Content area
Cross-border e-commerce has become the driving force contributing to China's foreign trade growth under the background of "Belt and Road Initiative" and free trade zones strategy. China's rapid development of cross-border e-commerce not only speeded up Chinese foreign trade transformation, but also raises a series of demands and challenges on the current government management system, especially in small Cross-border E-commerce trend. China's current management system, policies, regulations and existing business environment conditions are far from meeting the demand of actual development. On the basis of analyzing the Chinese cross-border e-commerce development status and the exiting problems, countermeasures will be proposed to promote the sustainable development of cross-border e-commerce in this paper.
KEYWORDS
Cross-border E-commerce, Government regulation, Small Cross-border E-commerce
ABSTRACT
Cross-border e-commerce has become the driving force contributing to China's foreign trade growth under the background of "Belt and Road Initiative" and free trade zones strategy. China's rapid development of cross-border e-commerce not only speeded up Chinese foreign trade transformation, but also raises a series of demands and challenges on the current government management system, especially in small Cross-border E-commerce trend. China's current management system, policies, regulations and existing business environment conditions are far from meeting the demand of actual development. On the basis of analyzing the Chinese cross-border e-commerce development status and the exiting problems, countermeasures will be proposed to promote the sustainable development of cross-border e-commerce in this paper.
1 Introduction
The definition of Cross-border e-commerce refers to the e-trading activities, such as e-exhibition, e-negotiations, e-transaction and so on among entities from different territories, the delivery is done through cross-border express. Because import and export business is often involved in international payment settlement, customs clearance, international cargo transport and insurance, coupled with the necessary security and risk control requirements, foreign trade enterprises tend to advertise and communicate on line, while the import and export business are usually done offline, it is also the biggest difference between cross-border trading and domestic trading. However, after the global economic crisis in 2008, the large business represented by giant containers are depressed, small Cross-border E-commerce is spreading globally with the rapid development of infrastructure like the Internet, logistics network etc. and the development of modern technologies like mobile Internet, big data, cloud computing etc,
2 The Driving Force of the Global Cross-border E-commerce
2.1 Outstanding advantages attract traditional foreign trade enterprises to reform
In this information age supported by Internet technology, the network development has created a new space with information sharing, collaboration and business activities, Internet has appeared in almost every corner of our life, thus more and more enterprises are considering how to seize the enormous opportunities brought about by cross-border e-commerce. Compared with traditional trade, cross-border e-commerce help enterprises to grasp more trade opportunities, reduce transaction costs and improve trading efficiency by timely global business information obtained from the Internet, convenient communication with foreign customers, and effective integration of internal and external resources. In addition, cross-border e-commerce can also reduce the traditional import and export business links and expenses by taking out intermediary agent.
2.2 Increasingly mature e-commerce system lays the foundation for the development of cross-border e-commerce industry
Platform and logistics are key elements to the development of cross-border e-commerce. The two trading sides advertise, pay, and transact through the cross-border e-commerce platform to realize online transactions. A large number of high-quality integrated trading and services cross-border e-commerce platforms have emerged which attract many enterprise and consumers to participate, which directly determines the future development of cross-border e-commerce industry. The giant cross-border e-commerce enterprise Ebay, has more than 300 million buyers globally mainly from Europe, supporting more than 120 countries and regions, and its online multi-currency payment tool Paypal (supporting more than 20 currencies) plays significant role in the payment procedure. At the same time, the rapid growth of cross-border e-commerce promotes the development of logistics, many cost effective, fast, safe logistics companies with quality service spring up. In turn, it accelerates the development of cross-border e-commerce.
2.3 The global economic crisis has become a driving force for the development of cross-border e-commerce
After the 2008 economic crisis, the global economic recovery is very slow, due to the tensioned capital chain and depressed market demand, the traditional importers, especially those small or medium importers tend to divide substantial procurement into small amount purchases, and turn the long-term procurement into short-term procurement in order to avoid procurement risk. This has greatly promoted the efficient, timely and low-cost small cross-border e-commerce.
3 The Development Status of China's Cross-border E- commerce
3.1 Industry expands rapidly, export accounts for a dominant proportion in cross-border e-commerce
Under the background of "Belt and Road Initiative" and free trade zones strategy, cross-border e-commerce has become a driving force for China's foreign trade growth. The transactions scale of cross-border e-commerce from 2009 to 2014 raised from 0.9 trillion to 4.2 trillion yuan, achieving an average annual growth of about 30%, its growth rate far exceeds the traditional trade. In addition, the proportion of cross-border e-commerce take up 4.4% of the overall import & export volume in 2008, which increased to 14.8% in 2014. Regarding to the percentage of the import and export, cross-border e-commerce in exports accounted for 85.4%, while imports 14.6%, which means that currently cross-border e-export is developing very fast while e-import is still in its infancy. The proportion reflects that China is an export-oriented country. Ministry of Commerce predicts that by 2016 China's import and export trade volume of cross-border e-commerce will reach 6.5 trillion yuan, and e-import proportion will reach 20% , annual growth rate will exceed 30% in the next few years. Cross-border e-commerce with its huge potential for development, is subverting the traditional import and export patterns, it will become a new growth point and new impetus for the Chinese foreign trade.
3.2 A variety of business models flourish, cross-border e-commerce enterprise being new entities
Currently, the main business model of cross-border e-commerce are as follows: 1, Post product information on the giant cross-border electronic platform to look for opportunities by traditional manufacturing companies, commercial enterprises, brokers for international trade wholesale business, with large or small amount of online payment; 2, Open on-line shop in the third-party cross-border e-commerce platform through which foreign/domestic retail sales can spread to end consumers globally; 3, Establish its own independent cross-border website and sell directly to end users worldwide. According to incomplete statistics, there are more than 5,000 cross-border e-commerce platform enterprises in various modes with more than 200,000 active foreign trade enterprises participating. With the 2014 cross-border e-commerce policy dividends continue to be released, more than 20 well-known e-commerce enterprises has accelerated the cross-border e-commerce business. In 2015, China continues to promote cross-border e-commerce with pilot area in Shanghai, Ningbo, Hangzhou, etc. Since then, the major e-commerce platform have focused on the cross-border e-commerce as their major growth point such as T-mall, Jingdong, Amazon, Kaola, Ymato etc. Alibaba emphasizes on globalization, Amazon opens direct express in China, Jingdong launches JD Worldwide, Yihaodian launches Yihao overseas purchase projects, e-commerce projects are springing up. Until now, the cross-border e-commerce market has not yet shaped, the cross-border e-commerce industry, especially e-import will remain a high growth rate in the long-term future, the industry as a whole is still in the formative phase.
3.3 Cross-border e-commerce transaction category is relatively concentrated, new markets has become a highlight
China' s cross-border e-commerce transaction mainly focuses on maternal and child products, clothing & apparel, 3C electronic products, household & gardening, auto parts industries and so on, of which the 3C electronic products accounting for up to 41.2%. These products with prominent features like high degree of standardization, low return rate, easy transportation and storage etc, fit the e-commerce channels best. Regarding to the cross-border exports, US, EU, and ASEAN region have become China's three top e-commerce trade partners, with the trading volume accounted for 16.6%, 15.3% and 11% respectively. Some new markets such as ASEAN, Russia, India, Brazil and other regions are also growing rapidly. When it comes to import, the current product category mainly focuses on maternal and child products, health products, cosmetics and other products with high degree of standardization, mainly imported from developed countries such as Japan, Korea, New Zealand, France, Germany etc.
4 Analysis of Cross-border E-commerce Development Issues in China
China's rapid development of cross-border e-commerce has speeded up the transformation of China's foreign trade, at the same time, it also raise new demands and new challenges on the government management system under the traditional trade mode. Our current management system, policies, regulations and conditions of the existing business environment is still far from satisfying the actual development needs.
4.1 Customs supervision become more difficult and tax evasion is serious
Small amount wholesale or retail is one of the major cross-border e-commerce platform model. It's goods are mainly for personal end users, the logistics often use air parcel, mail, express, etc. and the customs declaration are usually done by the courier company. At present, most of these transactions are hard to be included in the customs statistics, tax evasion is serious. With the growing import scale in cross-border retail industry, it generates a large number of orders. The statistics of seven pilot cities in 2015 show that during January to November, the cross-border import volume reaches $22.3 billion, while the clearance records are up to 95,988,900. A large number of small packaging by express brings difficulty and high cost in customs supervision on price, intellectual property rights as well as fake inferior products. In 2016, China introduced a new import tax policy, under which the e-imported goods will no longer be levied according to the postal items called Parcel tax, but by cargo tariffs with VAT and consumption tax. The tax reform reduces the profit margins in gray area and plays a positive role to avoid loss of national revenue to some degree.
4.2 Imperfect market supervision system, and lack of appropriate normative standards
The buyers and sellers mainly rely on cross-border e-commerce platform to complete the transaction, so timely supervision is particularly important. The existing cross-border e-commerce platform is divided into two modes, self-operation and third-party operation. The third-party is to provide transaction services and supervision for the participating enterprises or business entities. Currently most of the third party platform not only lack of appropriate supervision on the enterprise participating, which makes it hard to protect consumers' right, especially when the product quality and safety issues occurs. but also need appropriate normative standards for the after sale service. In result, a few unscrupulous business enterprise distributes false advertising on the platform, they selling counterfeit and shoddy products, cheat on consumers overseas, and even violate intellectual property rights of others. As far as we know, popular e-commerce platform like eBay, Alibaba, Kuajinggou often received complaints from overseas customers.
4.3 Immature logistics service system and unguaranteed after-sales experience
International parcel, international express, overseas warehouse, cross-border special logistics lines and domestic express are the five popular business modes applied for China's e-commerce industry. For small items, the following problems usually occur: (1) Balance between cost and efficiency; (2) Backlog, late or missing of goods for international cargo transportation; (3)Complicated return procedures when products have quality problems; (4) Unable to track the cross-border express situation due to low logistics information level; (5) Malicious hackers may intercept, steal, embezzle the transaction information during transmission due to the openness and anonymity of the Internet, which may result to unexpected loss for the customers. Logistics, as a key factor in the development of cross-border e-commerce, has influenced the customer satisfaction rates and trading volume because of the above-mentioned problems. According to the China Consumers' Association survey, cross-border recognition rate is less than 10% among the online consumers. Lagging development of logistics has become an main reason to restrict the development of cross-border e-comerce.
5 Countermeasures to Speed Up Cross-border E-commerce Development of China
5.1 Create public information platform and establish open market supervision system
Establishment of government information-sharing system is the basis and prerequisite for open market supervision system. It is recommended to speed up the establishment of regulatory information sharing platform, including customs, quality inspection, administration for industry and commerce, taxation, foreign exchange information and so on. At the same time, the government should create a public information platform in a wider range instead of directly building the business platform like cross-border channel. Directly mailed goods with existing order for individual consumers can be released directly without batch inspection; imported stocking goods without order at entry apply to general trade regulation; special supervision products should be released after centralized declaration, once inspection and verification. Through this platform, we will be able to achieve normal export customs inspection and tax exchange process, which is not only conducive to the state regulation, but also beneficial for the long-term developmen. Public information platform can integrate the cross-border e-commerce supply chain resource and information. Through the construction of the public information platform, we can collate information from different departments, merge and make them public. It will not only help to enhance the transparency of management, but also help to improve the efficiency of supervision of cross-border e-commerce for the government.
5.2 Improve relevant laws and credit system and promote the standardization of trading
Cross-border e-commerce security is still a concern and relevant laws and credit systems need to improve. The government departments with the division of responsibilities should improve the cross-border online shopping standards and management practices as well as establish thorough credit intermediation systems as soon as possible. Meanwhile, the government should strengthen statistics, training and service guidance work, and encourage potential entities to develop cross-border e-commerce business. Under the framework of national import and export policies, the government is advised to focus on the establishment of a convenient cross-border e-commerce channel and regulatory policies; adapt tax refund policy to cross-border e-commerce development, bring out policies which supports cross-border payments and settlement; plan the market resources to promote cross-boarder e-commerce growth and the logistics transformation. The government should also improve the external market environment. In addition, in order to create safe and secure trading environment, the secure technical support system is critical, business transactions should base on the real-name authentication to ensure the authenticity and validity of information, accompanied with strict management practices and punishment measures. The online trading credit management should be strict to crack down on anonymity payment, virtual business and other illegal behavior. The government can establishment 12345 hotline, Internet complaint email and other product quality supervision and inspection channels. Import commodity quality complaints should be collected and those substandard products and prohibited products shall be posted on the government customs website.
5.3 Strengthen cross-border logistics service system, and provide comprehensive, professional and differential logistics services
In recent years, cross-border e-commerce transaction volume is growing rapidly. By developing the overseas warehouse logistics mode we can reduce the logistics cost. Sellers can stock the products abroad in advance through overseas stocking warehouses, the generated transaction information will be sent to the overseas warehouse, thus the orders can be conformed, sorted, and delivered in the first time. In this way, the economies scale grows, and the logistics cost significantly reduces. In another aspect, differential logistics services should be provided to satisfy different consumer demand, SF Express for example, improve its cross-border logistics competitiveness in foreign markets through cooperation with high quality foreign express companies such as UPS and DPD. By continuous innovation on multivariate products and services, SF is able to meet the sellers' different demand. What' s more, information technology should be vigorously promoted to improve the supply chain efficiency for the cross-border e-commerce logistics enterprises. Here we proposes two aspects to improve: First, China's cross-border e-commerce logistics companies need to strengthen the information network technology, foreign supply chain management software could be taken as a reference; Second, we should take full advantage of big data, cloud computing and other modern data processing technology, and establish logistics information sharing platform, adopt intelligent data processing and analysis to achieve effective allocation of resources to complete the logistics and save logistics cost.
6 Conclusion
In recent years, China's cross-border e-commerce represented by small cross-border transactions has developed rapidly. Small-scale cross-border e-commerce transactions has basically broken through the technical obstacle: Domestic sellers are most proficient in using Paypal to complete international settlement, they are also capable to use online translation software to help real-time communication with overseas buyers, what is more, the improvement of cross-border logistics and distribution system as well as e-commerce service platform system. Necessary conditions and broad space have all been provided for the development of small-scale cross-border transactions. As the global economic is depressed, a growing number of foreign trade enterprises, especially small and medium-sized traders began to seek for new international market opportunities through small-scale foreign trade e-commerce. Although the development of e-commerce in China is still lagging behind compared with developed countries such as European countries, America and Japan, small-scale cross-border e-commerce transaction is a new attempt in the field of e-commerce, China and the developed countries are in the same starting line. It is worth investigating how to guild cross-border e-commerce as a national economic strategy, and how to further optimize the import and export procedure management as well as tax management, how to improve the government regulatory system to promote the sustained development of China's foreign trade.
* Corresponding author.
E-mail address: [email protected]
References
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Copyright St. Plum-Blossom Press Pty Ltd. Sep 2017