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DHGATE.COM | TSINGHUA UNIVERSITY, NATIONAL ENGINEERING LABORATORY FOR E-COMMERCE TECHNOLOGIES

| CENTRAL UNIVERSITY OF FINANCE AND ECONOMICS, CHINA CENTER FOR INTERNET ECONOMIC RESEARCH1

2016 China Cross-Border E-Commerce

(Export B2B) Report

Table of Contents

DHGATE.COM | TSINGHUA UNIVERSITY, NATIONAL ENGINEERING LABORATORY FOR E-COMMERCE TECHNOLOGIES

| CENTRAL UNIVERSITY OF FINANCE AND ECONOMICS, CHINA CENTER FOR INTERNET ECONOMIC RESEARCH 2

Table of Contents

Preface .............................................................................................................................. 1

1. Cross-Border E-Commerce Development Index for Provincial Level Administrative

Regions in China ................................................................................................................. 3

2. Cross-Border E-Commerce Index for Provincial Level Administrative Regions in China .. 5 (i) Market Size Index ................................................................................................................... 5 (ii) Growth Index ......................................................................................................................... 7 (iii) Penetration Index .................................................................................................................. 9 (iv) Influential Factor Index ....................................................................................................... 11

3. China’s Cross-Border E-Commerce Development & Distribution Analysis .................... 13 (a) Regional Development Distribution Analysis ...................................................................... 13

1. Eastern Region ................................................................................................................. 13 2. Central Region ................................................................................................................. 14 3. Western Region ................................................................................................................ 14

(b) Trade Partners Analysis .................................................................................................... 15 1、 Major Trade Partners ...................................................................................................... 15

2、 Analysis of Major Trade Partners ..................................................................................... 16 (c) Analysis of Product Categories ........................................................................................... 20

1. Cross-Border E-Commerce （Export B2B）Major Products & Growth .................................. 20 2. Cross-Border E-Commerce (Export B2B) Major Product Categories Ranking .......................... 21

(d) “The Belt and Road” Continues to Strive ........................................................................... 22 1. “The Belt and Road” Major Trade Partners Analysis ............................................................. 23 2. “The Belt and Road” Related Trade Analysis of Provinces ..................................................... 23 3. “The Belt and Road” Traded Product Categories Analysis ..................................................... 24

4. China’s Cross-Border E-Commerce Development Trends & Prospects .......................... 26 (i) The Growing Prowess of “Chinese Brands” ............................................................................ 26 (ii) B2B Model, The Fundamental Pillar of E-Commerce ............................................................ 27

Conclusion ........................................................................................................................ 28

Appendix: Calculation Methodology .................................................................................. 31

Preface

DHGATE.COM | TSINGHUA, NELECT | CUFE, CCIER 1

Preface

In recent years, China’s cross-border digital trade has achieved remarkable progress and

significant growth. In 2015, cross-border e-commerce turnover surged to 5.4 trillion yuan, which is

a year-on-year increase of 28.6%. Of the total transaction turnover, cross-border export e-commerce

trade reached 4.49 trillion yuan, accounting for 83.2% of the total figure; while cross-border import

e-commerce trade amounted to 907.2 billion yuan, accounting for 16.8%. China’s cross-border e-

commerce turnover is projected to surpass 10 trillion yuan at the end of 2018, corresponding with

the projected average growth rate of approximately 23% in the coming three years. On the macro-

level, B2B cross-border e-commerce transactions accounted for 88.5% of total turnover, dwarfing

the turnover generated by B2C cross-border e-commerce transactions, which contributed only 11.5%.

B2B e-commerce continues to be the mainstay of cross-border digital trade.

B2B exports in China’s cross-border e-commerce sector have been growing rapidly and

consistently at a rate of 50% and above, outpacing the growth rate of exports on the whole (Source:

Customs Statistics), and consequently it plays a significant role in China’s import and export trade.

Meanwhile, there has been an increase in B2B cross-border e-commerce as a proportion of total

export turnover, with 1.3‰ growth in 2013, and 3.5‰ growth in 2015. Therefore, to analyze the size,

rate of growth, structure, and future developments of Chinese cross-border e-commerce through the

perspective of its B2B exports, would be both a symbolic and practical approach.

2013 2014 2015

Cross-border E-Commerce

(Export B2B) growth

58.9% 53.7% 59.1%

China’s Annual EXPORT GROWTH 7.9% 6.6% -0.3%

Cross-Border E-commerce,

% of Total export

1.3‰ 2.7‰ 3.5‰

The 2014-2015 Cross-Border E-commerce Development Index takes into account the

performance of 33 Chinese provincial level administrative regions in cross-border e-commerce in

2014-2015, by examining their respective size, growth, penetration and market support mechanisms.

Apart from highlighting the scale of the cross-border e-commerce market, this index also places an

emphasis on the weightage of each province’s performance on China’s overall cross-border e-

commerce trade, as well as in comparison with the province’s international trade. This index was

created based on actual statistics from Chinese cross-border e-commerce platforms, and calculated

Preface


using a scientific approach, resulting in an objective and authentic reflection of the current situation

and future developments.

The 2015 Index shows that e-commerce hub provinces Guangdong, Zhejiang and Fujian are the

top 3 performing players in cross-border e-commerce, while Xinjiang, Jilin, Hainan and several other

provinces have undergone remarkable growth. Lastly, Ningxia, Inner-Mongolia, Liaoning and a few

other provinces still have great room for improvement.


1. Cross-Border E-Commerce Development Index for Provincial

Level Administrative Regions in China

In 2015, the Chinese cross-border e-commerce market has continued to grow, albeit at a more

gradual rate, cross-border e-commerce has exerted a large impact (penetration) on each province’s

economic development, resulting in the continual improvement of market support mechanisms

provided by each province for the general e-commerce market landscape. The performance measures

and rank of all provinces’ B2B cross-border e-commerce trade is presented in the following table.

Table 1: China Provincial Level Administrative Regions Cross-Border E-commerce Index 2015

Rank

Province

Market

Size Index

Growth

Index

Penetration

Index

Influential

Factor

Index

Cross-Border

Index

Change

in Rank

1 Guangdong 100.00 13.31 88.71 73.70 77.77 -

2 Zhejiang 52.53 11.50 85.19 54.35 51.04 -

3 Fujian 22.78 19.87 99.94 25.19 37.87 ↑ 1

4 Shanghai 25.05 8.42 54.98 54.78 30.69 ↓ 1

5 Beijing 9.90 12.46 79.82 64.05 29.81 -

6 Jiangsu 25.00 15.58 30.81 37.47 25.52 ↑ 1

7 Henan 5.36 20.86 74.02 8.06 22.47 ↑ 3

8 Xinjiang 0.06 100.00 0.90 7.23 20.93 ↑24

9 Hunan 2.27 23.99 69.67 7.01 20.57 ↑ 7

10 Hebei 2.53 33.55 38.24 13.97 17.02 ↑ 7

11 Jiangxi 2.63 28.00 43.91 7.52 16.45 ↑13

12 Hubei 2.20 23.38 42.37 14.64 15.71 ↑ 2

13 Shandong 6.71 14.37 37.89 18.15 15.62 -

14 Anhui 2.44 17.36 44.68 8.94 14.52 ↓ 3

15 Sichuan 1.27 41.97 14.05 16.75 13.51 ↑ 5

16 Guangxi 0.89 37.37 15.11 5.24 11.46 ↑12

17 Tibet 0.03 49.42 2.74 6.78 11.13 ↑ 6

18 Jilin 0.30 22.17 18.32 10.53 9.30 ↓ 6

19 Hainan 0.07 33.78 5.27 10.34 8.88 ↑14

20 Shaanxi 0.42 13.30 16.50 13.89 7.56 ↓11

21 Shanxi 0.12 23.23 6.85 9.59 7.04 ↑ 4

22 Yunnan 0.28 28.19 4.15 3.92 7.00 ↓ 7

23 Chongqing 0.49 23.74 5.39 8.18 6.89 ↓ 4

24 Taiwan 0.00 23.46 2.16 16.53 6.78 ↑ 2

25 Heilongjiang 0.25 20.29 8.00 9.38 6.72 ↓ 4

26 Tianjin 0.14 22.88 1.09 14.93 6.36 ↑ 3

27 Qinghai 0.06 1.48 26.18 6.72 6.24 ↓21

28 Gansu 0.14 16.47 8.96 4.03 5.56 ↑ 2

29 Guizhou 0.20 12.32 11.18 3.09 5.11 ↓ 2


30 Liaoning 0.25 17.33 1.00 11.94 4.99 ↓ 8

31 Inner Mongolia 0.18 1.74 13.87 9.26 4.14 ↓23

32 Hong Kong 0.72 5.53 2.16 16.53 3.55 ↓14

33 Ningxia 0.00 1.48 0.00 5.74 0.87 ↓ 2

The 2015 China Provincial Level Administrative Regions Cross-Border E-commerce Index

indicates that the top 5 provinces for cross-border e-commerce trade activities are Guangdong,

Zhejiang, Fujian, Shanghai and Beijing. Of these five provinces, some were involved in e-commerce

development pilot programs, or they possess an advantageous geographical location. This is the

second consecutive year that Guangdong has been at the top of the table. This is primarily due to

Guangdong’s strategic location along the coast, its massive market size and rapid pace in

development; at the same time, Guangdong has an outstanding e-commerce market landscape and

support environment, it is equipped with an all-rounded set of infrastructure necessary in cultivating

a conducive environment for cross-border e-commerce trade activities – easily allowing it to maintain

its position as a forerunner nationally. Lastly, it must be noted that Guangdong province’s focus and

fostering of the “Internet+” strategy, which aims to improve the industry continually, have reaped

substantial benefits. Looking at the change in rankings, various provinces have performed

exceptionally and risen through the ranks: Xinjiang (up 24 spots), Hainan (up 14 spots), Jiangxi (up

13 spots), Guangxi (up 12 spots). Compared with the overall development of B2B cross-border e-

commerce nationally, the value of export B2B cross-border e-commerce in 8 provinces surpassed the

national average index value in 2014 – trade in Guangdong, Shanghai, Zhejiang, Fujian, Beijing,

Qinghai, Jiangsu, Inner Mongolia amounted to 24.2% of the total figure; in 2015, the number of

provinces surpassing the national average index value increased to 11, amounting to 33.3% of the

total figure, this can be attributed to success for the latecomers to the market. Nevertheless, 50% of

the provinces are still below the average index value in 2014—2015, indicating that there is much

room for improvements in these provinces.


2. Cross-Border E-Commerce Index for Provincial Level

Administrative Regions in China, By Categories

(i) Market Size Index

The market size index reflects the cross-border e-commerce market size in the respective

provinces. They are primarily calculated based on each province’s total number of export B2B

transactions and their respective Gross Merchandise Volume (GMV). The evaluation results with

regards to the market size index are presented in Table 2 below.

Table 2: China Provincial Level Administrative Regions Cross-Border E-Commerce

Market Size Index & Ranking 2015

Rank Province Market Size Index 2014 Market Size Index 2014 Change In Rank

1 Guangdong 100.00 100.00 -

2 Zhejiang 55.72 52.53 -

3 Fujian 30.04 25.05 -

4 Shanghai 22.27 25.00 -

5 Beijing 18.19 22.78 -

6 Jiangsu 10.19 9.90 -

7 Henan 6.32 6.71 -

8 Xinjiang 4.25 5.36 -

9 Hunan 2.17 2.63 ↑ 1

10 Hebei 1.71 2.53 ↑ 1

11 Jiangxi 1.61 2.44 ↓ 2

12 Hubei 1.58 2.27 ↓ 1

13 Shandong 1.46 2.20 ↓ 1

14 Anhui 0.96 1.27 ↑ 1

15 Sichuan 0.63 0.89 ↑ 2

16 Guangxi 0.59 0.72 ↓ 2

17 Tibet 0.45 0.49 ↑ 2

18 Jilin 0.40 0.42 -

19 Hainan 0.35 0.30 ↑ 2

20 Shaanxi 0.25 0.28 ↑ 5

21 Shanxi 0.23 0.25 ↑ 1

22 Yunnan 0.21 0.25 ↑ 1

23 Chongqing 0.20 0.20 ↑ 1

24 Taiwan Province 0.20 0.18 ↑ 1

25 Heilongjiang 0.17 0.14 ↑ 3

26 Tianjin 0.12 0.14 -

27 Qinghai 0.10 0.12 ↑ 1

28 Gansu 0.08 0.07 ↑ 1

29 Guizhou 0.03 0.06 ↓ 9


30 Liaoning 0.01 0.06 ↑ 1

31 Inner Mongolia 0.01 0.03 ↑ 1

32 Hong Kong 0.00 0.00 ↑ 1

33 Ningxia 0.00 0.00 ↓ 1

Some notable highlights of the market size index:

1. Guangdong, Zhejiang, Shanghai, Jiangsu, and Fujian provinces took the first five spots in

the rankings. Of which, Guangdong received a considerably higher index score in

comparison to other provinces, indicating again the obvious edge it possesses in export B2B

cross-border e-commerce;

2. There is no drastic change in the rankings on the market size index of 2014-2015 – there is

no change in rank for the top 8 spots (Guangdong, Zhejiang, Shanghai, Jiangsu, Fujian,

Beijing, Shandong, Henan); 90% of the provinces recorded a movement of less than 3 spots

upwards or downwards. This phenomenon can be attributed to how the development of

cross-border e-commerce is largely dependent on the region’s own resources and

dispositions and so drastic changes in market size is unlikely in the short-run;

3. There is a considerable gap between the market size indexes of different provinces, with less

than one-fifth of the provinces surpassing the average index value (8.04). Merely by looking

at the turnover, Guangdong province, which is at the top of the table, has outperformed

Ningxia, the province with the poorest performance by more than 75000 times. This huge

discrepancy is driven by the fact that B2B export is largely dependent on the local industry

scale and regional policies, it is the collective outcome fueled by the market and

policymaking.


(ii) Growth Index

The growth index measures and reflects the provinces’ prospects and potential, focusing on and

calculated with the growth rate of the number of export orders and overall turnover. The growth

index evaluation results are presented in Table 3 below.


Growth Index & Ranking 2015

Rank Province Growth Index 2014 Growth Index 2015 Change in Rank

1 Xinjiang 100.03 100.00 ↑27

2 Tibet 66.77 49.42 ↑ 6

3 Sichuan 65.65 41.97 ↑ 8

4 Guangxi 52.33 37.37 ↑17

5 Hainan 52.06 33.78 ↑28

6 Hebei 51.52 33.55 ↑10

7 Yunnan 50.79 28.19 ↓ 4

8 Jiangxi 44.60 28.00 ↑24

9 Hunan 43.93 23.99 ↑22

10 Chongqing 43.16 23.74 ↓ 4

11 Taiwan Province 41.09 23.46 ↑ 4

12 Hubei 37.16 23.38 ↑ 6

13 Shanxi 34.83 23.23 ↑ 1

14 Tianjin 33.53 22.88 ↑ 8

15 Jilin 33.21 22.17 ↓ 8

16 Henan 32.21 20.86 ↑13

17 Heilongjiang 28.14 20.29 ↓ 7

18 Fujian 27.62 19.87 ↑ 1

19 Anhui 25.63 17.36 ↓ 6

20 Liaoning 23.85 17.33 ↓11

21 Gansu 22.27 16.47 ↑ 6

22 Jiangsu 22.23 15.58 ↓ 2

23 Shandong 21.00 14.37 ↑ 7

24 Guangdong 20.42 13.31 ↑ 1

25 Shaanxi 19.56 13.30 ↓23

26 Beijing 18.73 12.46 ↓ 2

27 Guizhou 17.74 12.32 ↓10

28 Zhejiang 15.30 11.50 ↓ 2

29 Shanghai 11.20 8.42 ↓17

30 Hong Kong 9.86 5.53 ↓26

31 Inner Mongolia 8.69 1.74 ↓30

32 Ningxia 8.26 1.48 ↓ 9

33 Qinghai 3.04 1.48 ↓28


Some notable highlights of the provinces’ growth index:

1. Xinjiang, Tibet, Sichuan, Guangxi, Hainan took the first five spots in the rankings,

indicating that these five provinces’ cross-border e-commerce have the best prospects to

excel;

2. The provinces that fared better on the growth index are not those with a high market size

index. This indicates that latecomers have an edge to develop rapidly, allowing their cross-

border e-commerce sector to progress at an accelerated pace;

3. The change in rankings on the 2014-2015 growth index are apparent, with more than half of

the provinces on the table undergoing a change of 10 positions or more. This implies that

increasing attention is being paid to digital trade as a driver of commerce, resulting in

respective provinces’ emphasis and efforts in this respect.


(iii) Penetration Index

The penetration index reveals the impact exerted by each province’s cross-border e-commerce

activities, as a weightage on their import and export trade. The assessment results are presented in

Table 4 below.


Penetration Index & Ranking 2015

Rank Provinces Penetration Index 2014 Penetration Index 2015 Change in Rank

1 Guangdong 100.00 99.94 ↑ 1

2 Zhejiang 98.78 88.71 ↓ 1

3 Fujian 96.09 85.19 ↑ 1

4 Shanghai 96.00 79.82 ↓ 1

5 Beijing 83.53 74.02 ↑ 2

6 Jiangsu 75.05 69.67 ↑ 2

7 Henan 60.61 54.98 ↓ 1

8 Xinjiang 49.65 44.68 ↑ 1

9 Hunan 38.13 43.91 ↑ 4

10 Hebei 36.87 42.37 ↑ 2

11 Jiangxi 36.34 38.24 ↑ 4

12 Hubei 33.61 37.89 ↓ 2

13 Shandong 30.87 30.81 ↓ 2

14 Anhui 26.50 26.18 ↓ 9

15 Sichuan 23.25 18.32 ↑ 1

16 Guangxi 17.83 16.50 ↑ 1

17 Tibet 16.21 15.11 ↑ 2

18 Jilin 11.25 14.05 ↑ 4

19 Hainan 11.18 13.87 ↓ 5

20 Shaanxi 8.74 11.18 ↓ 2

21 Shanxi 8.17 8.96 ↓ 1

22 Yunnan 7.39 8.00 ↓ 1

23 Chongqing 5.50 6.85 -

24 Taiwan 3.53 5.39 -

25 Heilongjiang 3.43 5.27 -

26 Tianjin 2.77 4.15 -

27 Qinghai 2.24 2.74 -

28 Gansu 1.82 2.16 ↑ 1

29 Guizhou 1.82 2.16 ↓ 1

30 Liaoning 1.35 1.09 ↑ 2

31 Inner Mongolia 0.99 1.00 ↓ 1

32 Hong Kong 0.92 0.90 ↑ 1

33 Ningxia 0.09 0.00 ↓ 1


Some notable highlights of the provinces’ penetration index:

1. Fujian, Guangdong, Zhejiang, Beijing and Henan took the first five spots on the ranking,

signifying that the impact of cross-border e-commerce on their overall trade is the largest.

At the top of the table is Fujian province, its export B2B turnover figure amounts to more

than 50% of its overall export turnover;

2. There are not many changes in ranking on the penetration index, with 80% of the provinces

recording a movement of less than 2 positions, this suggests that cross-border e-commerce

is a gradual process;

3. The provinces that fared poorer on the penetration index are mainly landlocked inland

provinces such as Xinjiang and Ningxia, implying that cross-border e-commerce activities

are affected by geographical location to a certain extent.


(iv) Influential Factor Index

The influential factor index reflects the provinces’ overall market landscape and mechanisms

that support the development of digital trade, thought measures such as infrastructure, logistics

framework, and human resources. The assessment results are presented in Table 5 below.


Influential Factor Index & Ranking 2015

Rank Province Influential Factor

Index 2014

Influential Factor

Index 2015

Change in Rank

1 Guangdong 73.70 72.82 -

2 Beijing 64.05 66.49 ↑ 1

3 Shanghai 54.78 47.10 ↓ 1

4 Zhejiang 54.35 51.75 -

5 Jiangsu 37.47 35.02 -

6 Fujian 25.19 24.17 -

7 Shandong 18.15 19.31 ↑ 1

8 Sichuan 16.75 12.87 ↓ 1

9 Taiwan 16.53 15.57 ↑ 1

10 Hong Kong 16.53 15.57 ↓ 1

11 Tianjin 14.93 14.15 ↑ 2

12 Hubei 14.64 12.39 -

13 Hebei 13.97 13.23 ↑ 1

14 Shaanxi 13.89 10.93 ↓ 3

15 Liaoning 11.94 11.36 ↑ 3

16 Jilin 10.53 15.43 ↑ 1

17 Hainan 10.34 8.53 ↑ 6

18 Shanxi 9.59 9.28 ↑ 4

19 Heilongjiang 9.38 8.74 ↓ 4

20 Inner Mongolia 9.26 8.42 ↓ 4

21 Anhui 8.94 7.57 ↓ 1

22 Chongqing 8.18 8.00 ↓ 1

23 Henan 8.06 6.71 ↓ 2

24 Jiangxi 7.52 5.57 ↑ 2

25 Xinjiang 7.23 6.71 ↓ 1

26 Hunan 7.01 7.40 ↑ 2

27 Tibet 6.78 4.87 ↓ 2

28 Qinghai 6.72 6.50 ↑ 2

29 Ningxia 5.74 4.83 -

30 Guangxi 5.24 4.96 ↓ 3

31 Gansu 4.03 3.26 -

32 Yunnan 3.92 3.42 -

33 Guizhou 3.09 2.09 ↑ 1


Some notable highlights of the provinces’ digital trade influential factor index:

The top five provinces Guangdong, Zhejiang, Beijing, Shanghai, and Jiangsu all have a suitable

environment for the development of digital trade. The logistics industry in the above five provinces

have a higher growth rate, and they constitute a larger portion of the national express delivery

business volume, each amounting to 10% and above, far surpassing the national average value of

3.2%; on average, 4.18% of a region’s total workforce is employed in the e-commerce sector, and in

Beijing this figure has reached 8.5%, far outpacing the national average value of 1.95%; they are also

the forerunners in the country with the highest number of registered domain names and internet

penetration rate. On the other hand, for the five weakest performing provinces, results indicate that

there is a clear potential for the improvement of Guizhou, Qinghai, Ningxia, Gansu and Xinjiang’s

development and market landscape. These provinces require more support mechanisms in the forms

of policymaking, financing and funding, for the establishment of infrastructure, logistics network,

and human resource. Finally, there are no significant changes in the ranking for the influential factor

index. Over 70% of the provinces recorded a movement of less than 2 positions, as the influential

factor index mainly evaluates the impact of external factors on digital trade, with an emphasis on the

infrastructure; there are hard constraints in the establishment of infrastructure, hence there are rarely

drastic changes in the short-run.


3. China’s Cross-Border E-Commerce

Development & Distribution Analysis

This section is an analysis on the development of China’s e-commerce (export B2B) sector

through three dimensions: regional development, product classifications, and trade partnerships.

(a) Regional Development Distribution Analysis

1. Eastern Region

The Eastern region consists of 11 provincial level administrative areas including Beijing,

Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong and Hainan.

Due to strategic factors such as economic progress and advantageous geographical locations along

the coast, the cross-border e-commerce (export B2B) players in the Eastern region account for a vast

majority of the market share, constituting over 90% of both numbers of orders and transaction

turnover. In terms of penetration and support for cross-border e-commerce, they are also ahead of

the Central and Western regions by a large margin (Chart 1). However, in terms of growth, the

average growth rate of turnover for Eastern region provinces in the 2015 is 67.18%, markedly lower

than Central and Western region provinces, indicating that the development of cross-border e-

commerce in the Eastern region has gradually plateaued.

Chart 1 China Cross-Border E-Commerce (Export B2B) Regional Distribution: Size


2. Central Region

The Central region is made up of 8 provincial level administrative regions in total, comprised

of Shanxi, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei, and Hunan. In 2015, provinces in the

Central region constitute 6% of the cross-border e-commerce national transactions turnover, with a

growth rate of 78.47%, making it the fastest growing region for cross-border e-commerce in China

(Chart 2). With respect to penetration and support, the Central region is performing moderately

between the Eastern region and Western region, with plenty of room for improvement.

Chart 2: China Cross-Border E-Commerce (Export B2B) Regional Distribution: Growth

3. Western Region

The Western region consists of 11 provincial level administrative areas including Sichuan,

Chongqing, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Guangxi and

Inner Mongolia. In 2015, provinces in the Western region constitute 2% of the cross-border e-

commerce national transaction turnover, with a growth rate of 78.15%, underscored by only the

performance of the Central region, showing great potential.

With respect to the penetration of cross-border e-commerce on the local market and economy,

the weightage of cross-border e-commerce on the overall import and export trade in the Western

region is currently at 6.5%, which pales in comparison to the Eastern region (34.4%) and Central

region (13.2%); this indicates that there is great room for improvement regarding the prevalence and

penetration of cross-border e-commerce in the Western region (Chart 3). Therefore, in the strategic


planning to promote trade and the development of the economy, provinces in the Western region can

achieve rapid growth of international trade by fostering their e-commerce sectors.

Chart 3: China’s Cross-Border E-Commerce (Export B2B) Regional Distribution: Penetration Levels

(b) Trade Partners Analysis

1、 Major Trade Partners

The rapid development of China’s cross-border e-commerce sector is evident not just in its

market size and growth rate, it is also evident in its international trade partnerships. In 2014-2015,

China’s cross-border e-commerce partners span 220 countries and regions around the world,

including both developed and developing nations.

Table 6: China Cross-Border E-Commerce (Export B2B), Top 10 Major Trade Partners

RANK TRADE

VOLUME

RANK TRADE

VOLUME

RANK TRADE

GROWTH

RANK TRADE

VOLUME

1 United States 11 Australia 1 Latvia 11 Spain

2 Russia 12 Ukraine 2 Chile 12 Lebanon

3 Brazil 13 Italy 3 Slovakia 13 Peru

4 Spain 14 Turkey 4 Bulgaria 14 Belgium

5 United Kingdom 15 Poland 5 Slovenia 15 Hungary

6 Canada 16 Kazakhstan 6 Lithuania 16 Greece

7 France 17 Netherlands 7 Korea 17 Austria

8 Israel 18 Sweden 8 Kazakhstan 18 Romania

9 Belarus 19 Czech Republic 9 India 19 Portugal

10 Chile 20 Germany 10 Moldova 20 Estonia


Due to the unique traits of export e-commerce and expertise in the B2B sector, China’s leading

major partners in cross-border e-commerce are comprised mainly of developed countries, this

proclivity is related to the massive market size of developed countries, and their matured environment

conducive for e-commerce. In addition, due to the rapid progress of digital trade in developing

countries, they are also viable partners for China’s cross-border e-commerce sector.

2、 Analysis of Major Trade Partners

1) Europe & America

In 2015, China’s cross-border e-commerce (export B2B) had remarkable progress in the

European and North American regions (see Chart 4). Of which, the growth in North America was

the most significant, with the turnover growth rate for the United States and Canada each amounting

to 50% and above. In Europe, e-commerce is also propelling China’s export trade forward by leaps

and bounds, with countries such as Spain (48.7%), Germany (41.5%), France (37.4%), and the

Netherlands (30%) each achieving a turnover growth rate of 30% and above.

Chart 4: China’s Cross-Border E-Commerce (Export B2B),

Major Trade Partners & Growth (Europe & North America) 2015

With respect to the types of goods sold, Europe and America have a varied distribution in terms

of trade volume and growth (Chart 7). In 2015, the top five best-performing categories of popular

Chinese cross-border e-commerce (export B2B) goods in Europe & North America are consumer

electronics, mobile phones (and accessories), sports & outdoor products, health & beauty, as well as

household furniture & gardening products. Looking solely at the rate of growth, the fastest growing


goods in Europe and America are classified under sports & outdoor products, jewelry & accessories,

shoes & bags, household furniture & gardening products, and digital cameras. On the whole, taking

into account both market size and growth, the fastest growing type of goods for Europe and North

America in 2015 is sports & outdoor products. One particular bestselling product this year is the self-

balancing scooter (hover board).

Table 7: China Cross-Border E-Commerce (Export B2B)

Major Trade Product Categories & Growth (Europe & America)

RANK MARKET SIZE RATE OF GROWTH

1 Consumer Electronics Sports & Outdoor Products

2 Mobile Phones & Accessories Jewelry & Accessories

3 Sports & Outdoor Products Shoes & Bags

4 Health & Beauty Household & Gardening

5 Household & Gardening Digital Cameras, Photography Equipment

2) Oceania

Australia and New Zealand are major markets China exports to. With respect to cross-border e-

commerce, the Australian market is relatively more established and matured compared to the New

Zealand market, with a market that is more than twice the size of New Zealand; however, the rapid

rate of growth for the New Zealand market far outpaced that of their Australian counterpart. The

primary goods exported to Australia and New Zealand are mainly consumer electronics products

(computing, communication, and consumer), fashion apparels & bags, and household products;

apparels, jewelry and other fashion related products had a 60% growth in 2015, in comparison with

the previous year. The cross-border e-commerce (export B2B) preferences of the Oceania region is

presented below in Chart 5 and 6.

Chart 5: China’s Cross-Border E-Commerce (Export B2B), Top 5 Trade Product Categories (Oceania) 2015


Chart 6: China Cross-Border E-Commerce (Export B2B)

Major Trade Product Categories (Oceania) 2015

3) ASEAN Region

The ASEAN region is a fundamental component of the “The Belt and Road” policy, indicating

the great prospects of their market. Malaysia is the fastest growing ASEAN country, with a growth

rate that surpasses even countries in Europe and North America.


Growth of Trade Partners 2015 (ASEAN Region)


Growth of Trade Product Categories 2015 (ASEAN Region)


Looking solely at the data of product categories exported, consumer electronics (computing,

communication, and consumer) products accounted for 28%, followed by fashion apparels, health &

beauty, and so on. 3C products enjoyed a high weightage of sales turnover as well as a high rate of

growth, while sports & outdoor, health & beauty products all recorded growth rates above 50%.

4) Latin America Region

Brazil, Mexico, Argentina, Chile, Columbia, and Peru are the major markets in Latin America.

Although it’s current turnover is relatively small compared to other region, but the prospect for

growth here is a force to be reckoned with. From the 2015 statistics, the growth in sales volume for

these 6 countries, compared to their performance in the previous year is apparent. The sales volume

in Brazil is the highest, accounting for over 25% of the turnover of the Latin America region,

followed by Mexico and Chile. Apart from Brazil, the total sales volume for most countries in the

Latin America region are still relatively low, however, they do have a significantly higher growth

rate in comparison to Brazil (Chart 9).


Growth of Trade Partners (Latin America Region)

With respect to the distribution of product categories, the Latin American market has an

interestingly more culturally distinct profile, categories such as hair products (571%), skincare

products (458%), extreme sports (416%), as well as locksmith tools (312%) all experienced a growth

rate of above 300%, while consumer electronics (141%), hair-removal products (139%) and beauty

& cosmetic products (129%) also enjoyed a growth rate above 100% (Chart 10).



Growth of Trade Product Categories 2015 (Latin America Region)

(c) Analysis of Product Categories

The variety of goods traded by China in cross-border e-commerce transactions are getting more

diverse each day, the volume traded and growth rate are also continually shifting as the global trade

environment evolves. In 2014-2015, a majority of the products exported by Chinese cross-border e-

commerce players are concentrated in 23 key categories such as electronics & games, digital

camera/photography equipment, jewelry, watches, fashion apparel and so on.

1. Cross-Border E-Commerce （Export B2B）Major Products & Growth

Chart 11 shows the following trends of China’s cross-border e-commerce (export B2B), in the

major trade products growth and ranking, between 2014-2015:

In 3C (computing, communication, and consumer) products, the selfie-stick is certainly the

bestselling product of 2015. In addition, aerial photography devices, VR glasses are also

popular items that had rapid growth, they are still in the early stages of their product

lifecycle and will continue to grow in popularity;

In outdoor sports, one major product that performed remarkably is the self-balancing

scooter (hover board). As each item’s unit cost is relatively higher, it has also driven

outdoor sports to be one of the fastest growing categories. However, as incidents have

prompted the need for improved product safety, manufacturers will have to make

improvements accordingly, to fulfill any policy requirements;

In lighting, there is a trend of increased emphasis on branding, in addition, as overseas

logistics players have lowered the costs of shipping, pricing can be improved as costs are

lowered; products are delivered in a shorter time, enhancing the overall experience for


consumers.

Bridal Gowns：High quality and good pricing are the key trends in preference. They are

also useful benchmarks for Chinese brands to follow. Apart from traditional European and

American style bridal gowns, those with unique cultural attributes are also potential

products to develop. To design creatively, create complex styles, and to develop

customized products will be China’s edge;

Maternity Items & Children Toys: Continue to diversify products based on market

segmentation catering to different age groups, follow the trends in cartoons and animation

closely. Branding and maintaining high-quality products are the major guidelines for

development in this sector;

Fashion, accessories, shoes and bags: May, September and November are the best-

performing peak seasons in the fashion industry; Major products that perform best in May

are: swimsuits, summer dresses, t-shirts, and undergarments; Products that perform best in

September are: costumes (demand due to Halloween), jeans, and jackets; Products that

perform best in November are: jackets, down jackets, pants, and socks. Between March to

September, sales of sunglasses are also notable. And lastly, hats, scarves, and sunglasses

are the best-performing products that fall under the fashion accessories grouping.


Growth of Trade Product Categories & Rank 2015

2. Cross-Border E-Commerce (Export B2B) Major Product Categories Ranking

Taking into account the trade volume and rate of growth for the major product categories, we

have calculated a “Major Product Categories Index”, to reflect the weightage and development


potential in China’s cross-border e-commerce export sector (see Chart 8).

In comparison to the index from 2014, there are quite drastic changes to the rankings of the

product categories in 2015. Jewelry and watches, the weakest performers (in 2014) have soared

towards the top of the table (in 2015), while musical instruments, maternity products, bridal gowns

and other categories all displayed a downward trend. These examples illustrate the vigor and degree

of volatility in the export cross-border e-commerce sector, which also implies that this is an

unconventional realm that is filled with opportunities and transformations.

Table 8: Major Product Categories Size & Growth Ranking 2015

Rank Product Category Index Score 2014 Index Score 2015 Change in Rank

1 Jewelry 1.51 1.70 ↑ 17

2 Watch 1.50 1.46 ↑ 17

3 Fashion Apparels 1.68 1.42 ↑ 12

4 Household & Gardening 1.84 1.34 ↑ 7

5 Mobile Phones & Accessories 1.93 1.21 ↑ 4

6 Hair Products 3.36 1.20 ↓ 5

7 Luggage, Bags & Accessories 1.69 1.20 ↑ 7

8 Toys & Gifts 1.74 1.19 ↑ 5

9 Consumer Electronics 1.57 1.18 ↑ 7

10 Computers & Networking 1.30 1.18 ↑ 11

11 Sports & Outdoor Products 3.11 1.16 ↓ 8

12 Commercial & Industrial 2.20 1.10 ↓ 6

13 Fashion Accessories 2.44 1.08 ↓ 9

14 Health & Beauty 2.29 1.07 ↓ 9

15 Cars, Motorcycles 1.91 1.06 ↓ 5

16 Security & Surveillance 1.39 1.06 ↑ 4

17 Maternity & Baby Products 1.98 1.04 ↓ 9

18 Footwear & Accessories 1.56 1.04 ↓ 1

19 Lighting 1.77 1.03 ↓ 7

20 Musical Instruments 2.00 0.99 ↓ 13

21 Bridal Gowns 3.29 0.94 ↓ 19

(d) “The Belt and Road” Continues to Grow

The “The Belt and Road” initiative is also known as “The Silk Road Economic Belt and the

21st-century Maritime Silk Road” initiative. It focuses on connectivity and cooperation between

China and other global markets, through the oceangoing route from the South China Sea towards the

Indian Ocean, extending to Europe; through ports from the South China Sea to the ports in the Pacific

Ocean; the land-based economic belt forms a corridor that bridges China with the rest of Asia, Europe,

and Russia, and towards the global market.


1. “The Belt and Road” Major Trade Partners Analysis

The “The Belt and Road” initiative involves over 60 countries, in which 33 have an increased

turnover of 50% and above in comparison to the previous year; looking solely at the trade volume,

Russia is at the top of the table with the highest turnover and a more consistent growth rate, driven

by goods in 3C (computing, communication, and consumer) electronics, fashion, and household

products primarily. The performance of countries involved in the initiative, with respect to their

market size and growth in cross-border e-commerce (B2B) in 2015, is presented in Table 9 below.

Table 9: 2015 China’s Cross-Border E-Commerce (Export B2B),

Major Trade Partners & Growth: “The Belt and Road” Country

RANK MARKET SIZE MARKET GROWTH

1 Russia India

2 Israel Pakistan

3 Belarus Malaysia

4 Ukraine Albania

5 Turkey Slovakia

6 Poland Turkey

7 Czech Republic Philippines

8 Slovakia Thailand

9 Saudi Arabia Saudi Arabia

10 Latvia Armenia

11 Lithuania Romania

12 Hungary Israel

13 Bulgaria Lithuania

14 India Croatia

15 Estonia Latvia

16 Romania Egypt

17 Singapore Latvia

18 Moldova Slovenia

19 Thailand United Arab Emirates

20 Lebanon Lebanon

2. “The Belt and Road” Related Trade Analysis of Provinces

Different provinces in the “The Belt and Road” initiative have performed with varying degrees

of success in China’s cross-border e-commerce (B2B) sector, with a distribution of market size and


growth. In terms of market size, Guangdong, Zhejiang, Shanghai, Fujian and other major provinces

in cross-border e-commerce continue to rank at the top of the table; in terms of growth, Xinjiang,

Tibet, Hainan, and Yunnan have been undergoing considerable growth despite being latecomers to

the competition (Table 10).

Table 10: 2015 China’s Cross-Border E-Commerce (Export B2B),

Market Size & Growth: “The Belt and Road” Provinces

RANK MARKET SIZE MARKET GROWTH

1 Guangdong Xinjiang

2 Zhejiang Tibet

3 Shanghai Hainan

4 Fujian Yunnan

5 Guangxi Jilin

6 Chongqing Chongqing

7 Shaanxi Guangxi

8 Heilongjiang Fujian

9 Jilin Heilongjiang

10 Liaoning Liaoning

3. “The Belt and Road” Traded Product Categories Analysis

With respect to the distribution of product categories, each province involved in the “The Belt

and Road” initiative all have their own respective propensities and traits, as Chart 12 below illustrates.

Chart 12: “The Belt and Road”: Province Distribution of Product Categories Traded

In Guangdong province, consumer electronics (computing, communication, and consume)

products accounted for approximately 50% of all transactions, followed by sports & outdoor products,

health & beauty, and lighting products; In Fujian province, shoes accounted for 27% of all


transactions, followed closely by sports & outdoor products, fashion apparels and household goods

also had a growth rate of 30% and above; In Zhejiang province, the distribution of product categories

are more balanced, with health & beauty, household, jewelry, maternity, and fashion apparels making

up the key products traded; in the key Northeastern provinces (Liaoning, Jilin, and Heilongjiang),

apart from the few abovementioned export-trade oriented and economically-progressive provinces,

the three Northeastern provinces have been undergoing overall growth markedly better than the rest

of the provinces in China, with a growth rate of more than 80%; sports & outdoor, household goods,

health & beauty, toys are a few areas that have been growing rapidly; In Shaanxi, health & beauty,

sports & outdoor, commercial & industrial goods are the key products exported, which are also

experiencing accelerated growth; In Chongqing, the transaction volume has grown by more than 40%,

with the key products exported being automobile accessories, mobile phones, hair accessories and so

on; In Xinjiang, transaction turnover has increased by leaps and bounds. Major products include

those in consumer electronics, household goods, and fashion apparel; in Yunnan, transaction turnover

has also more than doubled, with key products being in health & beauty accounting for over 30% of

its total turnover, other categories including fashion apparel, hair accessories, household goods, toys

and so on also fared well; Lastly, in Hainan, health & beauty also accounted for over 30% of its total

turnover, followed by 3C electronics, fashion apparels and so on.


4. China’s Cross-Border E-Commerce

Development Trends & Prospects

This section is an analysis on the development of China’s e-commerce (export B2B) sector

through three dimensions: regional development, product classifications, and trade partnerships.

(i) The Growing Prowess of “Chinese Brands”

In its infancy, the barrier to entry in the cross-border e-commerce sector is relatively low.

However, products with poor quality can harm consumers to a great extent. At the current stage, to

optimize e-commerce platforms, greatly improving product quality and aftersales services are the

most imperative issues that e-commerce businesses must resolve. As Li Keqiang, the current Premier

of the State Council of China has pointed out, the Chinese cross-border e-commerce sector needs to

be revitalized, the focus on capacity and volume in foreign trade should be shifted and realigned

towards quality and excellence. Only the pursuit of quality can boost the economy and the nation,

and propel Chinese brands to the global stage, which is also a vision for cross-border commerce.

Chart 13: China’s Cross-Border E-Commerce (Export B2B)

Branded Products Sales Turnover Percentage

Based on data from 2014-2015, as illustrated by Chart 13, the growth in GMV of branded

products in cross-border e-commerce have exceeded the growth of overall sales turnover, the

weightage for the GMV of brands have also increased significantly; it is forecasted that this trend

and emphasis on branding will continue. In 2011, during the infancy of cross-border e-commerce,

branding only accounted for 9% of the goods on the market, with very gradual growth. 2014-2015


has become China’s “Year of Branding” for cross-border e-commerce players, with the rate of

branding increasing from 12% to 19%, a significant increase. It is forecasted that by 2017, the rate

of branding will increase to 30%, this corresponds with the vision of the “Made in China 2025”

initiative, and will continue to be the impetus for the development of China’s import and export trade.

(ii) B2B Model, The Fundamental Pillar of E-Commerce

Massive Market Size: The circulation of commodity products requires three key processes,

which can be broken down into: procurement of B2B raw materials, B2B e-commerce distribution,

and B2C retail. Solely looking at the scale of transactions in each step, B2B clients are a far more

sizeable market compared to B2C clients.

High Units Per Transaction: The sales turnover from B2B orders are always larger than those

from B2C orders. This allows vendors and suppliers to lower their operating costs.

Customer Loyalty: For Business clients, they do not have the propensity to change suppliers

after a suitable partner has been found and a relationship has been established, as long as their long-

term procurement demands can be fulfilled.

Comparison of B2B clients and B2C clients.(Chart 14):

Chart 14: Unique Traits for Procurement in Cross-Border E-Commerce (Export B2B)


Conclusion

1. The Era of Digital Globalization, Only 5 Years Remaining to Complete the Transition

from the Conventional Model of Export Trade

In the previous decade, millions of small-and-medium-sized enterprises have utilized cross-border e-

commerce platforms such as DHGate, in their pursuit of the global market. Between 2015-2016, more

and more traditional enterprises began embracing internet technologies and such platforms. From

factories involved in OEM manufacturing, traditional export trade businesses that wish to switch to

a model that incorporates e-commerce into their operations, to logistics, and even the finance sector

are all looking for opportunities through crossing the digital divide.

These are the results from the trend of “Digital Globalization.” Conventional offline enterprises and

purely online internet enterprises will cease to exist. In the coming 5 years, conventional enterprises

will all establish a presence online, while internet enterprises will continue their outreach to the now-

offline market. The market will no longer emphasize whether the enterprise is online or offline, as

the boundary will be blurred.

It is imperative to latch onto this window of transition in the coming five years, as a leader to

each industry will emerge from here, restructuring the industry’s ecosystem. From our

conservative estimate, only half of the businesses in the market currently will be able to seize the

opportunity to ride on the wave of digital globalization; a new form of entities will replace the

remaining 50% of businesses. Based on our forecast, by 2030, 2 billion job positions will no longer

exist, these 2 billion accounts for 50% of all positions globally. After 15 years, new models of

businesses will emerge.

2. Be An Early-Adopter of the Belt and Road, “The Online Silk Road”

In recent years, the policymaking and implementations of the “The Online Silk Road” under the “The

Belt and Road” initiative spearheaded by the state have sparked a series of systematic change.

The blueprint of this visionary plan is to tap into China’s Cross-Border E-Commerce platforms to

carve an edge in the global market. On one hand, the platforms allow us to bring in partner nations to

our market, through the introduction of their quality products to Chinese consumers; on the other

hand, it allows small and medium-sized enterprises in China to team up and enter onto the global

stage, to reach a potential market of four billion people. Hence, the early adopters who chose to

utilize the platforms can be the first to snag a pot of gold on the Belt and Road Initiative,


through the Silk Road on the Internet, benefitting from the wealth brought by this state

initiative.

In July 2015, the Chinese government spearheaded the Belt and Road initiative, to establish a “Digital

Silk Road.” Within a short span of three months, in November 2015, the first fruits of labor were

reaped: State leader Xi Jinping and President Erdogan of Turkey signed a “Memorandum of

Understanding regarding cooperation on the Belt and Road Initiative,” this was the first bilateral

agreement in cross-border e-commerce trade signed by China. Shortly after, in November 2016, the

second fruit was reaped, State leader Xi Jinping and President Kuczynski signed an agreement similar

to the partnership between China and Turkey.

One of the highlights to the Chinese-Turkish and Chinese-Peruvian agreements is that China will be

responsible for establishing the bilateral cross-border e-commerce platforms. This taps into the

natural edge from Chinese’s export-oriented economy, it is also much more beneficial to Chinese

vendors – from the backend systems, to operations, payment methods, logistics, to financing – these

are all familiar and customized to cater to Chinese vendors. Particularly for small-and-medium-sized

enterprises, it would be unthinkable to explore a foreign market in the past, or even to send their

employees abroad. In a matter of days, through the Digital Silk Road, businesses can now easily sell

their goods to Turkey and even to Peru – halfway round the world.

For the partners involved in this initiative, the “Digital Silk Road” is a great opportunity to leapfrog

and outperform their competitors. The key is to be an early-adopter. In the past era of traditional trade,

a developing nation could take decades or even a century to improve and progress to the standards of

a developed nation. But today, countries involved in this initiative can use the platforms established

by China directly, to replicate the success of Chinese industries, and progress.

On the Digital Silk Road, Chinese consumer electronics, outdoor equipment, fashion apparel can

reach the homes of Turkish consumers with greater speed and productivity. At the same time, Chinese

consumers can purchase Turkish leather jackets and cherries from Peru at a fraction of their previous

price.

Establishing a Global Brand to Prosper, Seizing the Best Opportunities

The first wave of cross-border e-commerce, to establish a business with modest means and to engage

in a price war, is over. In 2015, the second wave of “Global Branding” has commenced. And

through two years of cultivation, the next stage in 2017, will be the maturity of “Global

Branding”. Chinese cross-border e-commerce vendors must ride on this wave if they do not

wish to be eliminated in the coming few years.


Based on the forecast of this report, the turnover attributed to branded products from China’s cross-

border e-commerce (B2B) sector will reach 30% of total sales by 2017, signifying a 150% growth

from 2014. In three years, the turnover from branded products will further increase to 50%, amassing

the growth of the market twofold.

As such, the crux to propelling the market forward is through branding, with platforms and individual

websites channeling resources towards branded products. As the cost of labor increase, as there is

heightened awareness of environment and conservation, it will be impossible for the poor product

quality, low pricing strategy of Chinese manufacturers to thrive. Currently, in the sectors of consumer

electronics, bridal gowns, wigs, outdoor products, and surveillance equipment, brands that are capable

of competing with foreign brands on the global market, from Chinese cross-border e-commerce

players have already emerged, hence the future competition of global branding will further intensify.


Appendix: Calculation Methodology

The cross-border e-commerce market includes the four measures of market size index, growth

index, penetration index, and influential factor index. Of which, market size index and growth index

reflects the development of the cross-border e-commerce sector in comparison to its past performance.

The market size index focuses on the assessment of the current market conditions, the growth index

evaluates the developmental potential forecasted; the penetration index and influential factor index

reflects upon the external factors that can influence the development of the cross-border e-commerce

sector, with the penetration index assessing the impacts exerted by the cross-border e-commerce

sector on the overall economy, while the influential factor index evaluates the effects of the

environment and whether it is conducive to the sector. These four measures looks inwards and

outwards, and is a comprehensive appraisal of the development level of the sector, its

conceptualization can be explained in the following diagram:

Market Size Index: The market size of the cross-border e-commerce sector. A higher value signifies a

larger market size. This index is a reflection of the current development of the region.

Growth Index: The development and progress of the cross-border e-commerce sector. A higher value

signifies a greater potential for the region. This index is a reflection on the future of the e-commerce sector

based on forecasts.

Penetration Index: The impacts exerted by the cross-border e-commerce sector on the overall economy.

A higher value signifies that the cross-border e-commerce sector plays a more important role in the economy,

with more influence in the import and export trade.

Influential Factor index: The external support mechanisms that benefits and supports the cross-border

e-commerce sector. A higher value signifies that the local environment is more conducive to conduct cross-

border e-commerce in.

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