B2B Payments

China’s Bustling Cross-Border eCommerce Market

With Alibaba last week having gone through the largest initial public offering in U.S. history, expect continued growth in international eCommerce trade coming out of China. Alibaba already is saying it wants to create more online sales between China and other Asian businesses and consumers, and other Chinese eCommerce players say they will pursue similar strategies as they seek to boost their trade volume.

China’s cross-border eCommerce trade is projected to reach 6.5 trillion yuan (US$1.1 trillion) in 2016, according to iResearch’s “2012 China Cross Border eCommerce Report.” It totaled 2.3 trillion yuan in 2012.

Indeed, “a slew” of eCommerce deals were struck before the four-day China-ASEAN Expo closed on Friday (Sept. 19) involving companies from China and the Association of Southeast Asian Nations, reports sina.com. It says China has been accelerating eCommerce cooperation with the ASEAN region by encouraging cross-border transaction settlement in yuan and establishing online payment platforms.

Growth in yuan trade

Moreover, German and French companies increasingly are using yuan, also referred to as renminbi, to trade, and American businesses increasingly are, too, according to an HSBC global survey of international business decision makers in 11 countries, including 102 in the U.S. More U.S. businesses plan to use renminbi amid expectations that their trade with China will increase in the next 12 months, PYMNTS.com reported recently.

Seventeen percent of U.S. businesses leaders said their companies had
used renminbi to settle trade this year, up from 9 percent that did last year.

Despite such activity, eCommerce still relatively lags behind in Asia, Gao Hongbing, an Alibaba vice president, reportedly said on Friday, according to wantchinatimes.com. To help improve that situation, he said in the article, Alibaba “looks forward to deepening cooperation with the Association of Southeast Asian Nations and jointly building an eCommerce economy.”

Room to grow

Most of Alibaba’s revenue, however, comes from domestic sales in China, as trade volume from its online cross-border trading platform AliExpress totaled just $2.4 billion in 2013. That said, Alibaba’s cross-border business is growing rapidly in some countries, as it brought in $4.5 billion in sales fiscal 2014 ended June 30, Alibaba executives reportedly told investors.

As PYMNTS.com reported on Saturday (Sept. 20), Alibaba says growth in sales for its AliExpress online marketplace, created in 2010 to facilitate sales to overseas consumers from Chinese businesses, comes from the increasing number of buyers, particularly from the United States, Russia and Brazil. Further tapping into the international market, Alibaba also launched in June an online shopping portal called 11Main.com where U.S. merchants and U.S. consumers can interact.

With billions in additional capital from its IPO, Alibaba theoretically could invest more heavily in these initiatives to drive more growth in its international endeavors. In other words, the global online marketplace and online payments sector just got a lot more competitive.

With online commerce growing rapidly, aided by growth in mobile-based shopping, the question is, is there room for even more competitors to emerge to put further pressure on U.S. stakeholders?

More China eCommerce expansion?

It appears likely other Chinese firms are eager to find out, as more eCommerce firms from that country now have their own international growth objectives, including DHgate.com, a major B2B ePlatform provider that specialize in cross-border trade.

“The successful listing of Alibaba shows China’s indigenous third-party platform has reached maturity,” Li Guiping, a DHgate.com senior said in the wantchinatimes.com report, noting his hopes that Alibaba’s IPO success can create more new trade channels. “It is like a cardiotonic injection for China’s eCommerce industry.”

DHgate.com recently completed a fourth round of financing and is looking to introduce mobile-terminal services in new markets, said Li.

In addition, JD.com (Jingdong Mall), China’s second-largest eCommerce company after Alibaba, also is working hard to develop cross-border trade, Xu Xinquan, a senior executive with the company, said in the wantchinatimes.com article.


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