context: PRC CBEC (cross-border e-commerce) firms are rapidly expanding internationally with competitive pricing. For example, industry giant Temu's recent expansion in the US saw massive growth through subsidies and promotions, reaching 7.5 bn downloads in 2023 and 91 percent of Amazon's global user base in 2024. But, low-prices create problems such as low-quality goods and trade frictions with foreign firms. Beijing will likely step up support and further regulate CBEC to prevent 'disorderly competition' that could harm the sector as a whole.
Song Yuru 宋玉茹 Chinese Academy of Social Sciences Finance Strategy Institute assistant researcher outlines her insights on CBEC (cross-border e-commerce)
- difference between PRC and Western e-commerce platforms
- PRC firms like Alibaba have an edge over their Western counterparts like Amazon and eBay because of their low prices enabled by lower warehousing and labour costs
- Western platforms prioritise brand value and user experience, while PRC platforms rely on the country's vast manufacturing base to expand market share through high sales volume at low margins
- low prices have allowed PRC platforms to rapidly capture international markets, especially where income disparity leads to consumer price sensitivity
- problems of PRC firms' low price strategy
- quality compromises due to cost-cutting measures in production processes can tarnish the image of PRC-made products
- low-price competition may lead to labour exploitation, environmental neglect and neglect of consumer safety standards
- it can also impact global perceptions towards the country as PRC firms outcompete some local companies abroad, causing them to go out of business
- firms are also less likely to devote resources to innovation, research and development
- extreme costs-cutting during price competition could also make some platforms more vulnerable to supply chain breakdown due to natural disasters
- transitioning from low-price dominance to innovation
- encourage innovation among SMEs to enrich the product ecosystem
- PRC e-commerce platforms can incentivise and support SMEs to innovate by providing funding, technological support and marketing tools etc.
- they can also support original brands and promote intellectual property protection to encourage innovation
- PRC e-commerce platforms can incentivise and support SMEs to innovate by providing funding, technological support and marketing tools etc.
- establish a differentiated product and service system
- PRC platforms can provide differentiated products and experiences by leveraging diverse product development, unique supply chain resources and intelligent services
- consumer preferences would play a key role in providing differentiated services
- PRC platforms can provide differentiated products and experiences by leveraging diverse product development, unique supply chain resources and intelligent services
- PRC e-commerce platforms should focus on global brand building, enhancing brand awareness and image and increasing product premium
- emphasising brand image aspects like sustainability, social responsibility, etc. can attract more conscious consumers
- it also helps to reduce reliance on low prices and convey quality and innovation of PRC-made products
- emphasising brand image aspects like sustainability, social responsibility, etc. can attract more conscious consumers
- invest in technological innovation to optimise user experience
- cutting-edge tech like AI, big data and blockchain are key to helping firms distinguish themselves in consumer experience
- AI can be used in personalised recommendation systems
- smart customer service and virtual reality shopping experiences can also improve users' affinity and trust in the platform
- blockchain technology can ensure transparency in the supply chain, addressing consumer concerns about product quality and sourcing
- cutting-edge tech like AI, big data and blockchain are key to helping firms distinguish themselves in consumer experience
- strengthen localisation team building and cultivate target markets
- establishing local teams help to
- understand local needs
- forumulate local-oriented marketing strategies
- enhance R&D and compliance abilities
- establishing local teams help to
- encourage innovation among SMEs to enrich the product ecosystem