Just how deep the impact of the rapid evolution of cross-border e-commerce in China has been on the grassroots as well as the country’s foreign trade can be gauged in Hangzhou, Zhejiang province.
In this provincial capital, forklift driver Li Jingsheng, 36 and father of two who works with a local warehouse, routinely skips lunch at his office canteen just so that he could meet near impossible demands on his time and energy.
Li has to load, well, loads of goods into ocean-bound shipping containers almost nonstop through the day. Fully-laden containers are then transported on trucks to various ports. Inside the containers are tons of assorted consumer goods－juicers, air fryers, bread makers and food processors－bought by overseas consumers on various cross-border e-commerce platforms.
On a certain workday afternoon in April, Li’s task was to load goods made by Joyoung Co Ltd, a Jinan, Shandong province-headquartered producer of home appliances. From Hangzhou, the goods will be transported to the Chuanshan port zone at Ningbo-Zhoushan Port, where they will be loaded into a containership operated by China COSCO Shipping Corp Ltd.
After Customs clearance, a procedure which has been simplified recently to facilitate trade via cross-border e-commerce, the vessel will set sail for Europe.
Li said his employer has hired some staff members recently to deliver lunch boxes and flasks to his team of forklift drivers, all of whom are being paid extra as workload increased from the third quarter of last year.
Higher wages for additional work may appear as the silver lining of the dark cloud of COVID-19, which has affected many companies’ operations and people’s daily lives, and revealed many weaknesses in the global supply chain, like limited shipping capacity and shutdowns of both plants and ports across the world.
As it transpires, the pandemic has also necessitated efforts to grow cross-border e-commerce as well as transportation networks, to support distribution of the goods bought online. One shining instance is the increased activity in the China-Europe freight train services.
Without doubt, cross-border e-commerce has boosted trade since last year, said Lyu Xiaobin, deputy director-general of Ningbo Customs District.
Driven by robust demand arising from the rapid recovery of some major economies, China’s total goods imports and exports soared more than 29 percent year-on-year to 8.47 trillion yuan ($1.3 trillion) in the first quarter of this year, according to data from the General Administration of Customs.
Trade via cross-border e-commerce channels alone surged 46.5 percent on a yearly basis to 419.5 billion yuan in the first quarter of this year.
Since the pandemic has kept people at home longer due to social distancing norms and general curbs on travel, consumption from homes surged, inflating sales of products or goods like household appliances. This has, in turn, altered the structure of supply chains worldwide.
For instance, Hangzhou Great Star Industrial Co Ltd, the biggest vendor of hand tools, power tools and safety products in Asia by sales revenue, said sales of its Workpro brand ballooned to triple-digit growth last year on the back of its online platform.
“Thanks to the firm overseas demand, we have gained more bargaining power in terms of pricing and gradually popularized our brands overseas. We no longer focus on working as an original equipment manufacturer or OEM,” said Li Feng, vice-president of Great Star Industrial, which employs more than 1,000 people and notched up 2020 net profit of 1 billion yuan, up 46 percent year-on-year.
“Unlike Chinese residents, they may use a hammer for life. Hardware products are often purchased goods for consumers in Western markets, because labor costs in these countries are high and they are used to doing the housework, gardening and vehicle maintenance themselves,” he said.
The company’s e-commerce platform, he said, also started to offer customized products, such as pink-colored hardware products to female consumers overseas.
China saw its total imports and exports of goods expand 1.9 percent on a yearly basis to 32.16 trillion yuan last year. Foreign trade via cross-border e-commerce advanced 31.1 percent to 1.69 trillion yuan, with over 10,000 traditional trade firms going online for the first time in 2020, the GAC said.
For instance, like other firms, Suzhou Walklake Smart Systems Co Ltd, a Jiangsu province-based robot manufacturer, opened its online shop for cross-border e-commerce on Alibaba in August. The online marketplace, owned by China’s e-commerce giant Alibaba Group, has been the preferred destination of most global-bound wholesale traders.
Walklake’s export volume of robots jumped by 30 percent to 2,000 units in 2020. Customers in 45 countries and regions, including the United Kingdom, Spain, Russia and Chile, placed orders for the robots that can check students’ body temperature, eyes, hands and mouths in seconds.
Zhang Ziyang, chairman of Walklake, said as many countries have gradually embraced nontraditional style trade methods, digital-based technologies will play a more important role in enriching global trade and help deal with uncertainties in the next phase of development.
As an emerging trade format, cross-border e-commerce continued its strong momentum last year and has become one of the main forces behind the steady growth of China’s foreign trade, said Zhang Xiangchen, vice-minister of commerce.
He said this sector has also become an influential force in promoting the digitalization and informatization of international trade, representing a new direction for the future growth of global trade.
That direction has already been embraced by Best Inc, a Hangzhou-headquartered integrated supply chain and logistics solutions provider. It began to deliver bulkier and heavier items in Thailand in February.
It covers nationwide shipment of heavy parcels weighing up to 80 kilograms, meeting increasing demand online among Thai consumers for China’s home appliances like fridges and TVs, and furniture like sofa sets.
As China has been working with 14 other partners to ratify the Regional Comprehensive Economic Partnership agreement before the end of this year and push for it to take effect on Jan 1, 2022, Best’s move will further support the growth of interregional trade, cross-border e-commerce and investment, said Johnny Chou, its chairman and CEO.
The company will, therefore, exploit new development opportunities.This diversification happened at a brisk pace, thanks to the technological prowess－complete industrial chains and support facilities－already accumulated in the field, said Li Kuiwen, director-general of the General Administration of Customs’ statistics and analysis department.
Agreed Wang Xiaoming, a researcher at the Institutes of Science and Development of the Beijing-based Chinese Academy of Sciences. “Cross-border e-commerce business is not only another boon to stimulate consumption of quality products but a solution that can strengthen the dual-circulation development paradigm in the field of trade.”
Dual-circulation refers to China’s new development paradigm where domestic and overseas markets reinforce each other, with the domestic market as the mainstay.
Leaders of foreign businesses said China’s cross-border e-commerce boom will also help them reach more families in the country’s lower-tier cities.
“With the magic of cross-border e-commerce, we are finding that we can reach consumers throughout China, no matter where they are. That was not possible a decade ago,” said Tara McCarthy, CEO of the Irish Food Board, or Bord Bia, the agency which promotes Ireland’s food products.
China’s growing demand for meat products and growth of its cross-border e-commerce sector are expected to make the country Ireland’s second-largest destination for exports of foodstuffs and agricultural products after the United Kingdom, over the next several years.
All cities and regions that host free trade zones, comprehensive areas of cross-border e-commerce, comprehensive bonded areas, and select bonded logistics centers are now eligible to start pilot programs of cross-border retail imports, according to a notice published by a group of government departments, including the Ministry of Commerce and the National Development and Reform Commission, in early April.
In these pilot areas, companies receive preferential tax policies, such as exemption of value-added tax and consumption tax on retail exports and reduction of corporate income tax rates.
Pilot cities that join the program can conduct more convenient modes of imports like “online shopping bonded import mode”, whereby imported retail goods can be temporarily stored at the bonded warehouse before being delivered to customers.
Before this, China had approved five batches of 105 cross-border e-commerce pilot zones since the first such zone was set up in Hangzhou in 2015.