Consultant Insight: China as the epicenter of cross-border e-commerce

China’s efforts to grow its cross-border and domestic express services in recent years are bearing fruit and positioning China as the world leader for cross-border e-commerce traffic. A total of 150 billion parcels were delivered domestically and internationally in 2020, with 69% handled in the Asia-Pacific region and China, representing 55% of the total market at 83 billion parcels, according to the State Post Bureau's Development and Research Center of China. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] For 2021, the State Post Bureau estimates that China will handle 95 billion parcels, accounting for more than half the global market, which this year is estimated at 170 billion parcels. Domestically, the focus has been on expanding express services to rural areas of China. "In rural areas, most parcels arrive at towns," Ma Junsheng, director general of the State Post Bureau, said at the recent Fourth China (Hangzhou) International Express Delivery Conference. "Locals who reside in villages have to travel to towns to pick up the packages, some riding motorcycles, and some driving tractors, even for hours." China began an initiative to expand its express delivery network to rural areas six years ago. In 2020, about 30% of parcels were delivered to rural areas. Ma also urged leading parcel delivery enterprises to expand abroad by improving international networks and building major hubs. As such, an alliance was launched between 16 parcel delivery companies, including YTO Express, ZTO Express, SF Express and Yunda Express, with the goal to promote the development of international express deliveries. Indeed, at the second China-Central and Eastern European Countries (CEEC) Expo, Ningbo and Zhejiang Province were highlighted. For the first quarter, cross-border e-commerce exports from this city and region pair to CEEC reached $7.05 billion, up by 78% year over year. “There are now more than 120,000 active export online stores on major third-party platforms in Zhejiang Province, said Sheng Qiuping, director-general of the Department of Commerce of Zhejiang Province, during the expo. “We have also built overseas warehouses for cross-border e-commerce." To accommodate the growing demand, local operators are beefing up their cargo fleets. SF Express recently expanded its fleet size to 63 aircraft when a converted 767-300 freighter joined the fleet in June. It is the second addition to the fleet in 2021. According to the company, SF Airlines' global network comprises77 destinations at home and abroad, reaching Asia, Europe and North America. Thanks to capacity constraints in air and ocean freight transport, cross-border transportation by train is also on the rise. According to the Chinese government, a record 12,406 China-Europe freight train journeys were made in 2020, up 50% from 2019. The increase was due to Chinese policies implemented early in 2020 to boost cross-border e-commerce. Economics of cross-border e-commerce From an economic perspective, cross-border e-commerce is important to China. Imports and exports of China's cross-border e-commerce totaled $261.5 billion in 2020, up 31.1% year over year. Meanwhile, the annual growth rate of foreign trade was only 1.9%, according to China's General Administration of Customs (GAC). For the first quarter of this year, China's customs data showed that its cross-border e-commerce reached a $65.28 billion, a 46.5 % increase from the same period in 2020. E-commerce exports increased 40.1%, while imports were up 16.5%. The Regional Comprehensive Economic Partnership (RCEP) agreement, signed by 15 Asia-Pacific countries will further expand China's cross-border e-commerce capabilities. Countries included in the agreement are Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand and Vietnam. The RCEP specifically singled out e-commerce and digital trade as areas the countries involved plan to develop, promote and enhance. The agreement includes the facilitation of paperless trading, electronic authentication, electronic signatures, online consumer protection and online personal information protection.

Consultant Insight: China as the epicenter of cross-border e-commerce

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