Cross-border e-commerce boosts trade and SMEs
Chinese online retailers are speeding up efforts to expand their presence in overseas markets amid a broader drive to diversify revenue sources and hedge against the negative effects of the COVID-19 pandemic, industry experts said.
They added cross-border e-commerce has played an increasingly important role in stabilizing China’s foreign trade and accelerating the digitalization push by small and medium-sized enterprises.
Online discounter Pinduoduo Inc recently announced it plans to invest 10 billion yuan ($1.4 billion) to help China’s manufacturing enterprises boost their global reach. In the first phase of the initiative, Pinduoduo will help 100 Chinese brands to go abroad and support 10,000 manufacturers directly connected with overseas markets.
It will provide infrastructure services including warehousing, cross-border logistics and after-sales services, as well as offer tailor-made courses to domestic manufacturers who will enjoy the long-term preferential policies of zero deposit and zero commission, the company said.
“We will learn from successful domestic experience and increase investments in scientific research and technology to better serve the overseas business operations of Chinese manufacturers,” said Chen Lei, chairman and CEO of Pinduoduo.
He emphasized that the company’s cross-border e-commerce business will not simply repeat what others have already done, but will instead strive to create its own unique value. Chen said in an earnings call with investors in September that the company is exploring new business opportunities, including entering overseas markets.
Pinduoduo’s latest move coincides with the trend of Chinese vendors selling their products globally through cross-border e-commerce platforms against the backdrop of the COVID-19 pandemic that severely impacted international trade.
Last month, the Shanghai-based company launched its cross-border e-commerce platform named Temu targeting the US market, the company’s first overseas destination.
The products sold on Temu cover a wide range of categories, including apparel, consumer electronics, jewelry, shoes, bags, cosmetics, baby products and pet supplies. The platform will focus on US consumers who are inclined to buy cost-effective goods. For example, most offerings are daily necessities priced below $10.
“Chinese e-commerce platforms are accelerating their layout in overseas markets so as to seek new sources of revenue as the growth in the domestic e-commerce sector is slowing,” said Zhang Zhouping, a senior analyst of business-to-business and cross-border activities at the Internet Economy Institute, a domestic consultancy.
As a new channel for foreign trade, cross-border e-commerce has emerged as a key pathway to mitigate the impact of the pandemic on foreign trade. It is also playing a crucial part in encouraging traditional foreign trade enterprises to build new brands, Zhang said.
China will further introduce policies and measures to support the development of cross-border e-commerce and overseas warehouses, according to a notice issued by the Ministry of Commerce in September.
Chinese fast-fashion online retailer Shein is expanding its facilities in the US with plans to open two more distribution centers, which could help shorten delivery times to its customers by three to four days, The Wall Street Journal cited George Chiao, president of Shein’s US operations, as saying.
The company opened its first distribution center in Whitestone, Indiana, in April. The additional warehouses will greatly improve delivery efficiency as it currently takes 10 to 15 days for Shein customers to receive their orders, the report said.
Known for its ultralow prices and a vast selection of fashionable clothing, Shein surpassed Amazon in app downloads on US mobile platforms for the first time in the second quarter, said mobile app data analytics firm Sensor Tower.
“Cross-border e-commerce platforms have become an efficient and convenient way for traditional manufacturing enterprises to expand their overseas footprint. They can help micro, small and medium-sized enterprises open up new markets,” said Lyu Gang, a researcher from the Development Research Center of the State Council.