Manufacturers in China’s cross-border e-commerce sector are gaining momentum in the global market for general merchandise as the rising popularity of Chinese shopping apps fuels demand.
In June, China reported a 68 per cent year-on-year increase in the export value of “low-value simple clearance goods”, primarily representing cross-border e-commerce, according to customs authorities.
Cross-border e-commerce exports grew by 7.1 per cent, month on month, becoming China’s second-largest export category by value in June. In comparison, China’s overall exports in June grew by 8.6 per cent, year on year.
In the first half of the year, the value of China’s exports of cross-border e-commerce products saw a year-on-year rise of 36.72 per cent to US$38.16 billion.
Cross-border e-commerce is enjoying a rapid boom in China, benefiting from a rise in global demand and affordable prices as Chinese manufacturers offer discounts in a price war targeting bargain-hunting consumers. The sector has also gained support from various levels of government in China.
The latest support was demonstrated in a 22,000-word resolution released after the much-awaited third plenum that concluded last week, as Beijing vowed to build comprehensive pilot zones and global distribution centres for cross-border e-commerce. Leadership also pushed for regions with the right conditions to build international logistics and commodity allocation hubs to spur growth.
“China’s disinflationary environment and weak domestic demand have pushed more firms to enter the overseas market at competitive prices,” said Gary Ng, senior economist with Natixis Corporate and Investment Banking.
For global consumers, buying Chinese products online has also become an attractive option, as goods under a certain value are exempt from import tariffs, Ng said.
“However, challenges may emerge as more countries view duty-free options online as a way to bypass taxes,” Ng noted, adding that “this may create unfair competition for local businesses”.
With the likelihood of a Trump presidency increasing after Biden’s election dropout, Chinese manufacturers are front-loading their exports amid fears of a deeper tariff war.
In the first half of the year, the US was the main export destination for China’s cross-border e-commerce products, accounting for 25.2 per cent of the total export value, according to customs data.
In June, exports of cross-border e-commerce to US increased by 42.45 per cent, year on year.
“It is hard to say how much of the demand comes from the US election, but it is clear that China is probably still the most accessible one-stop shop for low-value goods,” Ng added.
As a global factory, China is expanding its presence in the global e-commerce market, and it has nurtured brands such as Pinduoduo’s Temu, Shein, TikTok and AliExpress. AliExpress is owned by Alibaba, which also owns the South China Morning Post.
The southern Chinese city of Shenzhen saw the volume of airborne cross-border e-commerce business at its international airport reach 138,000 tonnes in the first half of the year, a year-on-year increase of 68.5 per cent, the local Shenzhen Economic Daily reported on Tuesday.