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Cross-border e-commerce has established a free and open, universal and inclusive
global trade platform, on which millions upon millions consumers can buy worldwide
while small and medium-sized enterprises can sell worldwide, truly realizing global
connection and linkage. Through cross-border e-commerce big data from Alibaba’s
platforms, we see that new connections are being built between China and the world
via cross-border e-commerce.
•Rapid growth:It is expected that by 2020, China’s cross-border e-commerce
transaction size will reach 12 trillion Yuan, accounting for about 37.6% of its total
import and export, China’s cross-border e-commerce retail turnover will exceed 3.6
trillion Yuan, with an annual average increase of about 37%.
•Four major growth impetuses: technological progress,consumption upgrading,
industrial basis and credit guarantee.
•ECI index: According to Alibaba’s big data on cross-border e-commerce (concerning
B2B export, B2C export and B2C import), we have prepared the ECI index
(E-Commerce Connectivity Index between China and Major Economies), which aims
to reflect closeness of connection between China and other countries in cross-border
e-commerce. In 2015, the ECI between China and other G20 countries showed the
following ranking: the USA, Britain, Australia, France, Italy, Japan, Canada, Germany,
Korea, Russia, India, Turkey, Brazil, South Africa, Mexico, Indonesia, Argentina and
Saudi Arabia.
•eWTP: Entering 2016, Alibaba Group called on establishment of the Electronic World
Trade Platform (eWTP), so as to conform to the trend in our times, better help global
SMEs develop, promote growth of inclusive trade and data economy, and incubate
new rules for global trade in the times of Internet.
Abstract
Content
1.Overview of China’s Cross-border E-commerce Development
1.1 Concept of cross-border e-commerce
1.2 Development history of China’s cross-border e-commerce
2. China’s cross-border e-commerce market: size and growth
2.1 Growth of China’s cross-border e-commerce against trend
2.2 New growth of cross-border e-commerce retail
2.3 Four major growth impetuses: technological progress,consumption
upgrading, industrial basis and credit guarantee
3. New connections of China-global cross-border trade
3.1 Cross-border e-commerce: buying worldwide
3.2 Cross-border e-commerce: selling worldwide
4. ECI between China and countries among G20
4.1 ECI ranking
4.2 ECI grouping
5. The development of cross-border e-commerce retail policies in China
6. Outlook of the development of cross-border e-commerce in China
Appendix: Research Method
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1. Overview of China’s Cross-border E-commerce Development
1.1 Concept of cross-border e-commerce
The concept of cross-border e-commerce has both broad and narrow senses:
In a broad sense, cross-border e-commerce means cross-border import and export trade activities of transaction subjects from different customs territories by e-commerce means.
In a narrow sense, cross-border e-commerce refers in particular to cross-border e-retail, which means a new format of international trade where transaction subjects from different customs territories close deals by concluding transactions via the e-commerce platform, making cross-border payments and settlements, and delivering goods through cross-border logistics. Cross-border e-retail is a new trade pattern which comes into being when Internet develops into a certain stage.
The report contains a comprehensive analysis of China’s cross-border e-commerce development in the broad sense of cross-border e-commerce.
Fig.1 Definition of the Concept of Cross-border E-commerce
export import
C
B
cross-border e-commercein a narrow sense
cross-border e-commerceIn a broad sense
By interaction types, main modes of cross-border e-commerce can be divided into B2B, B2C, C2C and so forth, among which B2C and C2C are geared to ultimate consumers, so the two can be collectively called cross-border e-commerce retail; by operating entities, cross-border e-commerce can be divided into platform-based, self-run and combined (platform-based+ self-run) models.
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Fig.2 Classification of Main Business Models of Cross-border E-commerce in China
Business models Platform-based Self-runCross-border B2B (export) Alibaba.com, Made-in-China.com,
globalsources.com, dhgate.com
Cross-border B2B (import) 1688.com, seatent.com
Cross-border e-commerce retail
(export)
AliExpress, eBay, Amazon, Wish LightInTheBox, DX, Milanoo
Cross-border e-commerce retail
(import)
Tmall Global, global.taobao.com,
ymatou.com
kaola.com, JD Worldwide, jumei.com,
xiaohongshu.com
1.2 Development history of China’s cross-border e-commerce
China’s cross-border e-commerce development has undergone three stages:
Stage I (germination, 1997-2007): Cross-border e-commerce started in the late 20th century in China, with B2B platforms helping export of small and medium-sized enterprises being the earliest, represented by Alibaba.com, Made-in-China.com, etc. During 1997-1999, China’s foreign trade B2B e-commerce websites such as ChemNet.com.cn, Made-in-China.com and alibaba.com were established in succession, which provided small and medium-sized enterprises with commodity information presentation, transaction matchmaking and other basic services. Among these websites, Alibaba.com is the world’s largest cross-border B2B platform at present, and has gradually developed from an online B2B information service platform to a B2B cross-border online trading platform.
Stage II (development, 2008-2013): With an increase in global netizen penetration and in the level of services such as cross-border payment and logistics, around 2008, China’s cross-border e-commerce retail export (B2C/C2C) catering to overseas individual consumers began to flourish, with DX (2006), LightInTheBox (2007) and AliExpress (2009) being cross-border e-commerce B2C websites complying with the trend. The development of cross-border e-commerce retail resulted in great changes to international trade subjects, mode of trade and so on, and that a large number of small and medium-sized enterprises and network businessmen in China began to directly and deeply participate in international trade.
Stage III (outbreak, 2014 to now): in 2014, China carried out innovation in the
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Fig.3 China’s Cross-border E-commerce Development History
regulatory system for cross-border e-commerce retail import, facilitating rapid development of cross-border e-commerce retail import in China and giving birth to a multitude of cross-border e-commerce retail import platforms and enterprises, including Tmall Global, kaola.com, jumei.com, ymatou.com and xiaohongshu.com, and the whole industry ushered in explosive growth in 2015.
If cross-border e-commerce which started in the late 20th century changed only the marketing mode of the traditional international trade, then with rapid development and general installation of Internet infrastructures worldwide, the present cross-border has exerted revolutionary and substantive influence on operating mode of international trade and trade links. Small and medium-sized enterprises and individuals are deeply involved in different international trade links, and small and medium-sized enterprises directly interact and trade with global consumers, so that there are more people benefiting from globalization dividends and such benefits are more balanced and inclusive.
1999
Stage I
germination
2008 2014
Stage IIdevelopment
Stage IIIoutbreak
time
B2B platforms emerged
cross-border e-commerce retail export began to flourish
cross-border e-commerce retail import began to flourish
B2B platforms grew up B2B platforms upgraded
cross-border e-commerce retailexport grew up
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Fig.4 Exports of China to Main Economies in 2015
Source: General Administration of Customs
In 2015, though global trade showed down its growth and the growth of China’s cross-border e-commerce decreased, the growth of cross-border e-commerce was still much higher than that of import and export of trade in goods, and e-commerce penetration into China’s import and export trade continued to increase. In 2015, China’s cross-border e-commerce transaction size reached 4.8 trillion Yuan, representing a year-on-year increase of 28%. It is expected that by 2020, cross-border e-commerce market transaction size will reach 12 trillion Yuan and the compound average annual growth rate will be 20.1% from 2015 to 2020.
2. China’s cross-border e-commerce market: size and growth
In 2015, though global trade slowed down its growth, China’s cross-border e-commerce grew against trend and e-commerce penetration into import and export trade continued to increase. Cross-border e-commerce retail, as a new form of trade in the Internet era, is outshining, with its proportion in China’s cross-border e-commerce market being significantly increasing. Technological progress, industrial base, consumption upgrading and credit guarantee will be four impetuses for growth of China’s cross-border e-commerce.
2.1 Growth of China’s cross-border e-commerce against trend
In 2015, China’s total import and export of trade in goods was 24.59 trillion Yuan, indicating a 7% decrease over that in 2014. The export reached 14.14 trillion Yuan, decreasing by 1.8%; the import reached 10.45 trillion Yuan, decreasing by 13.2%. In view of the current situation, China’s foreign trade in 2016 is not optimistic and is still faced with large pressure.
Export value (billion US Dollars) Year-on-year growth rateThe USA 410.1 3.5%EU 356.4 -3.9%ASEAN 279.0 2.6%Japan 135.9 -9.2%India 58.3 7.4%Russia 34.8 -35.2%Brazil 27.4 -21.5%
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In 2015, cross-border e-commerce turnover accounted for 19.5% of China’s total import and export, and it is expected that by 2020, the proportion will reach 37.6%.
China’s cross-border e-commerce is export-oriented. In 2015, cross-border e-commerce export turnover accounted for 83.1% of total cross-border e-commerce turnover while the import turnover accounted for 16.9%. It is expected that by 2020, the proportion of cross-border e-commerce import turnover will rise to 25%.
Fig.6 Changes in the Proportion of China’s Cross-border E-commerce Turnover in Total Import and Export
19.5%37.6%
20152020
Source: Ministry of Commerce, General Administration of Customs, IResearch, Analysys, AliResearch; AliResearch analysis.
0.8 0.9 1.2 1.6 2.0 2.7
3.75 4.8
12
18.0
15.1
20.2
23.6 24.4
25.8 26.4
24.6
31.9
2008 2009 2010 2011 2012 2013 2014 2015 2020E
Turnover of Cross-border E-commerce(trillion Yuan) Total import and Export(trillion Yuan)
Fig.5 Changes in China’s Cross-border E-commerce Turnover and Total Import and Export
Source: Ministry of Commerce, General Administration of Customs, IResearch, Analysys, AliResearch; AliResearch analysis.
CAGR
+20.1%
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By business mode, China’s cross-border e-commerce is now B2B-based. In 2015, B2B accounted for 84.3% of total cross-border e-commerce while cross-border e-commerce retail accounted for only 15.7%, but the latter showed a strong growth. It is expected that by 2020, the proportion of cross-border e-commerce retail will exceed 30%.
90% 88.9% 88%83.1%
75%
10% 11.1% 12%16.9%
25%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014 2015 2020E
Import Export
Fig.7 Proportions of Export and Import in China’s Cross-border E-commerce Turnover
Source: Ministry of Commerce, General Administration of Customs, IResearch, Analysys, AliResearch; AliResearch analysis
95%89.4% 88.2% 84.3%
69.5%
5%10.6% 11.8% 15.7%
30.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014 2015 2020E
Retail B2B
Fig.8 Proportions of Cross-border E-commerce B2B and Retail Turnovers
Source: Ministry of Commerce, General Administration of Customs, IResearch, Analysys, AliResearch; AliResearch analysis.
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2.2 New growth of cross-border e-commerce retail
In 2015, China’s cross-border e-commerce retail turnover reached 751.2 billion Yuan, representing a year-on-year increase of about 69%. Cross-border e-commerce retail export was 503.2 billion Yuan, representing a year-on-year increase of about 60%; cross-border e-commerce retail import was 248 billion Yuan, representing a year-on-year increase of about 92%. It is expected that by 2020, China’s cross-border e-commerce retail turnover will exceed 3.6 trillion Yuan, and the average annual increase will be 37% from 2015 to 2020. According to estimates, in 2020, cross-border e-commerce retail export will reach 2.16 trillion Yuan, indicating an average annual increase of about 34%; cross-border e-commerce retail import will reach 1.5 trillion Yuan, indicating an average annual increase of about 43%.
Along with sustained economic development and steady increase in resident income in China, China has ushered in a new round of consumption upgrading. In this course, domestic consumers have outstanding rigid demands for high-quality, long-tail and individual commodities overseas.
According to customs statistics, in 2014, China’s import of consumer goods reached 936.27 billion Yuan, increasing by 14.9%, apparently faster than overall growth of import in the corresponding period in China and accounting for 7.8% of total import then. During the first eleven months of 2015, China’s accumulative import of consumer goods reached 790.79 billion Yuan, indicating a year-on-year decrease of 7%, which was clearly lower than the decrease (-14.4%) of total import in the corresponding period.
Fig.9 China’s Cross-border E-commerce Retail Market Size and Average Annual Growth
884 1290 2480
15050
2013 2014 2015 2020E
China's Cross-border E-commerce Retail Import(billion Yuan)
1976 3145
5032
21600
2013 2014 2015 2020E
China's Cross-border E-commerce Retail Export(billion Yuan)
CAGR
+34%CAGR
+43%
Source: Ministry of Commerce, IResearch and AliResearch; AliResearch analysis.
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Fig.10 Import of Consumer Goods in China during 2014-2015
Year Import of consumer
goods(billion Yuan)
Year-on-year growth Overall growth
of import in the
corresponding period2014 936.27 14.9% -0.6%January to November,
2015
790.79 -7.0% -14.4%
It is expected that by 2020, China’s gross e-retail sales will exceed 10 trillion Yuan, accounting for 20.7% of total retail sales of consumer goods; then cross-border e-commerce retail import turnover (1.5 trillion Yuan) will amount to 15% of China’s gross e-retail sales (10 trillion Yuan).
0.5 0.8 1.3 1.9
2.9 3.9
4.9
6.2
7.5
8.9
10.4
3.2%4.5%
6.2%
7.6%
10.7%
12.9%
14.8%
16.8%18.5%
19.8%20.7%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2010 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
E-retail Turnover(trillion Yuan) E-retail's proportions of total retail sales of consumer goods
Fig.11 China’s E-retail Turnover, 2010-2020
Source: Ministry of Commerce, National Bureau of Statistics and AliResearch; Aliresearch analysis.
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2.3 Four major growth impetuses: technological progress, consumption upgrading, industrial basis and credit guarantee
In recent years, rapid development of cross-border e-commerce has accelerated the globalization of consumption, trade, service and small and medium-sized enterprises. China’s cross-border e-commerce development is particularly outstanding for the following four reasons:
1.Growth impetus I: technological progress
The popularization and development of Internet, cloud computing and intelligent terminal are basic conditions. In the traditional industrial age, multinational corporations dominated international trade, while consumers and small enterprises could hardly acquire adequate market information, neither did they have basic conditions to be engaged in cross-border e-commerce. Since this century, Internet technology and global e-commerce platforms have rapidly developed, so market participants can acquire rich and symmetrical information at nearly zero cost and that C2B/C2M consumer demands drive large-scale flexible production gradually comes true. The payment system has become increasingly perfect, logistics efficiency has increased at a lower cost, cloud computing and big data have been more and more popular, and professional services for cross-border trade have been developed rapidly. All these conditions lay a solid foundation for the rapid development of cross-border e-commerce.
2.Growth impetus II: consumption upgrading
The main impetus for China’s economic growth is consumption. The contribution of consumption to China’s national economic growth rose further to 66.4% in 2015 and will continue to rise in the future. Moreover, China is ushering in a new round of consumption upgrading, and it is expected that by 2020, the number of households in middle class and above in China will reach nearly 200 million1, while consumers will have increasingly strong demands for long-tail, high-quality, cheap and individual products overseas.
For the next five years, 42% of private consumption increment will be contributed by e-commerce2. Online shoppers in a huge scale are the basis of consumption newly created by e-commerce; as of the end of June 2016, the scale of online shoppers in China has reached 448 million and online shopping usage rate has reached 63%3.
1、BCG and AliResearch, China Consumption Trend Report, 2015.
2、BCG and AliResearch, China Consumption Trend Report, 2015.
3、CNNIC, The 38th Report of China Internet Development Statistics, 2016.
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Enclosure 1
In February 2015, alibaba.com officially announced to launch a Trade Assurance Program and establish a credit system like taobao.com for small and medium-sized enterprises in China. These enterprises can accumulate trade assurance amount: the larger export data is, the more amount of trade assurance alibaba.com will provide, the higher line of credit and higher credit level an enterprise will have. Big data behind the trade assurance system is real export data of different enterprises. The data is acquired from onetouch.alibaba.com, an integrated service platform for foreign trade.
This breaks the bottleneck that restrains the development of foreign trade e-commerce for years—the problem of credit. As of the end of January 2016, there are accumulatively more than 820,000 trade assurance guaranteed orders actively placed by buyers on alibaba.com. From the end of August 2015, trade assurance guaranteed orders have increased geometrically, 80% of which are actively placed by buyers. With the establishment of the entire buyer-seller credit system, cross-border e-commerce will usher in more development opportunities.
3.Growth impetus III: industrial basis
China accommodates about five million small and medium-sized enterprises engaged in foreign trade, which contribute about 60% of total foreign trade volume, and these enterprises constantly participate in cross-border e-commerce market as “sellers” in “selling worldwide”, rendering cross-border e-commerce export to maintain rapid development.
China boasts traditional manufacturing foundation and advantageous export products, with design, process and manufacturing level of consumer goods manufacturing being world-class, and is the world’s largest producer especially in terms of consumer goods such as clothes, shoes and hats, bags and suitcases, 3C digital products, household appliances, etc.
4.Growth impetus IV: credit guarantee
In view of the development history of cross-border e-commerce in China, credit system and secured transaction play a key role not only in the development of retail platforms like taobao.com, but also in cross-border e-commerce B2B development.
Though cross-border e-commerce B2B platforms have an early start in China, as there is no credit guarantee system, they develop slowly in general. Since 2015, China’s cross-border e-commerce B2B platforms represented by alibaba.com have gradually transformed from information service platforms to transaction platforms, which is supported by gradually accumulated enterprise transaction and credit data. Through services such as “customs, inspection and quarantine, taxation and foreign exchange” provided by integrated service platforms for foreign trade, cross-border e-commerce platforms can obtain real transaction data of enterprises and help enterprises establish a global network transaction credit system, so as to better get trust and orders from international buyers, transform credit to wealth and form a virtuous circle.
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3. New connections of China-global cross-border trade
Global traditional trade has apparently slowed down its growth, but cross-border e-commerce is growing strongly at a rate far higher than that of traditional foreign trade, which indicates the advent of a new round of globalization tide—the globalization in the data age. Cross-border e-commerce has established a free and open, universal and inclusive global trade platform, on which millions upon millions consumers can buy worldwide while small and medium-sized enterprises can sell worldwide, truly realizing global connection and linkage.
3.1 Cross-border e-commerce: buying worldwide
Through cross-border e-commerce big data from Alibaba’s platforms, we see that new connections are being built between China and the world via cross-border e-commerce.
In 2015, TOP 10 origins of commodities that were most purchased by Chinese consumers were the USA, Japan, Germany, Korea, Australia, Netherlands, France, UK, Italy and New Zealand, and commodities of these countries were in particular popular with Chinese consumers.
Fig.12 Top 10 Countries in Sales Amount on Tmall Global in 2015
Source: Tmall Global;Aliresearch analysis.
USA
Japan
Germany
Korea
Australia
Netherlands
France
UK
Italy
New Zealand
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From the perspective of imported categories, maternal supplies, personal care and cosmetics as well as nutrition and health care products are three major categories that drive China’s cross-border e-commerce retail import. Generally, as Chinese consumers have higher requirements for the quality of products involving health, safety and green, cross-border e-commerce retail import has become a new important channel for buying these products.
Through cross-border e-commerce retail import, each Chinese consumer averagely purchased commodities from two countries, while the most active Chinese consumers purchased commodities from 18 countries; cross-border e-commerce platforms help Chinese consumers connect directly with overseas merchants, thus realizing buying worldwide.
From the perspective of urban consumption power, consumers in first-tier cities in China have the highest per capita consumption and their per capita consumption grows the most rapidly, followed by those in second-tier cities. Among first-tier cities, Shanghai has the highest per capita consumption, indicating high maturity of consumption of cross-border e-commerce import products by high-tier cities. Compared with first- to third-tier cities, fourth- to sixth-tier cities witness faster increase in total consumption amount and number of buyers, indicating that consumers in low-tier cities have begun to try buying import goods via cross-border e-commerce and have huge development potential.
First-tier cities
Second-tier cities
Third-tier cities
Fourth-tier cities
Fifth-tier cities
Sixth-tier cities
2014 2015
Fig.13 The Comparison of Per Capita Consumption by First- to Sixth-tier Cities
Source: Tmall Global;Aliresearch analysis.
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Maternal&baby
Beauty&personal
care
Nutrition and health care
Apparel/footwear/bags
Packaged food&drink
Household products
Others
Fig.14 Distributions of categories on Tmall Global
Source: Tmall Global;Aliresearch analysis.
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In 2015, on the platform of alibaba.com, the Top 10 countries witnessing the most new buyers were Russia, USA, Brazil, Spain, France, Canada, Ukraine, India, UK and Italy.
3.2 Cross-border e-commerce: selling worldwide
In 2015, on the platform of alibaba.com, the Top 10 overseas markets that made the most inquiries to Chinese enterprises were the USA, UK, India, Canada, Russia, Australia, Germany, Austria, Malaysia and Brazil.
Fig.15 Top 10 Countries Making the Most Inquiries on Alibaba.com in 2015
Source: Alibaba.com;Aliresearch analysis.
USA UK India Canada Russia Australia Germany Austria Malaysia Brazil
Fig.16 Top 10 Countries Witnessing the Most New Buyers on Alibaba.com in 2015
Russia
USA
Brazil
Spain
France
Canada
Ukraine
India
UK
Italy
Source: Alibaba.com;Aliresearch analysis.
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Enclosure 2
Cross-border e-commerce helps small enterprise truly realize globalization—the globalization in
the data age.
On “November 11”, 2015, buyers from 214 countries and regions placed orders on AliExpress
and finally merchants on the platform of AliExpress sent 21.24 million packages all over the
world. Among these orders,
•155 ones were from Greenland, located in the northernmost part of the earth,
•415,479 ones were from Chile, located in the southernmost part of the earth
•608 ones were from Fiji, located in the easternmost and the westernmost part of the earth
•356 ones were from Seychelles, an island country in the Indian Ocean
•30 ones were from Lesotho, a country located in the south of Africa and with the world’s highest
average elevation
•15 ones were from Vatican, the world’s smallest country
•and 18 ones were from Syria in chaos
Enclosure 3
Internet shortens trade chains and facilitates C2B-type innovation
US consumers have great demands for wigs, so they become important goods on AliExpress. A
black girl from the USA purchased a wig on AliExpress and swam with it. Unexpectedly, glue on
the wig was not waterproof, so the wig fell off in the water. The girl left a message on AliExpress
to complain about the product. A week later, the Chinese manufacturer developed the first
waterproof wig in the world under the C2B mode and sold it to the USA. Now, 90% of wigs made
in China on AliExpress are sold to the USA.
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4. ECI between China and countries among G20
ECI (E-Commerce Connectivity Index between China and Major Economies) is prepared according to Alibaba's big data on cross-border e-commerce (B2B export, B2C export and B2C import) to reflect the connection between China and other countries in cross-border e-commerce trade.
With respect to the methodology, ECI combined index is comprised of ECI export index and ECI import index, each of which is used to measure the scale (absolute value) and the penetration rate (potential value) of cross-border e-commerce among China and that country in a comprehensive way.
This research involves G20, temporarily not including the EU. At present, the turnover of G20 accounts for 80% of the total global trade, and that between China and G20 occupies over 50% of China's total imports and exports.
4.1 ECI ranking
In 2015, the e-commerce connectivity index between China and related countries among G20 was ranked as follows: the United States, the United Kingdom, Australia, France, Italy, Japan, Canada, Germany, South Korea, Russia, India, Turkey, Brazil, South Africa, Mexico, Indonesia, Argentina and Saudi Arabia.
Enclosure 4
Big game of small enterprises: huddling to do business in the world
On June 2, 2016, Provence Flagship Store was officially opened on Tmall Global. It is the first
regional flagship store on the platform of Tmall Global
There are numerous small and medium-sized enterprises in France, but they can hardly open
up the Chinese market rapidly on their own. Marseilles Government led to attract investment
from small and medium-sized enterprises and brands in Provence in a concentrated manner,
so that they can sell through Provence Regional Flagship Store. When each brand develops to
a certain degree, these brands can opt to exit the regional flagship store and build independent
flagship stores on tmall.com by themselves. At present, Provence Regional Flagship Store has
signed contracts with eight brands, including La Corvette, Terre des Sens, Savon De Marseille,
L’eau de Cassis, Henry Blanc and other famous local brands in Provence.
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USA
UK
Australia
France
Italy
Japan
Canada
Germany
South Korea
Russia
India
Turkey
Brazil
South Africa
Mexico
Indonesia
Argentina
Saudi Arabia
import index export index
Fig. 17 E-Commerce Connectivity Index between China and Related Countries among G20
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4.2 ECI grouping
These countries can be divided into three groups by ECI, that is, strong connectivity, moderate connectivity and weak connectivity.
Countries of strong connectivity (with ECI scores above 40): These countries have frequent trade contacts with China through cross-border e-commerce, and are strongly connected with China both in export and import, with relatively balanced ECI import and export index. That includes the United States, the United Kingdom, Australia, France, Italy, Japan and Canada, among which, the United States has the highest scores on the whole, with ECI scores being 82, and is regarded as having super-strong connectivity.
Countries of moderate connectivity (with ECI scores between 21-40): These countries have many trade contacts with China through cross-border e-commence, and are moderately connected with China both in export and import, with relatively unbalanced ECI import and export index. That includes Germany, South Korea, Russia, India, Turkey, Brazil and South Africa.
Countries of weak connectivity (with ECI scores below 20): These countries have few trade contacts with China through cross-border e-commerce, with relatively low ECI import and export index, especially too low ECI import index. That includes Mexico, Indonesia, Argentina and Saudi Arabia.
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Fig. 18 Detail List of E-commerce Connectivity Index between China and related countries among G20
G20 ECI import index ECI export index E-Commerce
Connectivity Index The United States 45 37 82The United Kingdom 35 30 65Australia 30 25 55France 32 22 54Italy 27 18 45Japan 39 5 44Canada 7 35 42Germany 23 16 39South Korea 25 7 32Russia 1 31 32India 1 30 31Turkey 1 28 29Brazil 1 22 23South Africa 1 22 23Mexico 0 13 13Indonesia 1 12 13Argentina 0 11 11Saudi Arabia 0 3 3
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5. The development of cross-border e-commerce retail policies in China
With the rapid development of the Internet technology and global e-commerce platform, and a new round of globalization of cross-border trade, consumption, service and SMEs, cross-border e-commerce retail is becoming a new format and an important part of international trade. However, trade rules and regulation pattern will exert great influence to the development of cross-border e-commerce retail.
The existing main and common difficulty for governments around the world to regulate cross-border e-commerce retail lies in the lack of high-efficient and low-cost management ways. In fact, the international community holds two viewpoints and policy orientations towards cross-border e-commerce retail, which in a certain sense reflects related countries' policy orientations towards trade protection or trade liberalization.
The first viewpoint takes cross-border e-commerce retail as one of major development trends of international trade in future. It thinks that such a trend conforms to the development trend of the Internet economy, and should be given positive support and policy innovation. The main policy thinking is to take it as low-value goods management, to simplify customs, inspection and taxation procedures, and to increase customs import duty exemption thresholds.
The second viewpoint takes cross-border e-commerce retail as a new kind of "gray" or "unfair" trade. It looks at and amplifies problems in the proceed of development through "colored spectacles", strictly criticizes its impact on general trade and exaggerates the problems such as tax evasion and product quality, and is proposed to be restricted.
In recent years, Chinese government and industries have attached great importance to the development of cross-border e-commerce, and regarded it as the new engine of China's economic development in the new period, the new format of industrial transformation, and the new window of the opening up. After several years of development, China has preliminarily established a "systematic and comprehensive" model to regulate cross-border e-commerce retail imports through continuous perfection of policies and systems and new business models, laying a good foundation for promoting the development of cross-border e-commerce in China. Cross-border e-commerce, however, as a new format, requires the Chinese government and the industrial circle to continuously improve policy design for its sound development.
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Fig. 19 China's Policies on Cross-border E-commerce (2012 till now)
Time Prepared by Policy Significance
December 2012 NDRC and General
Administration of Customs
of the P.R.C.
Deployment Meeting on
Cross-border E-commerce
Pilot
Cross-border e-commerce pilot work is
launched preliminarily in Zhengzhou,
Shanghai, Chongqing, Hangzhou and
Ningbo.。
February 2013 State Administration of
Foreign Exchange
Guidance on the Pilot
Program of Foreign Exchange
Payments for Cross-border
E-commerce of Third-party
Payment Institutions
It determines to establish pilot
programs of foreign exchange payments
for cross-border e-commerce of third-
party payment institutions in Shanghai,
Beijing, Chongqing, Zhejiang and
Shenzhen.
August 2013 Ministry of Commerce of
the P.R.C. and other 8
departments
Opinion on Implementing
Policies that Give Support
to Cross-border E-commerce
Retail Exports
It incorporates cross-border e-commerce
retail exports into export trade
statistics, introduces supportive
policies on cross-border e-commerce
retail exports, and puts forward six
concrete measures such as export
inspection and exchange collection and
settlement.
December 2013 Ministry of Commerce of the
P.R.C.
Notice on Taxation Policies
of Cross-border E-commerce
Retail Imports
Cross-border e-commerce retail exports
can enjoy tax refund and exemption
January 2014 General Administration of
Customs of the P.R.C.
Notice [2014]No. 12
issued by the General
Administration of Customs of
the P.R.C., i.e. Notice on
Setting Customs' Regulation
Code
General Administration of Customs of the
P.R.C. especially sets "9610" as the
regulation pattern code for cross-border
e-commerce.
April 2014 State Administration of
Taxation
Announcement on Issues
about Tax Refund (and
Exemption) for Export Goods
of Integrated Trading
Service Enterprise
It specifies conditions where integrated
foreign trade service enterprises
can enjoy tax refund and detailed
requirements in that respect.
April 2014 General Administration of
Customs of the P.R.C.
Notice on Issues about
Online Shopping Bonded
Import Model Used in Cross-
border E-commerce Pilots
It specifies bonded imports and amounts
as well as bonded import operation mode.
July 2014 General Administration of
Customs of the P.R.C.
Notice [2014]No. 56
issued by the General
Administration of Customs
of the P.R.C. i.e. Notice
on Issues about Regulating
Imports and Exports Traded
by Cross-border E-commerce
It further clarifies regulations on
cross-border e-commerce and distinguishes
the concepts of commodities and goods,
to which different regulation proposals
will be taken.
22
Time Prepared by Policy Significance
July 2014 General Administration of
Customs of the P.R.C.
Notice [2014]No. 57
issued by the General
Administration of Customs
of the P.R.C. in 2014, i.e.
Notice on Setting Customs'
Regulation Code
It specifies to add "1210" as customs
regulation pattern code, with the full
name of "Bonded Cross-border E-commerce
Trade", enabling cross-border e-commerce
bonded imports to be legal.
March 2015 The State Council Reply of the Approval of
Establishing Cross-border
E-commerce Comprehensive
Pilots in China (Hangzhou)
It clarifies to make breakthroughs and
give priority to the pilot programs in
each link of cross-border e-commerce,
so as to create a complete industrial
chain and an ecological chain for the
development of cross-border e-commerce
May 2015 General Administration
of Quality Supervision,
Inspection and Quarantine
of the P.R.C.
Opinion on Playing the
Role of Inspection and
Quarantine to Promote the
Development of Cross-border
E-commerce
It provides targeted arrangements and
measures for cross-border e-commerce
inspection and quarantine.
May 2015 General Administration of
Customs of the P.R.C.
Notice on Adjusting Customs
Work Time and Customs
Clearance Time Limit for
Cross-border E-commerce
Regulation
It specifies that working hours and
time limit for customs clearance for
cross-border e-commerce goods. To be
specific, "the Customs should work
throughout the year (365 days) without
holiday and goods should go through
customs clearance procedures within 24
hours upon arrival at customs regulation
place".
January 2016 The State Council Reply of the Approval of
Establishing Cross-border
E-commerce Comprehensive
Pilots in Tianjin and Other
11 cities
It approves to establish cross-border
e-commerce comprehensive pilots in
Tianjin, Shanghai, Chongqing, Hefei,
Zhengzhou, Guangzhou, Chengdu, Dalian,
Ningbo, Qingdao, Shenzhen and Suzhou.
April 2016 Ministry of Finance of
the P.R.C. and other 10
departments
Notice on Taxation Policies
of Cross-border E-commerce
Retail Imports
The tariff is temporarily set as 0%;
VAT and consumption tax are no longer
exempted and will be temporarily levied
by 70% for imports; individual's single
transaction amount is limited to 2000
Yuan and annual transaction amount is
limited to 20,000 Yuan.
May 2016 General Administration of
Customs of the P.R.C.
Notice on Implementing New
Regulation Requirements of
Cross-border E-commerce
Retail Imports
It specifies new requirements to
regulate cross-border e-commerce retail
imports in transition period. The
transition period is one year and will
be ended on May 11, 2017 (including the
11th day)
23
Enclosure 5
Bonded mode for cross-border e-commerce import retail: in July 2014, Bulletin [2014] No.57 by the General Administration of Customs added the customs regulation pattern code “1210”, with the full name of “bonded cross-border e-commerce trade”, or abbreviation of “bonded e-commerce”. The policy, driving birth of bonded mode for import based on cross-border retail, is an important innovation in the model of China’s supervision of cross-border e-commerce.
Flow of bonded mode for import based on cross-border e-commerce retail: overseas merchants on cross-border e-commercial platform transport relevant commodities into the Chinese bonded area in advance via international logistics, provide corresponding information for filing with Chinese customs and national inspection authority, and store the commodities in the bonded warehouses. After Chinese consumers place orders, cross-border e-commerce platform will help submit information on order, shipping documents and payment to customs, gain release from customs after inspection, then transport the commodities ordered to Chinese consumers through domestic express service.
Advantages of bonded mode for cross-border e-commerce import retail
-Advantage in efficiency: reducing intermediate links and cutting down purchase cost and international logistics cost
-Advantage in regulation: changing massive personal purchase and transportation behaviors into centralized purchase and transportation, making them enter national supervision areas, and executing the “three bills in one” system to master relevant information and data, perfect trade statistics, safeguard homeland security and quarantine safety and carry out supervision efficiently.
-Advantage in consumption experience: shortening delivery time and lifting customer’s experience.
6. Outlook of the development of cross-border e-commerce in China
From the practice of the development of cross-border e-commerce in China, we have the following inspiration and outlook:
B2B platform of cross-border e-commerce will be upgraded from an information platform to a trading platform. The provision of integrated foreign trade services will contribute to the accumulation of real trading data, and will help foreign trade enterprises to establish a global network trading credit system and minimize international trade risks. Meanwhile, cross-border e-commerce platform can make effective trade matching based on big data, innovate credit guarantee services, and provide financial and logistic services and other supporting services, which is very imaginative and has a lot of room to grow.
Cross-border e-commerce retail will help global consumers and enterprises freer and more convenient in “buy from and sell to the world”. Traditional trade (M2B2…B2C) will constantly shift to C2B or C2M, and the previous intermediate links relying on information asymmetry will be eliminated gradually. With such a system, producers will be able to connect end consumers directly, carry out customized, driven flexible production according to real-time demands of consumers and markets, and rely on global e-commerce platform, together with professional
24
4、Accenture and Ali Research, Prospects for Global Cross-border B2C E-commerce Market, 2015
trade service providers, to form a netty production and service concerted ecology. Cross-border e-retail is based on Internet and big data, and will gradually develop into a main global trade way with the same weight as B2B. On the one hand, it will surely replace partial traditional B2B trade; on the other hand, it will generate a large number of new trades, which is the general trend of business development brought by technological revolution and will be irreversible.
Cross-border e-commerce service ecology will be more prosperous and healthier in development. Cross-border financial service, cross-border logistics service, comprehensive foreign trade service and derivative cross-border e-commerce service (agency operation, search for key words and optimization, and personnel training and consulting, etc.), big data and cloud computing, etc. will witness rapid centering on cross-border e-commerce platforms.
Cross-border e-commerce will promote formation of new rules and new order of international trade in the times of Internet. By 2020, total consumers with cross-border e-commerce in the world will exceed 900 million4,and global cross-border e-commerce retail will become an important part of international trade, which represents a great change of global trade subjects and trade mode in the times of Internet. Therefore, the international community needs to constantly innovate in trade systems, rules and standards, so as to adapt to the trend of the times featuring leap-forward development of Internet economy and cross-border e-commerce.
Entering 2016, Alibaba Group called on establishment of the Electronic World Trade Platform (eWTP), so as to conform to the trend in our times, better help global SMEs develop, promote growth of inclusive trade and data economy, and incubate new rules for global trade in the times of Internet. The eWTP initiative has won active response and high identification from the international community, many international organizations including UN bodies, government authorities, industrial and commercial circles, think-tank scholars and consumer groups, and gained support and recognition by G20 trade ministers in July 2016.
25
Appendix: Research Method
ECI Index = ECI Import Index + ECI Export Index
ECI Import Index = Import scale score * weight + import penetration rate score * weight
ECI Export Index = Export scale score * weight + export penetration rate score * weight
A country’s import/export scale and penetration rate scores are calculated according to Alibaba’s big data on cross-border e-commerce (2015 full-year inquiries and turnover) and imports/exports between the country and China, with scale score range of 0-50 and penetration rate score range of 0-50.
ECI Import Index
ECI Export Index ECI Index
Import scale
score
Scale score
Penetration
rate
Export scale
score
Importpenetration
rate
Exportpenetration
rate
26
About Mentors and Authors of the Report
Mentors:
Hongbing Gao -Vice President of Alibaba Group, Director of AliResearch
Jian Yang - Deputy Director of AliResearch
Authors:
Yan Xue - Senior Analyst of AliResearch, Deputy Director of Ali Cross-border E-commerce Research Center
Cheng Ouyang - Executive Expert of AliResearch, Director of Ali Cross-border E-commerce Research Center
Hongjie Wan - Data Mining Engineer of AliResearch
Zhengwei Jiang - Data Mining Expert of AliResearch
Acknowledgments
This report would not have been possible without the efforts of our AliResearch colleagues Liang Chen, Zhoupei Xie, Yonghua Pan, Xin Cheng, and Lingxiao Zhang, as well as our Alibaba Group colleagues Peng Liu, Nan Zhou, Wei Liu and Wei Dou.
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