The following infographic is shared courtesy of Visual Capitalist
The following infographic is shared courtesy of Visual Capitalist
From ancient trade to modern tech
Two millennia ago, camel caravans trekked across an inland route centered around Chang’an – today’s Xi’an, the capital of Shaanxi province – serving to connect China to western-lying regions of the world through trade and exchange.
Today, under the guidelines of the Belt and Road Initiative, cross-border and transcontinental transactions are booming online as well, with a key difference: unlike the ancient model, the online businesses of today’s digital era are more efficient, more diverse and far more extensive.
Smart technologies and modern logistics have enabled people to pick and choose products from overseas – from Argentina’s red prawns, Mexico’s avocados and Chile’s cherries to the Czech’s crystals, Myanmar’s emeralds and Bulgaria’s rose oil – and receive them within hours or days after a simple click.
The Belt and Road online
Countries involved in the Belt and Road Initiative have launched businesses on China’s online shopping platforms, among which the e-commerce giant JD.com alone has attracted more than 50 overseas e-stores.
At the same time, these e-platforms facilitate the export of Chinese products to 54 countries, among them Russia, Ukraine, Poland, Thailand, Egypt and Saudi Arabia.
China’s e-commerce sector, projected to reach 2 billion consumers globally by 2020, has become a pillar industry supporting worldwide trade, said Xing Yue, vice president of Alibaba.com, one of China’s leading e-commerce conglomerates headquartered in Hangzhou, the capital of Zhejiang province.
“With circumstances highlighting digital dividends, cross-border e-businesses do not only focus on selling products, but also on creating service-centered trade, a signal epitomizing digital commerce,” added Xing at the second Cross-Border E-Commerce Summit held in Zhengzhou, capital of Henan Province, in May this year.
According to Alibaba.com, the company’s annual online shopping spree hosted last November 11 – a day evolved from China’s Singles’ Day into an annual online shopping frenzy – attracted buyers from 225 countries and regions, generating a revenue of 168.2 billion yuan (US$26.25 billion) and producing 812 million orders.
AliExpress, a global business division of Alibaba.com established eight years ago, reached 100 million overseas customers as of April 2017. “We may be underestimating the actual size as people under the same roof may use the same account,” said Shen Difan, the general manager of AliExpress.
“Products made in China are nothing inferior to the rest of the world. However, the problem is that the small-and-medium-sized enterprises in China were unable to reach overseas customers,” Shen said, adding that e-commerce has allowed these businesses to tap into other markets, extending connections between the two sides.
E-commerce and drones reshaping trade
The change in delivery speeds in Russia exemplifies the convenience of online business. Before e-commerce took off there, overseas packages often took as long as 60 days to arrive to Russian households, after being sent to Moscow for a security check.
Now, however, with the adoption of big data, Russian customs is no longer required to send deliveries to Moscow for unpacking and examination. Instead, detailed information about each package, including dates, types and values of commodities, is made available online, enabling direct delivery to customers.
E-commerce – arising as one of China’s four major modern inventions, along with high-speed railway, Alipay and bicycle sharing platforms – has overhauled traditional industrial chains and reshaped the trade system across the world, the People’s Daily reported.
“I have been greatly interested in the rural logistics run by JD.com,” Wu Min, the editor in chief of the Italian weekly newspaper Il Tempo Europa Cina, said while paying a visit to JD.com’s Beijing headquarters on June 1 of this year.
“In the past few years, it cost us heavily to send newspapers to the countryside, where difficult geographic conditions blocked entrance. Today, with the use of drones, we are able to surmount the last-mile challenge and send our newspapers to rural readers at much lower costs,” Wu explained.
JD.com has also developed drones, weighing 13 kilograms each, to manage deliveries to outlying areas. Additionally, smart technologies including robotic couriers and unmanned inventory have enabled the companies’ shipments to cover 99 percent of the population nationwide, saving 70 percent of total logistical costs, the People’s Daily reported.
Source: China.org.cn, article by Wu Jin, 14 June 2018
The world’s first blockchain-based platform for electronic certificates of origin (eCOs) was unveiled in Singapore on Tuesday.
The platform is the result of a partnership between the Singapore International Chamber of Commerce (SICC) and Singapore-based vCargo Cloud. As the first chamber in the world to implement blockchain-based eCOs, SICC seeks to provide its members and trade-related agencies, including trade financing and insurance firms, with a system that offers higher security, efficiency and flexibility. The platform aims to vastly improve transparency, security and efficiency in authenticating trade documents. It permits instant verification of eCOs and runs on a private blockchain network that prevents fraud, alterations and third-party interference.
SICC says the platform represents a quantum leap in processing trade-related documents by hosting information of trade transactions on a tamper-proof distributed ledger system, which can be authenticated and accessed by various stakeholders of the platform. The platform uses QR codes, allowing eCOs to be scanned using smart phones and then printed. The number of allowable prints is restricted to prevent unauthorized duplicates. This improves efficiency and minimizes the costs of verifying COs, removing a major impediment in the process and a frequent cause of high insurance or trade finance costs.
vCargo Cloud intends to leverage on the Singapore launch to promote the platform globally, beginning with Asian countries that are substantive manufacturing exporters such as Japan, Myanmar and Sri Lanka, using a pay-per-use model.
The launch of the blockchain-based eCO platform comes amidst the Singapore Government’s call for a Self-Certification regime through the ASEAN Single Window, which aims to expedite freight clearance and reduce manual paperwork across all 10 member countries.
Source: Maritime Executive, original article published 8 May 2018.
Global trade has reached its peak and globalisation is giving way to localisation, which is one of the most “profound changes” currently facing the global economy, says Paul Donovan, global chief economist at UBS Wealth.
Accounting for about a quarter of the world’s GDP, global trade is at a record high. “This is as good as it gets. What we are now starting to see is localisation returning to the manufacturing sector,” Donovan said on Tuesday, speaking at a Sasfin Wealth event.
Advances in robotics and artificial intelligence, collectively referred to as the fourth industrial revolution, mean that factories are mechanising, and are placed closer to companies’ consumer markets.
Swedish retailer H&M is using robotics, manufacturing most of its clothing in Europe, not Asia, enabling it to respond to consumer demand more effectively, Donovan said.
This allows the fast-fashion front-runner to quickly respond to consumer demand and even unseasonal weather.
“The fourth industrial revolution will dramatically alter investment, economics and society.”
At SA’s recent inaugural Singularity University event, disruption innovation expert David Roberts said that 40% of the S&P 500 companies would disappear in the next 10 years as exponential technologies disrupted a host of industries. The average lifespan of an S&P 500 company had decreased from 67 years to 15 years, he said.
While only about 9% of jobs would disappear altogether, automation and digitisation would affect about 40% of jobs, said Donovan. This would require people and companies to adapt to new ways of doing things.
“If your university degree is reliant on memorising a textbook, you are a low-skilled worker. We need companies and countries with workforces that are flexible.”
Donovan predicted a return to the imperial model of trade, where raw materials and intellectual property were imported, while “everything else” happened close to the consumer. “Raw materials will still be globalised, but finished products will be declining as a force for global trade in the years ahead.”
Source: Originally published in Business Day, Ziady. H, September 6, 2017. Globalisation gives way to localisation, in profound change, UBS economist says.