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E-WTP facilitates SMEs go global via digital Silk Road

Editor: zhangrui 丨CRI

05-16-2017 06:49 BJT

Full coverage: Belt and Road Forum for Int'l Cooperation

The development of the digital economy and advancements of new technology are expected to bring more opportunities to small and medium enterprises, or SMEs, through globalization on an electronic world trade platform.

E-WTP and globalization

Speaking during a session of the Belt and Road Forum for International Cooperation, Jack Ma, executive chair of Chinese e-commerce giant Alibaba, has called for fair globalization.

Jack Ma, executive chair of Chinese e-commerce giant Alibaba, speaks at a parallel session of the Belt and Road Forum for International Cooperation held in Beijing on Sunday, May 14, 2017. [Photo provided by Alibaba Group]

Jack Ma, executive chair of Chinese e-commerce giant Alibaba, speaks at a parallel session of the Belt and Road Forum for International Cooperation held in Beijing on Sunday, May 14, 2017. [Photo provided by Alibaba Group]

"The world needs to have more free trade, be fairer and more inclusive, and globalization is the capability to serve the world. The core value of globalization is to create jobs, create values for local people. We should care more about developing countries, care more about SMEs, and care more about young people," said Ma.

Alibaba's electronic world trade platform, the e-WTP, is being described as a new tool to battle with trade protectionism and a perceived rise in anti-globalization sentiment the past few years.

Song Juntao, head of Alibaba's e-WTP project, says the platform is built to provide one-stop solutions for SMEs, arguing they've been largely left out of the world free trade regime. Song says the project is an opportunity for small businesses to go global.

"We want to provide one-stop logistic services as well as one-stop commercial services which include customs clearance for imports and exports, tax refunds and exchange settlements," said Song. "We also want to offer one-stop financial services and inclusive services including payments and inclusive finance. We will also offer one-stop cloud-computing and big data services. In addition, we will send technologies and professionals to help with the trainings and development of local talent and the establishment of their own system."

The e-WTP proposal was officially included in the G20 Leaders Communiqué at the G20 Hangzhou summit last September, and has been endorsed by the World Trade Organization (WTO).

First e-hub in Malaysia

Alibaba announced in March it planned to establish its first e-hub of the e-WTP in Malaysia, encompassing logistics, cloud-computing and online financial services.

The e-hub is part of a collaboration agreement worked out between Alibaba and the Malaysian government, which is hoping to establish a digital free trade zone in the country.

"The Malaysian e-WTP hub is a regional hub. We want to make this hub be the sample for most of the developing countries," said Jack Ma while meeting with visiting Malaysian Prime Minster Najib Razak last Friday at Alibaba headquarters in Hangzhou, adding that "the internet is the solution to help developing countries, small business and young people, and is the way to help inclusiveness."

Chuah Poh Khiang, Chairman of the Malaysian Chinese Association Central PRC Affairs Committee, said the new digital free trade zone is expected to boost trade and e-commerce in Malaysia.

"In the past, a company needed to pay for a whole container even if it wanted to export just a small quantity of goods overseas, which was unaffordable for Malaysian SMEs. Now with e-commerce platforms, it is possible to export small quantities of goods. That's a real benefit for SMEs," said Chuah.

Danny Ng Theng Wei, the President of eBusiness Association of Malaysia, said Malaysian SMEs are still not clear about the do's and don't's when exporting products to countries like China, therefore, they face difficulties in the application processes for export permits, as well as in customs clearance procedures. He said he hopes the e-hub can, in time, help solve these problems.

"A lot of companies are still unclear in terms of how do we can go about making use of this digital free trade zone, so a lot of companies are waiting for a few successful cases before they actually say - how can I be part of this growing and exciting platform," said Ng.

To make things clearer, training programs are underway at Alibaba headquarters in Hangzhou, providing Malaysian SMEs with training on how to use the e-commerce system.

Jing Linbo, an associate director of the Chinese Academy of Social Sciences' National Academy of Economic Strategies, says the e-WTP is going to help to provide the infrastructure required in e-commerce.

"In the past, SMEs didn't have enough money to set up the infrastructure. For example, for e-commerce we need facilities, internet, logistics, and e-payment. With this system, Alibaba helps to provide the infrastructure, allowing SMEs to share and enjoy a unified system," said Jing.

Infrastructure in Malaysia's e-hub program is expected to take up to 2 years to be built. The construction of a big data center is already underway in Malaysia.

Meanwhile, the first e-hub in China is also under preparation in Hangzhou, with more e-hubs are expected around the world.

Data from all the e-hubs will be inter-exchangeable in the future, forming a type of "e-road" to help facilitate global trade.

Steps of China's cross-border e-commerce

The idea of e-WTP has been developed based on the growth of e-commerce in China. With platforms such as Tmall Global and AliExpress, Chinese and foreign customers can easily buy things from other countries.

AliExpress, the biggest Chinese e-commerce platform targeting overseas markets, surpassed 100 million overseas users on April 10 this year.

Spanning over 200 countries and regions in 18 languages, AliExpress boasted 60 million active users in 2016, with over 2 million log-ins per day.

Israeli Roy Kriezman is a frequent user of AliExpress. He said the goods on sale are quite cheap, and their descriptions are very clear.

"I am satisfied with most of the things I bought," he said. "In addition, they have very mature after-sales service, so it's convenient if you want to return the goods and get the refund. If you are not satisfied you can lodge a complaint and the problems can be solved quickly."

ToYouth, a Chinese fashion design brand focusing on women's dresses, began selling its products on AliExpress around 3 years ago, is now selling its clothes in over 60 countries.

Xi Bei, Chief Operations Officer of ToYouth's cross-border e-commerce project, said AliExpress offers an optimized sales channel for SMEs.

"Their solutions on logistic distribution and payment have solved the major problems we face when going global. Also, they deal with the intermediate links such as customs applications instead of us, which also helps to cut our costs," said Xi Bei.

According to Xi Bei, Alibaba also offers sellers on the platform big data services on customer behavior, allowing them more opportunities for market research.

According to data from the Ministry of Commerce, cross-border e-commerce turnover in China grew by an average of 30 percent per year from 2008 to 2015. In 2016, total turnover reached 6.3 trillion yuan.

By 2020, trade volume through cross-border e-commerce is expected to account for 37.6 percent of China's total exports and imports, making it a significant part of China's foreign trade, research agency CI Consulting predicted.

Reshaping global trade rules

At the opening ceremony of the Belt and Road Forum for International Cooperation on Sunday, Chinese President Xi Jinping called for the pursuit of innovation-driven development and the construction of a digital silk road for the 21st century.

"We should spur the full integration of science and technology into industries and finance, improve the environment for innovation and pool resources for innovation. We should create space and build workshops for young people of various countries to cultivate entrepreneurship in this age of the internet and help realize their dreams," said Xi.

Dubbing the e-WTP as commercial link to the 'Belt and Road' initiative, Alibaba plans to build the e-WTP into a platform which encourages the private sector to explore new business models.

Jing Linbo with the Chinese Academy of Social Science said the e-WTP also has the potential to influence global governance and trade rules.

"The e-WTP will be a key reformer in creating global trade rules," said Jing. "Nowadays we face a lot of regional trade zones and regional trade projects, so we face new problems. We need to utilize new technology and new business models to let different people, different countries, and different interest groups merge together and promote global trade in further areas."

In a report released by China's National Development and Reform Commission earlier in May, the e-WTP has been described as "the most influential idea and most practical innovation so far, among private institutions participating in the building of the Belt and Road".

The report says the e-WTP has made remarkable achievements in connecting domestic and foreign markets and reshaping trade rules among SMEs worldwide.


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