Technology-empowered Digital Trade in Asia Pacific
With the deepening of economic globalization and the upgrading of digital technologies, today’s global trade is aggressively shifting from the stage of digitalization to the stage of intelligence with “digital trade” as the latest development form. As cross-border e-commerce has developed rapidly in recent years, it has become a breakthrough in the development of digital trade. Digital trade is set to further accelerate on the back of dynamic cross-border e-commerce activities, rapid shifts towards a digital lifestyle by consumers, ongoing development of digital infrastructure, and strengthened regional cooperation led by RCEP. Asia Pacific region is expected to enter a golden age for digital trade over the next three years. Deloitte China Technology, Media & Telecommunications Industry launched the report of Technology-empowered Digital Trade in Asia Pacific to focuses on cross-border e-commerce and its related services, analyzing key countries in the Asia Pacific market as well as Asia Pacific micro and small multinational enterprises to further explore the future development trend of digital trade in Asia Pacific.
1. The next three years will remain a golden period for the development of digital trade, especially in the Asia Pacific region
- Global digitalization has been enhanced, the pandemic has accelerated the digitalization process of consumers and businesses, and it is difficult to reverse the habit of online consumption once it is formed. Meanwhile, ASEAN has become China’s largest trade partner thanks to the Belt and Road Initiative (BRI). In Southeast Asia, cross-border e-commerce platforms such as Lazada have emerged. They rush at China to recruit Chinese businesses on a large scale, hoping to import more Chinese goods to meet the needs of local consumers.
- Digital technologies enable global sellers to participate in global trade without any barriers to entry. The continuous improvement of digital infrastructure will effectively help remove two major constraints affecting cross-border trade: logistics and payments. Blockchain technology is also creating a new space of imagination for digital trade.
- The Regional Comprehensive Economic Partnership (RCEP) will promote regional cooperation, and facilitate regional digital trade in five aspects: removing tariff barriers, establishing flexible rules of origin, promoting e-commerce, enhancing trade facilitation, and focusing on small and medium-sized enterprises (SMEs) and technical cooperation.
2. Cross-border e-commerce and digitalization are shaping the relative pattern of digital trade development in the Asia Pacific region
- The development levels of digital trade in major Asian economies are analyzed and compared from two dimensions, namely cross-border e-commerce and digitalization. Asian markets can be classified under three categories: mature markets, including China, South Korea, Singapore and Japan; developing markets, including Thailand, Malaysia, Indonesia, Vietnam and the Philippines; and early-stage markets, including Myanmar, Cambodia, Laos and Brunei.
3. Analysis of key countries in the Asia Pacific market
- Singapore: Highly internationalized financial and maritime center renders Singapore an important market in Asia, even in the world. The Singaporean government actively promotes global digital trade, and the country has become a central hub for the headquarters of many cross-border e-commerce platforms in Southeast Asia.
- China: Developed digitalization lays a solid foundation for China’s e-commerce trade, which has entered a mature stage with huge development potential.
- South Korea: South Korea is world-leading in terms of infrastructure digitization, and the country promotes the development of cross-border e-commerce from the perspective of its national strategy.
- Japan: Strong logistics technologies that underpin the cross-border trade and infrastructure of digital economy have been perfected. However, cross-border e-commerce in Japan is still not open enough due to obstacles in the e-payment industry caused by population aging.
- Malaysia: The growth rate of the e-commerce market ranks first among RCEP member states. However, limited by factors such as cross-border logistics infrastructure, crossborder e-commerce in Malaysia has not been developed significantly.
- Indonesia: Demographic dividend, internet penetration rate and consumer habits create great potential for the development of e-commerce and cross-border e-commerce in Indonesia.
- The Philippines: E-commerce has huge growth potential, but is constrained by a low internet penetration rate and an undeveloped e-payment industry.
4. Asia Pacific micro-multinationals are springing up rapidly
- With the help of digital platforms, entrepreneurs and small businesses in the Asia Pacific region have become micro-multinational enterprises (mMNEs) as they are engaged in cross-border e-commerce across different markets. They provide diversified “locallymade products” and light customization services for global buyers.
- Asia Pacific businesses have a higher degree of satisfaction with the digitalization of payments and sales among all the links of cross-border e-commerce. They make full use of platforms and tools to forge ahead. In terms of payments, they choose reliable crossborder payment platforms to improve the timeliness of capital flows and realize onestop purchasing, order placement and payment collection. In terms of sales tools, they can efficiently find the correct direction for development by relying on various tools for selecting goods and uploading goods information with the help of big data analysis.
- RCEP clearly supports the cross-border operation of e-commerce, so new formats of cross-border e-commerce such as independent websites are guaranteed by international rules, which is of great importance. Compared with third-party platforms, cross-border e-commerce with independent websites has the advantages of precision and flexibility. 70% of the surveyed enterprises plan to set up independent websites, which is already in place in 33.4% of the surveyed enterprises. Independent websites have become a key channel for enterprises to break the business ceiling or expand into new markets, as it attracts the attention of increasing export sellers.
5. Overseas warehouse emerges in response to higher requirements for the service level of cross-border logistics
- In the context of cross-border e-commerce trade, overseas warehouses mean that domestic enterprises send goods to the target country through bulk transportation, set up warehouses and store goods in that country, and then immediately respond to local sales orders and directly carry out sorting, packaging and distribution in local warehouses in a timely manner.
- The essence of overseas warehouses is to localize cross-border trade, improve consumer shopping experience, and thus boost the competitiveness of cross-border sellers in the export destination market. Its prominent advantages include reducing logistics cost, accelerating logistics timeliness, increasing product exposure, and enhancing shopping experience.
6. Competing cross-border payment institutions help cross-border e-commerce forge ahead
- The rapid development of cross-border e-commerce is accompanied by highly intense competition in the third-party cross-border payments market. Cross-border payment platforms lower the cost and threshold of financial services and increase the utilization frequency of users relying on technical means. Furthermore, they have become an indispensable payment channel with the advantages of speed, convenience and high security. Specifically, WorldFirst occupies a share of over 40% in China, Japan and South Korea.