Since the global COVID-19 outbreak in 2020, who is meeting the endless new needs of global buyers?
"An environmentally friendly bag of water-soluble dog poop that we sold in the UK, Germany, France, Italy, Spain and the US"; "We have over 100 million 'fans' on Tiktok, and our products are not only sold in Europe, America and Japan, but also in Southeast Asia." "10 years ago, the foreign trade major I studied was very popular. After graduation, I had to fight for the head of a foreign trade company. But now, cross-border e-commerce is more popular than foreign trade companies.
These are not the chief executives of traditional multinationals but the post-1980s and post-1990s traders from the Pearl River Delta, Yangtze River Delta and even inland provinces who have built from scratch perhaps the world's tiniest multinationals.
"The next three years are still the golden age for digital trade. On the Asian scale, a number of micro-multinationals are rapidly emerging, not only to do business in multiple overseas markets thousands of miles away, but also to become the future mainstay of global trade." So said David Lin, vice chairman of Deloitte China.
On December 14, Deloitte released the 2021 Report "Technology Enabling Digital Trade in Asia Pacific", which focuses on the global digital trade rising against the trend of COVID-19, analyzes the ecological changes of digital trade in Asia Pacific in detail, and Outlines for the first time the leading role in this change -- the growing small and medium-sized cross-border e-commerce enterprises in Asia. With the policy dividends of the Regional Comprehensive Economic Partnership (RCEP) and digital technology, they are attempting the crucial leap to become "micro-multinationals".
RCEP has broken down barriers and reduced costs
Asia-pacific digital trade has entered a strong growth cycle
In 2020-2021, the epidemic accelerated the digitization process of consumers and businesses, and global buyers became accustomed to online "buy, buy, buy", resulting in rapid growth of global digital trade.
Global trade in goods reached a record high of more than $5.6 trillion in the third quarter of 2021, according to the United Nations. Among them, cross-border e-commerce is taking off. According to China's General Administration of Customs, the import and export volume of China's cross-border e-commerce grew by 20% in the first three quarters of this year and reached 1.7 trillion yuan in 2020, with exports accounting for two-thirds, up by 40%.
And that growth has only just begun. The deloitte report pointed out that under the influence of technological progress, international cooperation and opening-up, global trade is entering a new stage of intelligent upgrading. Important digital infrastructure, including 5G, will be put in place, and artificial intelligence will be superlaid with massive big data, enabling intelligent decision-making and ushering in the era of the Internet of everything. Technological upgrading will attract more and more cross-border e-commerce enterprises to join the global industrial chain of digital trade to meet the growing digital consumption habits of global consumers, among which the Asia-Pacific region will become a new force in the construction of global digital platforms.
At the same time, the policy construction in different regions of the world is also affecting the development trend of the region. On the one hand, on January 1, 2022, the RCEP, the largest free trade agreement benefiting the largest population in the world, will enter into force. It will promote regional digital trade in five areas: removing tariff barriers, establishing flexible rules of origin, promoting e-commerce, enhancing trade facilitation, and focusing on small and medium-sized enterprises and technical cooperation. On the other hand, from July 1, 2021, the VAT reform of the European Union will be officially implemented. The key reforms include the abolition of the 22 euro VAT exemption, the unification of the taxable registration threshold for long-distance sales, the expansion of the scope of application of the "one-stop" compliance mechanism, and the clarity of VAT payment obligations of e-commerce platforms.
In this regard, the Deloitte report predicts that digital trade activities in the Asia-pacific region will show a comparative strength in the future. Technology dividend superimposed policy dividend, in the next three years, Asia's "micro multinational enterprises" will usher in a critical leap.
"The implementation of RCEP can truly solve the problems facing the cross-border e-commerce industry." Guangzhou yan Xun trade general manager David Li said. With less than 100 employees, the company focuses on home furnishing and lighting products, which are mainly sold to the United States, Europe, Japan and other countries and regions.
Referring to the dividends RCEP will bring, David Li said for example, "The high cost of tariffs in Japan in the past two years has led many Chinese cross-border e-commerce sellers to abandon the Japanese market. If the IMPLEMENTATION of RCEP can gradually achieve zero tariffs among member countries, it will undoubtedly be good news for cross-border e-commerce enterprises."
According to deloitte's survey of nine Asia-Pacific countries, cross-border e-commerce enterprises in the region have high expectations for the RCEP coming into force, especially in terms of simplifying customs clearance procedures and improving efficiency, followed by lowering tariff barriers and lowering local entry barriers for enterprises.
Not content with relying on big platforms
Seventy percent of micromultinationals want to set up their own sites
What is the concept of "micro multinational"? For example, guangzhou Yanxun Trade general manager David Li's company is characterized by fewer than 100 employees and global trade. Deloitte's survey of more than 600 cross-border e-commerce enterprises in asia-pacific countries shows that 85% of cross-border e-commerce enterprises are small and micro enterprises with less than 100 employees. As few as one or two people, but managed to average more than three overseas markets. 3C, home furnishing, beauty makeup, clothing and so on are the top-selling goods exported by "micro multinational enterprises" all over the world. European and American markets are the main export markets, while Southeast Asia is recognized as the fastest developing emerging market.
At the same time, most of the founders of these "micro multinational enterprises" were born in the 1980s and 1990s. They are "Internet natives". Unlike the older generation of foreign traders who are limited by orders from international purchasing giants, they are better at facing and mining consumer demand from global social networks. To provide direct consumer marketing (DTC) to young overseas consumers with the help of "made locally" and flexible supply chain in Asia Pacific.
David Li, who was born in 1985, said that he entered the field of cross-border e-commerce 10 years ago, when cross-border e-commerce was still a blue ocean market. In 10 years, the company's business expanded from eBay to Amazon and AliExpress, and what he most wants to try is to be an independent website.
From Douyin live to Tiktok myopic band products after 1995, Ah Zhu, also have a special liking to independent station. "We prefer to set up our own standalone site, because we have to pay 15 percent commission for each purchase on Amazon, and we can keep the commission down to 7 percent. And do independent station equivalent to their own goods, with flow, master the right to speak more, just have enough supply."
At present, Ah Zhu has a team of less than 20 people, among whom three founders are responsible for developing popular models and a dozen employees are responsible for video creation and independent station operation. They have opened hundreds of video accounts to serve more than 100 million "fans" around the world, and then divert "fans" to the independent multi-regional foreign trade website established by themselves, focusing on vertical categories such as clothing, pets and home furnishing. At present, its main quality and cheap "domestic goods" has been sold to Europe, the United States, Japan and other countries and regions.
Currently, 64 percent of Asia's "micro multinationals" do business on Amazon, 31 percent on eBay, 18 percent on Self-build and 18 percent on Lazada, 14 percent on AliExpress and 13 percent on other overseas local e-commerce platforms, according to the Deloitte report. However, a significant change since 2021 is that 30 percent of enterprises have set up their own independent foreign trade websites, and another 70 percent hope to set up their own independent websites. Compared with relying on Amazon and other platforms in the past, the rise of self-built independent sites is a sign of the awakening of independent brand awareness of "micro multinational enterprises". This can not only eliminate the "entry fee" of third-party e-commerce platforms and avoid being restricted by the rules of large platforms, but also more directly face consumers, enhance the brand loyalty of "fans", make the follow-up promotion and new promotion more active, and improve the security of digital trade data.
Cross-border financial services within the RCEP region are resilient
It is safer for "micro-multinationals" to go offshore
Despite the global impact of COVID-19, cross-border financial services in the RCEP region, the world's largest free trade zone, are still showing strong resilience.
On December 14, the "RCEP Regional Digital Trade Cross-border Payment Service Index" jointly launched by Zhejiang University and Ant Research Institute confirms the significant improvement in the capital settlement channel capacity of Asia-Pacific cross-border e-commerce in recent years, among which "micro multinational enterprises" are the most active and dynamic.
From the perspective of small and medium-sized cross-border e-commerce enterprises in RCEP15 countries, the index integrates a series of indicators including the number of sellers participating in cross-border collection, transaction amount, number of payments, average length of collection and currency of payment, and measures the overall service level change of the industry from the two dimensions of cross-border financial service scale and service quality.
According to the index, the RCEP Regional Digital Trade Cross-border Payment Service Index has nearly doubled in four years since 2018, with an annualized growth rate of 18.55%. The year-on-year growth of the cross-border payment service scale Index was 53.5% in 2020 and 14.7% in 2021, maintaining double-digit growth in both years. Among them, payment activity, as measured by the number of payments, far outpaced the growth of sellers and the growth of transaction value, growing 25.6% year-on-year in the third quarter of 2021, hitting a record high.
In this regard, Ben Shenglin, dean of The International Business School of Zhejiang University, said that this shows that small and medium-sized sellers are increasing, and orders are gradually showing the characteristics of fragmentation and small order, which confirms the rise of "micro multinational enterprises" in Asia.
It is important to note that deloitte released 2021 annual report just the digital technology can assign the asia-pacific trade, according to the current "wait for a ship to" is the industry's widespread anxiety, especially the "container" has affect "multinational" delivery efficiency, high cost of logistics, customs clearance inspection difficult to become one of the biggest challenges facing the current cross-border electricity enterprise. But at the same time, in the operation treasure box of "micro multinational enterprises", enterprises are more satisfied with cross-border payment tools because digital technology can help cross-border payment achieve zero threshold, low cost and high efficiency.
Ding Chao, co-founder of Shenzhen Gori Technology, which is popular in The European and American markets through cross-border e-commerce, is one of the followers of cross-border payment tools. "In the past, it took at least one to two months to do foreign trade," he said. "However, electronic payment platforms such as WorldFirst provide cross-border payment services that can be delivered in one minute with the lowest rate in the market. If the market rate is 0.8%, the cross-border payment tool can reach 0.3%. At the same time, Wanlihui can also directly pay alipay account, which is convenient for enterprises to purchase goods from domestic trade wholesale platform, which can shorten the time cost by 30%. In addition, it can also help companies complete VAT and excise tax claims in European markets."
David Li, general manager of Guangzhou Yanxun Trading, a "micro multinational", compares cross-border digital financial services to the "digital chief financial officer" of outsourcing. "With tech-savvy 'digital Cfos', it is safer and more reliable for companies to go overseas, and they basically don't have to worry about the security of their funds."
"In the era of digital technology, payment technology gives small and micro enterprises the opportunity to grow into micro multinational enterprises, allowing them to sit on the train of global digital trade with a very low threshold, and even sit in the same compartment as those large multinational enterprises." Ben shenglin said.
Fan Jian, head of Wanlihui China, said "micro multinationals" need more policy and technical support to help them make cross-border "payments and transfers" more quickly and safely while going overseas, so that they can quickly seize global digital trade opportunities.
"We have recently provided a variety of services such as online business loan and US dollar loan, hoping to help cross-border e-commerce enterprises' scramble to raise money 'with the power of technology in the year-end' consumption campaign ', and relieve the financial pressure caused by enterprises' demand for stocking and delivery. With the RCEP coming into force next year, China's 'micro multinational enterprises' will face even greater opportunities." Fan Jian said.