WIM 2022 New York: The Era of Cross-Border E-commerce Has Arrived

Consumer Staples, Consumer Discretionary Author: Contributor, Sally Shi, Fuller Wang Jul 27, 2022 02:09 PM (GMT+8)

Within the past 10 years, the market cross-border e-commerce has been developed thoroughly. However, the era of cross-border e-commerce has just arrived, filled with plenty of opportunities and room for expansion.

WIM 2022

Following the trend of globalization, businesses in China tend to expand their business range to other countries. In 2021, within the first ten months, China's total amount of export was CNY 1.99 trillion, up 29% year-over-year. Cross-border e-commerce potentially becomes the hottest direction for business boost.

Obviously, the public is supporting this tendency, such as increased funding rounds and government policies. In 2021, the scale of China's cross-border e-commerce SaaS market reached CNY 7.3 billion, up 75.8%. As mentioned by the Chinese government, the development of China's cross-border e-commerce policy has undergone three stages: policy budding period, policy development period, and policy outbreak period. After being affected by the epidemic in 2020, cross-border e-commerce has become an essential breakthrough in promoting the transformation and upgrading of foreign trade and creating new economic growth points, and has received expenditures from many policies. The industry of cross-border e-commerce has opened up with significant development opportunities during the "145 Year Plan" period. Primarily after Announcements No. 56 and No. 57 issued by the General Administration of Customs of China in 2014, this wave has already become bigger and bigger. Within the year 2021, more than five major policies toward the cross-border e-commerce industry have already been published and applied to normal life, in order to support the development of the whole industry better. At the beginning of 2022, another good news has been ushered - 27 new cross-border pilot zones will be established across the country. In addition, the funding rounds have dramatically increased. For 2021, the number of funding rounds of cross-border e-commerce was 77, up 133.33% year-over-year. The total value of investments for these funding rounds was CNY 20.70 billion, up 191.55% year-over-year. We believe the highest wave of cross-border e-commerce has already arrived now.

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We think that this track is filled with competitions. There is absolutely no doubt that large companies want a slice of the pie. Internet giants such as Alibaba, JD.com, and ByteDance have not only involved themselves, but also have provided funding for unicorns and startups. Companies that find it difficult to expand furthermore due to the size limitation of the Chinese market, have tried to reach the global market for more business opportunities and higher business growth. More and more startups have been established, because of the attractiveness of opportunities in the cross-border e-commerce market. For example, after SHEIN's business transition in 2012, SHEIN has been representative of the startup's success in the market of China's cross-border e-commerce. From 2017 to 2020, SHEIN's revenue achieved rapid growth, with a compound annual growth rate of about 180%. In 2020, SHEIN increased by as much as 300%, achieving annual revenue of about CNY 10 billion, due to the business opportunities in online sales resulting from COVID-19. 

However, with the increased depression and inflation that mainly resulted from COVID-19, the cost of cross-border e-commerce has increased. Take Amazon, the hottest platform that many e-commerce picks, as an example. According to Marketplace Pulse, from the first month till the end month of 2021, the single click price of Amazon advertising has increased from USD 0.93 to USD 1.33. This 43% increase has inevitably increased the cost of market expansion and product promotions. You might wonder will the conversion rate also increases correspondingly? The average conversion rate is still stable in the range of 12% to 13%, at an almost 0% increase rate. And it is very likely that the real conversion rate does not reach this range, because on Amazon, there is a trend that top sellers will be sold soon, and others are waiting to be chosen by luck. Therefore, Amazon's advertising cost of sale has increased, causing more costs for the development of companies in cross-border e-commerce. Besides, even though last year's account ban incident of Amazon set up fair standards for the competition, it has also driven up the price of advertising. There is no room for opportunism. In addition, the trade war and the emergent COVID-19 also result in the increase in costs of labor, shipping, and production, and the delay in the supply chain, customs clearance, and logistics.

Even though cross-border e-commerce has increased cost and competition, more and more companies have already poured into this market. Because there are relatively more opportunities and more space to expand their business. We suggest that companies, that only want to sell their products, could take advantage of relatively cheaper labor of production and build the supply chain for companies in America. For companies that want to develop their own branding, it is better to define their uniqueness compared with other similar companies. Because if the products sold are too common in the market, it is relatively difficult to stand out in this competition. For well-known companies in China, it is better to find a target for their business, successful marketing strategies that attract people to choose your products, or even design new products that fit the culture of the newly expanded market. We analyze that there are thoroughly rooms for Chinese companies to join in cross-border e-commerce. The only matters are how to attract customers and how to design yourself. We could help "Made in China" popular again.

If you want to learn more about the trends in cross-border e-commerce sectors in both China and US, join us in Manhattan on July 29-30, WIM (World Innovators Meet) 2022 and we will hold a panel, "Trends in SPACs, Cross-Border M&A Transactions, &Alt. Routes to Intl. Listing". We also have invited talented speakers in this industry to share their experiences and insights. Meanwhile, you could interact with like-minded business leaders, investors, scholars, and international relations experts on the key issues and opportunities facing U.S-China business collaboration and investments.

Over the course of 2 days, hear from speakers on the past, present, and future of innovation and exchange between China and the world–from trends in Blockchain, IoT, AI, 5G, Biotech and Fintech for 10 sessions, and network with 175 attendees representing top institutional investors, venture funds, and investment firms.