

economy, while the support index evaluates the effects of the environment and whether it is

conducive to the sector. These four measures looks inwards and outwards, and is a comprehensive

appraisal of the development level of the sector, its conceptualization can be explained in the

following diagram:

Capacity Index: The capacity of the cross-border e-commerce export sector. A higher value signifies a

larger capability. This index is a reflection of the current development of the region.

Growth Index: The development and progress of the cross-border e-commerce sector. A higher value

signifies a greater potential for the region. This index is a reflection on the future of the e-commerce sector

based on forecasts.

Penetration Index: The impacts exerted by the cross-border e-commerce sector on the overall economy.

A higher value signifies that the cross-border e-commerce sector plays a more important role in the economy,

with more influence in the import and export trade.

Support Index: The external support mechanisms that benefits and supports the cross-border e-

commerce sector. A higher value signifies that the local environment is more conducive to conduct cross-

border e-commerce in.


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