Asian cross-border e-commerce trade on the increase

According to Beijing-based research company, iResearch, e-commerce transactions between China and other countries increased 32% to $375.8bn in 2012. Much of this trade was business-to-business and exports to other countries, with US the largest trade partner followed by Hong Kong, Southeast Asia, Japan, Korea and India.

Growth in cross-border e-commerce trade is likely to continue, particularly as governments seek ways to encourage the growth of small to medium size companies. China, for example, is trialling several e-commerce industrial parks. In July, the first of five such parks opened in Hangzhou. Among the companies that established operations in this new industrial park include Alibaba, eBay China, China Post/EMS, SF Express, YT Express and E-Dream Valley E-Business, a company that provides services for Chinese manufacturers seeking to sell online through such online marketplaces as those of Amazon and eBay. Hangzhou also includes a customs clearance facility.

In fact, Mark Millar, managing partner with M Power Associates, noted that despite the “borderless nature” of this business which makes it ideal to stretch across economic entities, it is challenging to authorities in terms of custom clearance, logistics, taxes and foreign exchange.

Indeed, delivery options are popping up to address this dilemma. For example, the US Postal Service has partnered with Hong Kong Post, China Post and Singapore Post to launch ePacket, a product targeted to eBay sellers in China, Hong Kong and Singapore that ship to buyers in the US. Meanwhile, Japan Post and Singapore Post have initiated a programme in which Singapore Post’s Quantium Solutions, a Japanese subsidiary, handles e-fulfilment activities, while Japan Post delivers the merchandise through its international network – China and the US are the largest export markets for this service.

Even freight forwarders are offering e-commerce solutions. American Worldwide Agencies (AWA), a global network of freight forwarders and agents, partners with Australian e-commerce company Qannu to provide it with a direct-to-consumer internet shopping service. Qannu’s services enable Australian consumers to order goods from any number of US websites, while paying only one international shipping charge.

Consumers can order through the Qannu website or directly from a US e-retailer, using a shipping address that directs goods to a unique “mailbox” at the Qannu warehouse in Los Angeles. Qannu uses AWA to provide delivery of consolidated packages direct to the consumer’s door in five to eight days, at a savings of up to 80% over traditional shipping methods.

Still, cross-border trade remains problematic. Besides logistics, taxes, foreign exchange and custom clearance concerns, payment methods is another issue. As such, e-commerce companies such as Alibaba (Alipay) and eBay (Paypal) provide alternative methods which are increasing in acceptance across the region.

While there are many solutions attempting to solve the cross-border e-commerce dilemma, corruption particularly within the customs clearance process exists in many countries, in particular those that are categorised as emerging economies such as Indonesia and Vietnam. While e-commerce is growing in double-digits in these countries, government processes will need to be reviewed in order for this growth to continue and thus allow these economies to grow and expand.

As cross-border e-commerce trade increases, Asian countries will need to address concerns within customs clearance, foreign exchange and payment platforms as well as taxes, logistics and the possibility of any corruption that may hinder the flow of trade.