Russia has a track record of implementing stringent eCommerce regulations. China, on the other hand, has emerged in the last few years as a leader in the space. Now, it looks as though China’s successful expansion in the industry — especially in cross-border B2B commerce — is pulling Russia into the game.
Last week, reports emerged of new agreements within both the private and public sector that will see Russia and China strengthen their economic ties through facilitating cross-border B2B trade between the two nations.
[bctt tweet=”New agreements will see Russia and China strengthen their economic ties through facilitating cross-border B2B trade between the two nations.”]
On Wednesday (Sept. 2), three companies in the two countries announced a collaboration to make it easier for businesses to buy and sell between the nations.
Russian payments technology company Qiwi, Chinese eCommerce platform DHgate and Russian delivery firm SPSR Express said they would be joining together to ease friction in B2B trade. Corporate buyers in Russia will be able to pay for goods from Chinese suppliers using the Visa Qiwi Wallet service on the DHgate platform. DHgate will be working with SPSR Express to assure quality delivery for the procured goods.
One day later (Sept. 3), reports emerged that Russia-backed VTB Bank has struck a nearly $2 billion trade agreement with the China Development Bank in an effort to provide trade financing to businesses in the two countries looking to conduct trade with each other.
“Under the agreement VTB and China Development Bank are to support and promote the trade flows between Russia and China by providing financing to clients that are engaged in import and export trade operations with Chinese counterparties,” the Russian bank said in a statement, adding that the deal is part of an extension on a deal the two banks signed last May to facilitate payment settlements between China and Russia.
That agreement saw Russia-based Sberbank opening a nearly $1 billion credit line with the China Development Bank, reports said in May.
And like that deal, the recent collaborations between Chinese and Russian institutions coincided with Russian President Vladimir Putin’s visit to Chinese President Xi Jinping last week, during which Putin stated that changes in the Western economy have led the country to look to China to boost business.
Reports said much of this heightened dialogue with China is a response to sanctions imposed on Russia by Western authorities following the nation’s annexation of Crimea last year. European officials are considering whether to extend those sanctions, reports in Business Insider said last week, and doing so would likely fuel Russia’s ties with China.
Regardless of political motive, the trade deals with China could signal Russia’s growing embrace of international B2B eCommerce.
[bctt tweet=”Regardless of political motive, trade deals with China could signal Russia’s growing embrace of international B2B eCommerce.”]
Last March, Jennifer Trelewicz, who serves at Moscow-based eMarket platform B2B-Center as its chief technical strategy officer, wrote about the state of B2B eCommerce in the nation for a piece in The Moscow Times.
According to the latest statistics, she said, 68 percent of Russian companies are using digital procurement methods. But as B2B eCommerce expands in the nation, Trelewicz added that regulators are clamping down on the industry.
“In general, procurement activity in Russia is tightly regulated by legislation, especially when it comes to state-owned companies,” she wrote. “In addition, each organization usually has its own internal regulations and long-term purchasing plans, fixing quantities and specifications of purchased goods. For this reason, the B2B sector has little room for spontaneity.”
Even with tight regulation, Russia’s B2B eCommerce industry appears to be growing at a fast rate — largely due to China.
“In the last few years, the Russian market achieved significant growth in cross-border eCommerce,” said Diane Wang, CEO of DHgate. “As one of the leading and biggest players in cross-border B2B eCommerce, DHgate is highly devoted to the Russian market and constantly improving local customer service and experience.”
DHgate rival Alibaba, which has made a point to promote the B2B business model of cross-border digital commerce, is stepping up its game as a Chinese company looking to do business with Russia. The company launched its first Russia location last June, as Alibaba CEO Jack Ma expressed plans to similarly strengthen cross-border B2B commerce with the nation, telling reporters that he discussed the development of SMEs in Russia and ways to make cross-border trade between Russia and China more efficient in talks with the Communications Ministry and the Economic Development Ministry.
Russia may be known for its stringent cross-border eCommerce policies, but if the recent deals between governments and private companies are any hint, China may be pulling Russia into the fast lane for B2B international trade.
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