The foreign trade industry in China had a good start in general this year, thanks to the rapid growth in cross-border e-commerce.The 2022 China Cross Border E-Commerce Market Data Report was released at the cross-border e-commerce roundtable meeting held on March 30th this year, indicating that cross-border e-commerce made a contribution of 37.32% to Chinas total import and export trade value in goods (RMB 42.07 trillion) in 2022.

Volume of cross-border e-commerce continues to rise

As customs data has showed, in 2022, China’s cross-border e-commerce imports and exports climbed by 9.8% year on year to RMB 2.11 trillion. As a new form of foreign trade, cross-border e-commerce is still gaining momentum.

According to statistics from the Department of Commerce of Guangdong Province, from 2015 to 2022, Guangdong saw the value of cross-border e-commerce imports and exports grow from RMB 14.8 billion to RMB 645.4 billion, up by nearly 43 times, with an average annual growth rate of 72% and accounting for 31% of the national total.

In 2022, Hangzhou recorded an import and export value of RMB 756.48 billion, hitting a new high in foreign trade volume, and accounting for 16.2% of the total of Zhejiang Province. Specifically, the value of exports reached RMB 514.06 billion, marking an increase of 10.6% from a year ago, and topping RMB 500 billion for the first time. According to the statistics, there were 832 cross-border e-businesses with an annual turnover of more than RMB 20 million in Hangzhou in 2022, as well as 4,371 registered trademarks of cross-border e-commerce enterprises.

In 2022, cross-border e-businesses in Shanghai enjoyed a strong export market, and the number of export declarations reached 152 million, up by 58% year on year, ranking the third among the ports in China. Besides this, the total value of these exports hit RMB 38.91 billion, marking a surge of 2.8 times from a year ago.

The customs statistics illustrate the fact that China’s cross-border e-commerce realized a nearly 10-time increase in the import and export value in just 5 years, reaching RMB 1.92 trillion in 2021, up by 18.6% year on year, which further hit RMB 2.11 trillion in 2022, marking a rise of 9.8% when based on the same comparison. In particular, in the first half of 2022, China’s cross-border e-commerce import and export volume increased by 28.6% year on year, and these integrated pilot zones for cross-border e-commerce provided an important stimulus.

On November 24, 2022, the State Council approved the establishment of integrated pilot zones for cross-border e-commerce in 33 cities and regions including Langfang, Cangzhou and Yuncheng, meaning that the number of integrated pilot zones for cross-border e-commerce has risen to 165, and there will be at least one such pilot zone in 31 provincial administrative regions across China, except for Hong Kong, Macao and Taiwan. Besides this, these pilot zones are expanding from the eastern and southern coastal areas to inland provinces, and from central cities and provincial capitals to second- and third-tier cities.

Taking Hangzhou in Zhejiang Province as an example, over the last 7 years since the first integrated cross-border e-commerce pilot zone in China was set up there, Hangzhou has fostered 49,000 cross-border e-commerce sellers, and has registered more than 2,000 overseas trademarks, while the volume of cross-border e-commerce has exceeded RMB 100 billion. Jiangsu Province realized an average annual growth of more than 4 times in the volume of cross-border E-commerce over the last 3 years by building more than 90 industrial parks and incubation bases for cross-border e-commerce, as well as more than 280 overseas warehouses in key markets including countries along the Belt and Road, turning cross border e-commerce into a strong new momentum for stabilizing the fundamentals of foreign trade.

Li Mingtao, chief expert at the China International Electronic Commerce Center, Ministry of Commerce, explained that continuously promoting the establishment of integrated pilot zones for cross-border e-commerce is an important measure for China to vigorously develop new trade forms including cross-border e-commerce, overseas warehouses and so on, and to promote the high-quality development of foreign trade, in order to maintain the vitality of foreign trade.

Consumers enjoy the convenient experience of “buying and selling globally”

While products manufactured in China are sold globally, more Chinese consumers are now buying globally through cross-border e-commerce platforms.

Seafood and other fresh products are foreign commodities that are becoming popular among Chinese consumers. How long will it take for a Boston lobster to be delivered to a Chinese consumer from the United States where it was just caught? The answer is 17 hours for the cross-border fresh food e-commerce process created byJD International.

After launching cross-border fresh food ecommerce, through direct sourcing from the place of origin and integration of supply chain resources with large suppliers, JD International now manages to supply consumers with high-quality global fresh food more quickly, such as instant frozen pizza from the UK, samosas from India, tempura shrimp from Japan, handmade pasta from Italy, and all kinds of imported ice-cream and chocolate.

Furthermore, since JD launched its cross-border e-commerce import business, it has reached cooperation agreements with more than 20,000 brands from the United States, Canada, South Korea, Japan, Australia, New Zealand, France, Germany and other countries and regions, covering categories such as mother and child products, fashion, nutrition and healthcare, personal care and beauty, 3C digital, household supplies, food, etc.

According to sources inside the industry, cross-border E-commerce is an innovative way to expand the import of high-quality foreign products and promote the expansion and upgrading of consumption. Meanwhile, it can also further enrich the commodity supply, and provide opportunities for consumers to experience high-quality goods from around the world without leaving home, as well as the cultural characteristics and lifestyles of different countries.

Meanwhile, new traffic growth points, live streaming, and other new technologies also contribute to the development of cross-border e-commerce, while the proportion of high-quality goods from overseas markets continuously rises as traceable authentic imports become ever more popular. Zhang Zhouping, senior analyst at the B2B and cross-border e-commerce department of the E-commerce Research Center of 100EC.cn, said that with the gradually perfected trade mechanism and international logistics network, the cross-border e-commerce market is expanding rapidly, enabling more and more market entities to “buy and sell globally”.

The Cross-Border E-commerce Industry Trends Report 2023 indicated that the global cross-border e-commerce export value would reach USD 22.5 trillion in 2023, and China would take up a share of this in a percentage as high as 45%.

According to the data from Qichacha, in China, there are presently 14,700 enterprises involved in cross-border e-commerce, including 3,201 newly registered companies in 2020, 4,789 in 2021, and 4,061 in 2022. Shenzhen, Guangzhou and Qingdao are among the leading cities in terms of the number of cross-border e-commerce enterprises.

Zhang Zhouping also stated that in 2023, China’s cross-border e-commerce will usher in a golden era for establishing brands overseas. With more third-party cross-border e-commerce platforms, including overseas platforms that have newly opened to Chinese players, the competition among major cross-border e-commerce platforms will get fiercer, and cross-border e-businesses will have more choices.

Global demand for online cross-border shopping continues to be released

Morgan Stanley made an estimation that the size of the global cross-border e-commerce market will reach USD 3.3 trillion in 2023 and top USD 5.4 trillion in 2026, and the North American market will grow by 129% from a year ago. KPMG expects that the global e-commerce market will reach USD 5 trillion in 2023 and USD 7 trillion in 2025.

In the first two months of this year, Cainiao realized an increase of 30% year on year in the volume of cross-border e-commerce. The cross-border e-commerce platform of Pinduoduo, TEMU, has made impressive achievements in the four months since it debuted in the United States, with the number of registered users reaching 10 million, making it the most downloaded cross-border e-commerce mobile app in the United States at that time.

Geographically, the mature e-commerce retail markets with a high penetration rate such as the United States and Europe are still the main targets for cross-border e-commerce retail exporters. At the same time, there is a large gap on the demand side in countries along the Belt and Road, including the following Southeast Asian countries: India, Russia, and Central and Eastern European countries, where there is a blue ocean e-commerce export market. At the China Cross-border E-commerce Trade Fair, Norman Sze, Vice Chairman of Deloitte China, said that Chinas cross-border e-businesses are accelerating the construction of overseas warehouses, especially in Southeast Asia, compared with other emerging markets.

As the Blue Book on Overseas Expansion of China Cross-border E-commerce Companies 2023 suggested, the construction of overseas warehouses is a key point for the fùture high-quality development of cross-border e-commerce, which will in turn play an important role in promoting the stable development of foreign trade and improve the quality thereof

Wei Jianguo proposed for China to help cross-border e-businesses set up high-quality overseas warehouses, and support SMEs with their choices of target markets and countries. In addition, cross-border e-businesses should join hands with institutions functioning abroad, in order to strengthen the integration of overseas warehouse resources and establish intelligent overseas warehouses.

In recent years, cross-border e-commerce in China has become an important support for the “external circulation” of the “dual circulation” development pattern. “Dual circulation” is centered on the domestic economy (or “internal circulation”)and aimed at integrating the domestic economy with the global economy (or “external circulation”). The development of cross-border e-commerce has led to changes across the entire industrial chain, and the digital transformation of trade represented by cross-border e-commerce will create a far-reaching impact for the global trade market and industrial landscape.

As stated in the Blue Book, digital technology has further strengthened cross-border e-businesses and facilitated SMEs and new businesses going abroad. Deng Hai, general manager of Fujian Midodo Network Technology Co., Ltd., which specializes in overseas digital marketing, said that the traditional foreign trade industry is undergoing a transformation and cross-border e-commerce is being upgraded, so digitalization is not only a trend that enterprises should follow, but is actually a necessity for future development. “The new opportunities for cross-border e-commerce may result from the higher efficiency and certainty brought about by the whole process digitization,” he explained.