Technology-empowered Digital Trade in Asia Pacific - December ,2021 - Deloitte
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Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific December ,2021 1
Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
Contents
Summary of the trends 4
I. Ecology of digital trade in the Asia Pacific region emerges 6
1.1 Global trade enters the era of intelligence 6
1.2 The Asia Pacific region seizes opportunities to develop digital trade 7
1.2.1 Enterprises speed up the deployment of online foreign trade 7
1.2.2 Digitalized habits of consumers are intensified 7
1.2.3 Digital infrastructure is constantly improved 9
1.2.4 The RCEP promotes regional cooperation 12
1.3 SMEs are the main driver for the transformation of digital trade 15
1.3.1 Asia Pacific mMNEs are rising rapidly 15
1.3.2 SMEs and the overall digital trade complement and reinforce each other 15
1.4 Green and sustainable development is a key theme of digital trade 16
1.4.1 Green and sustainable development is an important goal of Asia Pacific economies 16
1.4.2 Consumption of green products is increasingly booming 16
1.4.3 Green development of e-commerce enterprises is constantly valued 16
II. Comparison of the development of digital trade markets in the Asia Pacific region 17
2.1 Evaluation system for the development of digital trade in the Asia Pacific region 17
2.2 Development of digital trade in the Asia Pacific region and market grouping 17
III. Analysis of key countries in the Asia Pacific market 20
3.1 Singapore, as the international finance and maritime center, connects the Southeast Asia 20
3.2 China’s platform-based development drives the cross-border trade 21
3.3 South Korea strategically turbocharges its cross-border e-commerce 22
3.4 Japan’s strong logistics technologies underpin the cross-border trade 23
3.5 Malaysia’s continuous digitalization penetration drives the growth of cross-border trade 24
3.6 Indonesia’s demographic dividend keeps unleashing market potential 25
3.7 E-payment rate of the Philippines constrains the online trade 26
IV. Ten findings of the cross-border e-commerce dynamics in the Asia Pacific region 28
4.1 Small businesses account for more than 85% of cross-border e-commerce 28
4.2 “Cross-border home-bound economy” comes into prominence with 3C electronic products emerging as an export mainstay 28
4.3 Mature markets favor Europe and America, while developing markets focus on Southeast Asia 29
4.4 70% of enterprises hope to establish independent websites 32
4.5 Payment and sales are the most digitized links 33
4.6 Instant receipt of funds makes cross-border collection more efficient 34
4.7 High logistics cost is the largest challenge to cross-border e-commerce 35
4.8 “Genuine goods guarantee” is vital to the sustainable development of supply chains of cross-border e-commerce 36
4.9 Customs clearance process simplification and tariff reduction are the main expectations after the RCEP takes effect 36
4.10 Green development is turning from goal into action 37
2 3Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
Summary of the trends
• 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.
1. The next three years will remain a golden period for the development of digital
trade, especially in the Asia Pacific region 4. Asia Pacific micro-multinationals are springing up rapidly
• Global digitalization has been enhanced, the pandemic has accelerated the digitalization • With the help of digital platforms, entrepreneurs and small businesses in the Asia Pacific
process of consumers and businesses, and it is difficult to reverse the habit of online region have become micro-multinational enterprises (mMNEs) as they are engaged in
consumption once it is formed. Meanwhile, ASEAN has become China’s largest trade cross-border e-commerce across different markets. They provide diversified “locally-
partner thanks to the Belt and Road Initiative (BRI). In Southeast Asia, cross-border made products” and light customization services for global buyers.
e-commerce platforms such as Lazada have emerged. They rush at China to recruit • Asia Pacific businesses have a higher degree of satisfaction with the digitalization of
Chinese businesses on a large scale, hoping to import more Chinese goods to meet the payments and sales among all the links of cross-border e-commerce. They make full use
needs of local consumers. of platforms and tools to forge ahead. In terms of payments, they choose reliable cross-
• Digital technologies enable global sellers to participate in global trade without any border payment platforms to improve the timeliness of capital flows and realize one-
barriers to entry. The continuous improvement of digital infrastructure will effectively stop purchasing, order placement and payment collection. In terms of sales tools, they
help remove two major constraints affecting cross-border trade: logistics and payments. can efficiently find the correct direction for development by relying on various tools for
Blockchain technology is also creating a new space of imagination for digital trade. selecting goods and uploading goods information with the help of big data analysis.
• The Regional Comprehensive Economic Partnership (RCEP) will promote regional • RCEP clearly supports the cross-border operation of e-commerce, so new formats
cooperation, and facilitate regional digital trade in five aspects: removing tariff barriers, of cross-border e-commerce such as independent websites are guaranteed by
establishing flexible rules of origin, promoting e-commerce, enhancing trade facilitation, international rules, which is of great importance. Compared with third-party platforms,
and focusing on small and medium-sized enterprises (SMEs) and technical cooperation. 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,
2. Cross-border e-commerce and digitalization are shaping the relative pattern of which is already in place in 33.4% of the surveyed enterprises. Independent websites
digital trade development in the Asia Pacific region have become a key channel for enterprises to break the business ceiling or expand into
• The development levels of digital trade in major Asian economies are analyzed and new markets, as it attracts the attention of increasing export sellers.
compared from two dimensions, namely cross-border e-commerce and digitalization.
Asian markets can be classified under three categories: mature markets, including 5. Overseas warehouse emerges in response to higher requirements for the
China, South Korea, Singapore and Japan; developing markets, including Thailand, service level of cross-border logistics
Malaysia, Indonesia, Vietnam and the Philippines; and early-stage markets, including • In the context of cross-border e-commerce trade, overseas warehouses mean that
Myanmar, Cambodia, Laos and Brunei. domestic enterprises send goods to the target country through bulk transportation,
set up warehouses and store goods in that country, and then immediately respond
3. Analysis of key countries in the Asia Pacific market to local sales orders and directly carry out sorting, packaging and distribution in local
• Singapore: Highly internationalized financial and maritime center renders Singapore warehouses in a timely manner.
an important market in Asia, even in the world. The Singaporean government actively • The essence of overseas warehouses is to localize cross-border trade, improve
promotes global digital trade, and the country has become a central hub for the consumer shopping experience, and thus boost the competitiveness of cross-border
headquarters of many cross-border e-commerce platforms in Southeast Asia. sellers in the export destination market. Its prominent advantages include reducing
• China: Developed digitalization lays a solid foundation for China’s e-commerce trade, logistics cost, accelerating logistics timeliness, increasing product exposure, and
which has entered a mature stage with huge development potential. enhancing shopping experience.
• South Korea: South Korea is world-leading in terms of infrastructure digitization, and the 6. Competing cross-border payment institutions help cross-border e-commerce
country promotes the development of cross-border e-commerce from the perspective forge ahead
of its national strategy. • The rapid development of cross-border e-commerce is accompanied by highly intense
• Japan: Strong logistics technologies that underpin the cross-border trade and competition in the third-party cross-border payments market. Cross-border payment
infrastructure of digital economy have been perfected. However, cross-border platforms lower the cost and threshold of financial services and increase the utilization
e-commerce in Japan is still not open enough due to obstacles in the e-payment frequency of users relying on technical means. Furthermore, they have become an
industry caused by population aging. 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
• Malaysia: The growth rate of the e-commerce market ranks first among RCEP member
Korea.
states. However, limited by factors such as cross-border logistics infrastructure, cross-
border e-commerce in Malaysia has not been developed significantly.
4 5Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
I. Ecology of digital trade in the Asia Pacific region emerges I. Ecology of digital trade in the Asia Pacific region emerges
I. Ecology of digital trade in the Asia Pacific
1.2 The Asia Pacific region seizes opportunities to develop digital trade
COVID-19, the development of digital technologies and enhanced regional cooperation are accelerating the formation of digital
region emerges
trade in the Asia Pacific region. Digital trade in this region is presented with brand-new development opportunities as the supply
and consumption sides accelerate online deployment, with digital infrastructure like platforms and payments under continuous
improvement, and as regional policies promote trade facilitation and strengthen technological cooperation.
1.1 Global trade enters an era of intelligence
Figure: Development Opportu-
Under the influence of technological advancements and in-depth international cooperation, among other factors, global trade has Tech-driven sustainable
nities for Digital Trade in the
gone through four development stages: growth
Asia Pacific Region
Production
Figure: Four Development Stages of the Global Trade
Further in-depth and comprehen-
sive combination of more advanced Transactions Logistics
digital technologies and trade Cross-border
e-commerce
Accelerated development of 4.0 Era of intelligence
driven by SMEs
digital technologies represented
Deepening of economic glo- by information communication • Data factors plays a promi-
nent role. Digital infrastruc- Payments Sales
balization and further reduc- 3.0 Era of digitalization
ture, such as 5G, facilitates
tions in transportation and
the Internet of Everything
coordination costs
2.0 Era of global value • Emergence of “digital trade” (IoE) The trends spurring on digital trade in the Asia Pacific
(digitalization of trade meth- • Big data, combined with artifi-
chains
ods and objects) cial intelligence, plays a role
• Division of production of intelligent decision-making
1.0 Traditional era
processes among various
• Division of production and countries
consumption among vari- • Involves the trade of inter- Businesses accelerating the de- Adoption of new digital hab- Continued improvements to RCEP promotes greater re-
ployment of online foreign trade its by consumers digital infrastructure gional cooperation
ous countries mediate goods and services
• Involves the trade of final Source: Deloitte
products
Source: OECD and Deloitte
1.2.1 Businesses accelerating the deployment to e-commerce platforms, Figure: Survey of Digital Transfor-
deployment of online foreign trade striving to meet the needs of pandemic mation of Foreign Trade SMEs
(1) Traditional era:Initially, (3) Era of digitalization: In recent years, with the accelerated development of digital Affected by the COVID-19, businesses prevention and the control and main-
global trade mainly took the technologies such as information communication, the popularity and sophistication of around the world are facing challenges tenance of economic development.
form of cross-border produc- digitalized trade models and objects has grown and “digital trade” is surging forward. Dig- such as restricted offline venues, Countries lagging behind in e-com-
tion and consumption based
on the comparative advantag-
ital trade refers to the domestic business and international trade activities during which
digital technology plays a major role in order placement or delivery. It mainly includes:
tight cash flow, and a steep decline
of orders, with some even suffering
merce rely on regional e-commerce
platforms to participate in cross-border 84%
es of various countries, and it 1) digitalized trade models represented by cross-border e-commerce, and 2) digitalized closures or bankruptcy. The offline digital trade at a lower cost. Enterprises Increase in investment
primarily involved the trade of trade objects represented by digital products (such as audio and video, software, etc.) in online trade after
deployment of enterprises is blocked in these countries use the operation
COVID-19
final products. and digital services (such as information technology services, and online healthcare). objectively, while global public goods levels of advanced e-commerce coun-
Data source:
are in short supply. These external tries for reference to promote the ebrunresearch
conditions have prompted enterprises application of digital technologies. With
rapid development in recent years.
in the Asia Pacific region to accelerate the advantage of low barriers to entry,
The COVID-19 situation in 2020 also
the deployment of online foreign trade. vast markets and supportive policies,
(2) Era of global value chains: With the (4) Era of intelligence: As digital technologies are upgraded, and the According to a survey of more than 100 cross-border e-commerce markets in
accelerated the formation of digitalized
deepening of economic globalization and combination of digital technology and trade evolves to a deeper and behavioral habits of consumers, and
Chinese export-oriented companies, various economies have ushered in
the further reduction of transportation and more comprehensive level, digital trade has entered the era of intelli- online consumers have seen an accel-
84% of the enterprises continued to opportunities for acceleration, and the
coordination costs, the pursuit of produc- gence. Data factors play a prominent part in this period. Important digital erated expansion in both quantity scale
conduct foreign trade online after the supply side of digital trade in the Asia
tion cost minimization drove enterprises infrastructure, including 5G, will help build data distribution platforms and utilization market. Social distancing
outbreak of pandemic1. Pacific region is prospering.
to distribute production links over multiple and new network architectures, and facilitate the Internet of Everything Economies with mature e-commerce during the pandemic has added a large
countries, signifying that trade had entered (IoE). In the meantime, the vast accumulation of big data, coupled with markets in the Asia Pacific region number of customers to apps covering
a period of global value chains. Global trade artificial intelligence, will play a role of intelligent decision-making. leverage the first-mover advantage in 1.2.2 Adoption of new digital habits e-commerce, social media and life ser-
in this period mainly involved the transac- On the whole, today’s global trade is aggressively shifting from the stage cross-border e-commerce, taking the by consumers vices, and a great deal of consumption
tion of intermediate products and services. of digitalization to the stage of intelligence with “digital trade” as the latest lead in accelerating the deployment of Owing to improving information com- based on digital channels has led to the
development form. As cross-border e-commerce has developed rapidly cross-border e-commerce. Enterprises munication conditions, the popularity explosive growth of the “homebound
in recent years, it has become a breakthrough in the development of dig- with online and offline omni-channel of smartphones and the enhancement economy” during the pandemic.
ital trade. This report mainly focuses on cross-border e-commerce and operations tend to shift their business of logistics, the e-commerce market in
its related services. the Asia Pacific region has witnessed
6 7Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
I. Ecology of digital trade in the Asia Pacific region emerges I. Ecology of digital trade in the Asia Pacific region emerges
Figure: COVID-19 Catalyzes Digital Behavior among Consumers 1.2.3 Continued improvements to of commerce will not change, namely buyers and sellers directly, reducing
digital infrastructure meeting consumer demand and im- the cost of searching and coordinating.
Since the outbreak of COVID-19… (1) The Asia Pacific region has become proving the efficiency of supply chains. Such platforms, with greater room for
I have tended to shop one of the major players in the global In terms of meeting consumer demand, growth, have created seamless global
online more than 25% 27% 25% 12% 11% digital platform digital platforms and their technology markets in e-commerce, payments,
before
Countries and regions in Asia are im- tools for trade will provide new growth travel, study and labor services. With
I have spent a lot of proving digital infrastructure (such as opportunities for Asian SMEs and drive data, search engines and algorithms,
time watching digital 23% 36% 22% 11% 8% AI, big data and cloud and blockchain) the sustainable post-pandemic eco- these digital platforms can reduce the
entertainment content
and enhancing connectivity and popu- nomic recovery in the Asia Pacific re- cost of acquiring and applying infor-
I have spent more time larity through policies and reforms so gion. As trade is increasingly dependent mation, bypass intermediaries, reduce
browsing online 15% 36% 26% 13% 10% as to reap the benefits of the digitalized on digital platforms and tools, tradition- trade barriers, and use idle assets
economy. Riding the wave of the digital al forms of foreign trade can no longer to lower production and distribution
Completely agree Agree Unsure Disagree Completely disagree
economy, cross-border digital trade meet the needs of cross-border trade, costs2. With the rise of digital platforms,
Data source: United Nations Conference on Trade and Development has ushered in significant development and cross-border e-commerce plat- new business models emerge one after
Note: This survey, conducted in June 2020, covers nine countries, including Brazil, China, Germany, Italy, Russia, South Korea, South Africa, Switzerland and Turkey.
opportunities. However, no matter forms also play a role in cross-border another, bringing huge economic op-
how technology iterates, the essence digital trade. Digital platforms connect portunities.
Rapid spread of digital payments: Digital payments, a tool for the digital consumption industry, have spread rapidly
during the pandemic based on the expansion of online consumption and the convenience it provides. Shopping online, Figure: Digital Platforms Facilitate Trade Integration
paying for utilities and ordering take-out have all become the application scenarios of digital payments. In addition
Present Future
to payments, digital payment platforms also provide other functions such as entertainment and life services through
constant innovation. As of the first half of 2021, Alipay Wallet had 850 million active users, one fifth more than the 700 Digitalization of global trade
million at the beginning of 2020. In India and Indonesia, nearly 50 million users got an update on real-time information Government consignees
agencies
and pandemic dynamics via e-wallet. Such shift has accumulated a user base for countries in the exploratory stage of
digital payments, thus providing good conditions for the development of digital trade.
Consumption via cross-border e-commerce is booming: As the pandemic prevention and control enters the
Exporters Government Government Freight Exporters Land Railway Freight consignees
normalization stage, consumers pay more attention to health and safety, and tend to meet their strong consumer agencies agencies forwarders transportation transportation forwarders
demand through e-commerce channels. The wide variety of options, products with high performance-price ratio and by truck
the simple shopping processes of e-commerce have intensified consumers’ online shopping preference. In addition, as
the prospects for the liberalization of cross-border travel do not look optimistic in the short term, global shopping of
higher quality is expected to become a new consumption lifestyle model.
Destination Government Government Means of
Destination Government Government Means of agencies agencies conveyance
Digital entertainment ushers in growth: The pandemic has boosted people’s demand for online entertainment, agencies agencies conveyance
Data source: IBM
such as binge-watching, online gaming and social media. The penetration rate of online entertainment and social
scenarios has increased and the two are closely integrated. As the consumers’ habit of payments for digital products
In 2019, digital platform business-to- companies, third-party logistics (3PLs), Sea transportation will benefit from
is gradually established and consumption preferences become mature and diverse, demand for digital goods will be
consumer revenues reached US$3.8 overland transportation, consignors pre-built connections with custom-
more diversified. The cross-border trade of digital goods is expected to usher in growth opportunities.
trillion, equivalent to 4.4% of global and other players, and impact all links ers and ports/terminals around the
GDP. Asia accounted for about 48% of the supply chain in global digital world and real-time access to end-to-
Life service scenarios are unlocked: Due to the pandemic, restaurants, fruit and vegetable supermarkets, leisure
(US$1.8 trillion; equivalent to 6% of trade. end supply chain activities.
and entertainment and other businesses that originally focused on offline consumption and operation have turned to
regional GDP), the US accounted for • Ports and wharfs: Digital platforms • Customs and governments: Digital
online sales channels, and takeaway delivery services have seen rapid development. The traffic obtainment, radiation of
22% (US$836.7 billion; 3.9%), and the provide information on the disposal platforms provide information on im-
digital platforms and the creation of consumption scenarios will enable more consumers to complete the consumption
euro area 12% (US$445.3 billion; 3.3%). of cargos within port/wharf bound- port and export customs clearance
behavior of life service products, and online consumption of life services will become a considerable are of growth.
Asia will continue its rise as a major aries. Ports and wharfs will benefit of goods entering and leaving the
After the pandemic ends, cross-border population flows will gradually return to normal, and offline cross-border retail
player in the global digital platform from pre-established connections country. Customs and governments
and services are expected to bounce back. In terms of the payment tools, efficient and convenient mobile payments
market as increasingly wider access to with shipping companies and other will benefit from better-informed
will become the mainstream as an important force to boost the life of digital consumption. In the post-pandemic
digital technologies brings more users actors, end-to-end visibility of ship- risk assessment, better information
era, consumer confidence will gradually rise again along with the economic recovery, and it will be difficult to reverse
and generates higher revenue growth2. ping corridors, and real-time access sharing, less manual paperwork, and
the digitalized habits that have already been established. These factors will bring opportunities to the booming
In terms of improving the efficiency of to more information, thus enriching easier connection to national sin-
development of digital consumption-related fields.
supply chains, digital platforms aim to port collaboration and improving gle-window platforms.
connect and provide benefits to the wharf planning. • Forward freight: Digital platforms
supply chain ecosystem, form a global • Sea transportation: Digital plat- provide transportation plans, over-
shipping corridor network connecting forms provide information on the land transportation events, handover
ports and wharfs, customs, shipping disposal of cargo transported by sea. information of multimodal transpor-
8 9Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
I. Ecology of digital trade in the Asia Pacific region emerges I. Ecology of digital trade in the Asia Pacific region emerges
tation and document fillings. Forward platforms provide information on the for shipping information events and
freight will benefit from pre-built eco- disposal of the cargos transported by paperless trading capabilities. Con- • Cost reduction: In general, cross-border payments incur high cost. The banks do not have direct contact
system connectivity, improved tools trucks, railway and barge. Asset plan- signers will benefit from streamlined with each other over a long distance, so they often need to turn to intermediary banks to realize indirect
for customs broker functions, and ning and utilization can be improved, and improved supply chains so as to payments. The integrated blockchain removes the need for intermediaries, which dramatically lowers the
real-time access to end-to-end sup- and real-time access to end-to-end increase predictability, notify issues cost of initiating cross-border transactions. Blockchain can help businesses reduce transaction costs by 40-
ply chain data so as to improve the supply chain events can be achieved in advance, validate the entire trans- 80%, compared to a reduction of about 8% by traditional cross-border payments.
effectiveness of tracking and relevant to carry out delivery. parency of costs and surcharges, and
tools. • Consigners: Digital platforms take realize less safety stock.
• Multimodal transportation: Digital part in the solution as a consumer
• Authenticity of transactions: The underlying distributed ledger technology and hash pointer technology
of blockchain grant the data stored in the blockchain immutability and traceability. The whole transaction
(2) Cross-border payments have initiated value-based services
process is subject to the blockchain, delivering more authentic orders and more reliable transactions.
Cross-border payments have gone through three development stages from local to global. From basic payment channel
services to online trading platform for cross-border trade, it is now stepping into the stage of commercial operating systems
featuring one-stop comprehensive solutions for cross-border trade.
• Real-time transaction information: It has been proved that transactions can be completed within two to
Stage 1.0 This stage is mainly dominated by foreign cross-border payment enterprises, which charge high payment service five working days if cross-border payments are made through a third party. It is obvious that there may be
fees and the absence of other options for sellers. significant time differences between two currencies. Capable of realizing second-level transaction speed, the
Stage 2.0 With the rise of domestic cross-border payment enterprises, transaction rates are gradually lowered, and the blockchain technology has reduced the confirmation period to 6-141 minutes up to now.
establishment of payment licenses gradually sets industry standards.
Stage 3.0 Domestic cross-border payments enter an era when many enterprises contend. The major means of competition
• Security: Cross-border transactions via blockchain technology are protected by cryptography. Network par-
no longer lies in the transaction rate, which is replaced by differentiated value-added services and one-stop
ticipants have their own private key assigned to the event, which serves as the digital signature. The signa-
solutions for cross-border trade. The businesses that can really enhance industry efficiency and better meet the
ture will be invalid if the record is changed. As blockchain has no single point of failure, it cannot be altered
integrated demand of cross-border sellers can seize the initiative in future competition.
in a single computer.
Figure: Development Course of Cross-border Payment Platforms Online economy develops
from local to global
• Rich data sources: Metadata are transmitted from end to end, and pre-transaction information exchange
is authorized in advance.
3.0 Comprehensive solutions for
cross-border trade
Domestic cross-border payment
• Irreversibility: Each transaction has verifiable records.
enters an era where many enterprises
1.0 Basic payment channel contend and more value-based
services Popularity of smartphones further
services on offer
boosts the online economy
The cross-border payment market • Rates are further lowered to 0.5- • Close links with finance: Inclusion of the banks and other financial institutions into the ecology of block-
is dominated by foreign payment 0.7% chain enables banking institutions to conduct validation with transparent and traceable data in the block-
2.0 Online payment platforms
enterprises • Enterprises focus on brand chain. Such practices strengthen control over cross-border trade risks, and meets the bank's requirements
Rise in domestic cross-border payment
• High payment service fees: 2-3% building and provide differentiated around risk control. At the same time, banks can also eliminate the phenomenon of “multiple sums of fi-
enterprises
• Enterprises dominate the market, value-added services nancing for one transaction” through financing data sharing, thereby meeting the huge demand of SMEs for
• Rates in the industry are lowered to
and sellers have no choice. • Entering the value chain of sellers cross-border trade financing.
1%
• Payment licenses set the barrier to makes cross-border trade more
Internet economy rises
entry in the industry efficient and simpler
• Fund security becomes users’pain One-stop comprehensive solution is the core means of competition to build digital trade. The new track of cross-border
point Source: Deloitte payments for digital trade integrates many new value-added services, such as translation, customs clearance, currency exchange,
duty refunds, logistics, merchant reviews, financing and other supply chain services for international trade. Increasing innovations
The application of blockchain + payments breaks through the limitations around traditional cross-border payment and advanced transformations place participants on an integrated platform where they may get everything they want. One-stop
models. The current SWIFT system of traditional banks binds multi-party credit with international standards. Due to the existence comprehensive solutions will drive the growth of the global cross-border payment trade market.
of centralized architecture and agency mechanism, the current cross-border payment and settlement methods face similar
problems: long duration, high cost, and too many intermediate links, which make it difficult to control risks. Blockchain-based
cross-border payments solve the problems of traditional payment methods as follows:
10 11Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
I. Ecology of digital trade in the Asia Pacific region emerges I. Ecology of digital trade in the Asia Pacific region emerges
Figure: One-stop Service Ecology of Digital Trade (1) Removal of tariff barriers used in the production of the products the formulation of digital trade rules
After RCEP takes effect, more than 90% as the originating materials of the party worldwide lags behind development
of trade in goods in the region will fi- where the production takes place, and practices. At the multilateral level, the
Payer Payee nally enjoy zero-tariff treatment, mainly that the product’s RVC can be accumu- WTO has not introduced special rules
SWFIT including the immediate elimination of lated in the region of the 15 member on the digital trade, and relevant rules
Local clearing Intermediary Intermediary Local clearing
most tariffs with the remainder being states. Exporters can enjoy preferen- take the form of scattered content in
Payer's bank Payee's bank eliminated within 10 years. This makes tial policies within the region as they agreement texts and annexes under
system bank bank system
it possible for the RCEP FTA to fulfill its will more easily meet the RVC40 ratio the frameworks of the WTO, such as
commitment of liberalizing all trade in requirement or other material trans- the General Agreement on Trade in
goods in a relatively short period3. It is formation requirements through the Services (GATS), the Information Tech-
foreseeable that the removal of tariff cumulation rule. The lowered regional nology Agreement (ITA), the Agreement
Payer Payee barriers will significantly reduce trade preferential barriers allow multinational on Trade-Related Aspects of Intellectual
costs and product prices within the re- companies to be more flexible in the Property Rights (TRIP) and the Decla-
Payment platform gion, and bring about a huge trade cre- decision-making of industrial layout, ration on Global Electronic Commerce.
Local clearing Local clearing
Payer's bank of cross-border e-commerce Payee's bank ation effect. According to estimates by thereby enabling the existing system Due to the lack of foreseeability in the
system system
United Nations Conference on Trade around the division of labor on the in- development and reform of digital
and Development, “RCEP is expected dustrial chain to be more refined. The technology and the constrained effi-
to increase member states’ exports by reduction of production costs brought ciency of Doha Round negotiations, the
more than 10% by 2025”4. Cross-bor- about by flexible rules of origin will not above multilateral rules for digital trade
der e-commerce in most RCEP member only facilitate trade within the RCEP re- are facing new challenges in terms of
states is still in a phase of rapid growth. gion, but also promote deeper integra- text design and operation5.
The commitment to a “gradual shift to tion of regional supply chains and value
zero tariff” is expected to enhance the chains. It is the first time that the RCEP
International International Currency Merchants Duty refund Cross-border competitiveness of export commodities Change in tariff classification has included a dedicated chapter
collection of funds acquiring service exchange review management logistics by reducing the cost of taxes and fees, (CTC) refers to that after one party on e-commerce, which is the first
• Global payment • International bank • Interbank rate • Access to identity • Signing joint export • Bonded warehouse thereby bringing benefits to cross-bor- processes the raw materials of other comprehensive and high-level out-
network card acquiring • Locking products authentication sys- agreement with • Matching cross-bor-
• Receipt of pay- • Local wallet ac- to avoid risks tem duty refund service der logistics routes
der e-commerce within the RCEP re- parties, goods and raw materials are come of plurilateral e-commerce
ment on the same quiring • Trading at any • Access to compre- platform based on big data gion. categorized with different codes in rules established in the Asia Pacific
day* • Optimization of time (7*24) hensive enquiry sys- • Rapid arrival of duty the HS classification, including Change region. There are mainly three high-
• Full-amount pay- cross-border ac- tem for enterprises refund
ment quiring • OFAC/World Check
(2) Establishing flexible rules of origin in Chapter (2 Digits), Change in Tar- lights as below:
• Bulk payment • Value-added ser- Source: Deloitte Qualification around the origin of iff Heading (4 Digits) and Change in
vices goods is the basis for preferential RCEP Sub-headings (6 Digits). The CTC ap- Firstly, provisions related to paperless
treatment, which ensures relatively free plies only to non-originating materials, trading, ensuring the validity of elec-
and flexible arrangements for the rules and all non-originating materials are tronic authentication and signature,
1.2.4 RCEP promotes greater reform was formally implemented. The Figure: RCEP Facilitates Digital of origin. Enterprises can choose be- required to undergo the CTC. and temporary exemption from custom
regional cooperation reform mainly focuses on removing Trade in Five Aspects tween regional value content or change duties, will be conducive to creating a
On November 15 2020, ten ASEAN the EU€22 VAT de minimis, unifying in tariff classification, and all member (3) Promoting e-commerce more convenient online business envi-
member states, as well as China, Ja- the registration threshold for the VAT states are identified as a whole, so that At present, no sound or mature ronment. For digital trade, the interna-
Removal
pan, South Korea, Australia and New payment of long-distance sales, ex- of tariff the place of origin value content of set of rules for global e-commerce tional mutual authentication of digital
Zealand, signed the Regional Compre- panding the application scope of “one- barriers
goods produced in different countries have been established. On the one identity, a basic condition for the estab-
hensive Economic Partnership (RCEP), stop” compliance mechanisms, and can be accumulated. hand, with the increasingly obvious lishment of digital factor markets, pro-
marking the official launch of a free clarifying the VAT payment obligations Emphasis on Establishing
Regional Value Content (RVC) refers strategic competition in digital trade, motes the cross-border flow of digital
SMEs and flexible
trade area (FTA) with the largest pop- of e-commerce platforms. Affected by to that in case a party produces goods many economies are pursuing differ- technology. Meanwhile, thanks to the
technological Digital rules of
ulation, economic and trade scale and such reform, trade activities in EU will cooperation trade origin with non-originating materials, the entiated digital trade policies, while above provisions, the transaction links
development potential in the world. be weakened and those in the Asia goods can only be qualified as originat- developing countries are in a defensive can be further developed online. It is
According to the agreement text, the Pacific region will be further boosted in ing when they meet the requirement position in digital trade policies and expected that more scenarios like on-
chapters on “Trade in Goods”, “Rules the future. that the RVC is no less than 40%. rules for cross-border data flow. For line displays, online negotiations, elec-
Enhancing trade Promoting
of Origin”, “Customs Procedures and facilitation ecommercen Closely linked to the RVC is the "cu- example, India, Indonesia and South Af- tronic payments and electronic signing
Trade Facilitation”, “Electronic Com- mulation rule", which is also the most rica are opposed to global e-commerce will emerge, which will further broaden
merce”, “Small- and Medium-sized En- unique aspect around the rules of negotiations and refuse to sign the the channels of foreign trade and help
terprises” and “Economic and Technical origin in the RCEP. The so-called cumu- Osaka Declaration on the Digital Econ- companies secure more foreign trade
Cooperation” indicate the direction for Source: Deloitte
lation rule means that RCEP treats the omy, and India also advocates for local- orders.
promoting regional digital trade. originating materials of other parties izing data storage. On the other hand,
However, on July 1 2021, the EU VAT
12 13Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
I. Ecology of digital trade in the Asia Pacific region emerges I. Ecology of digital trade in the Asia Pacific region emerges
Secondly, provisions on online con- mutual trust of policies, mutual recog- cooperation the reduction of tariff barriers and the of businesses are mainly composed small businesses with fewer than 100
sumer protection, online personal nition of regulations and mutual com- Levels of development among RCEP lowering of barriers to entry for local of small retailers, small wholesalers, employees (accounting for over 85%),
information protection, regulation of munication among enterprises in the members vary significantly. In order to businesses (refer to 4.9 of this report and self-use purchasers. The Deloitte and more than half of the businesses
unsolicited commercial electronic mes- field of e-commerce, thereby greatly realize balanced development, RCEP for details). survey has also demonstrated the have an annual revenue of less than
sages and cyber security protection are advancing the development of e-com- specifically includes two chapters, aforesaid conclusions that Asia Pacific US$1 million (refer to 4.1 of this report
conducive to avoiding cyber hazards re- merce in the region. In the future, the Small- and Medium-sized Enterprises e-commerce markets mainly consist of for details).
lated to cross-border e-commerce. By integration of advantages of cross-bor- and Economic and Technical Coop- 1.3 SMEs are the main drivers
introducing laws, RCEP is expected to der e-commerce and traditional manu- eration. The two chapters enable the behind the transformation of Figure: Portrait of mMNEs
achieve the coordinated protection of facturing in the RCEP FTA may become member states to strengthen support digital trade
consumers’ rights and interests across the key for enterprises to reduce costs for SMEs and increase their levels of in-
borders, while also creating a favorable and increase efficiency, and the mutual vestment, while also building economic 1.3.1 Asia Pacific mMNEs are rising
environment for e-commerce. Com- promotion between online and offline and technical cooperation through the rapidly
pared with domestic e-commerce, how operations will support the long-term FTA platform, so that SMEs and devel- In traditional international trade, com-
to protect online consumers’ rights and coordinated development of enterpris- oping economies can better capitalize modities, technologies, funds and other Background: Type:
interests is a particular pain point right es. of RCEP's advantages. elements mainly flow among large busi- A large number of SMEs em- Small retailers, small whole-
now for the operation of cross-border The chapter of SMEs aims to build a nesses. However, digital technologies brace digitalization and the bar- salers, self-use purchasers
e-commerce. The ruling power was for- (4) Enhancing trade facilitation broader exchange platform for coop- have resulted in a constant reduction riers to access to cross-border
merly in the hands of overseas courts Compared with the Agreement on eration among SMEs. By emphasizing of global trade barriers and barriers on trade are increasingly lower
and arbitrators. Different interpreta- Trade Facilitation of the WTO and the promotion of information sharing, the international division of labor, and
tions of the provisions not only made the relevant rules in the FTAs already SMEs are encouraged to take advan- global trade has presented the features Portrait of small
of fragmentation and high frequency. and medium-
it more difficult for consumers to safe- signed by China, RCEP rules on cus- tage of the FTA and economic coopera-
sized cross-border
guard their rights, but also affected the toms procedures and trade facilitation tion projects under the Agreement in a Therefore, SMEs can extensively partic-
e-commerce
operational efficiency of cross-border cover more comprehensive content more active manner, so as to integrate ipate in global trade. With the help of businesses
e-commerce to a certain extent. For with a higher degree of facilitation. into the regional value stream and sup- cross-border e-commerce platforms,
this reason, the provisions on consum- These rules will enable the use of digi- ply chain. In addition, the agreement they can not only sell their products
ers’ rights and interests in the chapter tal technology to reduce customs clear- specifically places emphasis on promot- to broader markets, but also make
of Electronic Commerce mainly aim ance time and improve the efficiency ing the use of e-commerce by SMEs. cross-border purchases. With the help
Scale: Covered markets:
to protect the security of consumers’ of cross-border trade. RCEP simplifies SMEs, with great potential in economic of digital platforms, entrepreneurs and
Small scale, typically with Enterprises operate an aver-
information, make relief and recourse customs clearance procedures with growth, employment and innovation, small businesses have become mMNEs
fewer than 100 employees age of 3.56 outlet
specific and transparent, and supervise the adoption of a range of efficient are major drivers of digital trade. as they are engaged in cross-border
cross-border e-commerce businesses. administration measures to facilitate The chapter on Economic and Tech- e-commerce across global markets.
Thirdly, RCEP clearly supports the customs procedures, such as advance nical Cooperation aims to narrow They provide diversified “locally-made
cross-border e-commerce operations, rulings, pre-arrival processing and the development gaps among the parties products” and light customization
and so new formats of cross-border use of information technology and the and achieve common development. services for global buyers. Asia Pacific
mMNEs are rising rapidly. Date source: CBNData, Deloitte
e-commerce such as independent release of goods by express and per- Economic and technical cooperation
websites are guaranteed by interna- ishable goods, among others, within gives more importance to capacity These businesses are typical small and
tional rules. Specifically, in the case of six hours after arrival, where possible. building and technical assistance that micro enterprises, and many of them 1.3.2 SMEs and digital trade segments in view of their market posi-
“the realization of a legitimate public Such practices boost the development focus on trade in goods and services, are even start-ups with fewer than 100 complement and reinforce each tioning, so that digital trade can contin-
policy objective” and “the protection of new types of cross-border logistics investment, intellectual property, employees. Compared to convention- other uously align with market demands and
of essential security interests” without such as express delivery, and promotes e-commerce, competition and SMEs. al foreign trade businesses, they are The boom in digital trade would maintain positive growth momentum.
conflict, no party shall claim the right rapid customs clearance and increased The demands of the least developed more adept at using digital platforms. not be possible without the active Digital trade mitigates some of the
to monitor the computing facilities of a trade in fruits, vegetables, meat, eggs, countries (such as Cambodia, Laos Even though they are new players, exploration of SMEs on e-commerce disadvantages of SMEs in terms of
party involved as a condition for con- dairy and other fresh products. These and Myanmar) will be first considered, they can rapidly complete the compli- platforms by virtue of their flexibil- cost and risk resistance. In terms of
ducting business, nor prevent a party measures will drastically enhance the which is conducive to the effective flow cated deals that only large businesses ity. The development decisions made cost, the digital marketing of platforms
involved from transferring information facilitation of trade in goods within the and utilization of digital technology could handle in the past, including by large businesses tend to have a wide is characterized by strong pertinence
across borders by electronic means to region, provide efficient and convenient within the region. products selection, purchasing, sales, range of implications and involve com- and widespread range, so the custom-
conduct business. customs clearance services to enter- According to Deloitte’s survey of nine logistics, customs clearance, collection plex interests, while SMEs can quickly er acquisition cost of SMEs is reduced;
The aforementioned provisions will pro- prises of member countries, reduce Asia Pacific countries, cross-border of payments, settlement of exchange shift their business directions. Thanks mature cross-border e-commerce
vide institutional guarantee for mem- trade costs, shorten logistics time and e-commerce enterprises in this region deals and duty refunds. Meanwhile, to their flexible coping capacity, it is platforms offer one-stop import and
ber states to strengthen e-commerce further promote the formation of a re- are full of expectations after RCEP takes they have operated an average of 3.56 easy for SMEs to transform production export services and other technical
cooperation, facilitate the creation of gional integrated market. effect, especially in terms of simplifying overseas outlets, which means most lines and grasp the demand changes of support to businesses, simplifying the
a favorable environment for the devel- customs clearance procedures and of the companies serve three or even short-term markets. In addition, SMEs restrictions of intermediate cost to
opment of e-commerce, and enhance (5) Emphasis on SMEs and technical improving efficiency. They also expect more overseas markets. This group are more motivated to provide prod- SMEs. Scenario finance also provides
ucts and services in vertical market flexible and efficient financial solutions
14 15Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
I. Ecology of digital trade in the Asia Pacific region emerges II. Comparing the development of digital trade markets in the Asia Pacific region
II. Comparing the development of digital trade
to SMEs, which can help businesses cut laysia, have gained more international market in the world, as an example. At
down financing cost and respond to support to achieve higher emission re- the policy level, the Chinese govern-
markets in the Asia Pacific region
business changes in a more rapid man- duction targets. Hence, the flow of rele- ment guides enterprises to advance
ner. On risk resistance, digital trade has vant technologies and resources within the green supply chain management of
the attributes of multi-sided markets, the region has been strengthened, and express packaging through direct col-
therefore purchases and sales through various countries have enhanced their lection of goods from place of origin, di-
cross-border e-ecommerce platforms capacity to cope with the pressure of 2.1 Evaluation system for the devel- Figure: Evaluation System for the Development Indicators of Digital Trade
rect delivery with the original package,
enable SMEs to effectively avoid the reducing emissions. direct delivery of accumulated orders, opment of digital trade in the Asia
risks of single market. SMEs also face Pacific region
Downlin
of c ortion
recyclable applications, among other
of mobil
terminal,
speed
b oss-
e-c overa ce
sp road5%
less risk of trade default on digital 1.4.2 Consumption of green prod- models. China also encourages enter- This chapter analyzes and compares
Do d of and
e-c order
12% rce,
5%
r
ee b
b
me ll
me
p
r
wn fix ,
payment platforms, and e-commerce ucts is increasingly booming prises to make use of cloud computing, the development levels of digital trade
Pro
k
om
e
lin ed
platforms have formulated measures On the one hand, the understanding of big data, artificial intelligence and other in major Asian economies from two di-
om
k
Pr
in
to support SMEs during the epidemic, green consumption among consumers technologies to strengthen supply and mensions, namely cross-border e-com- o op
us f in orti
e t o
such as exempting the charges for continues to rise. According to a De- demand matching, increase stock turn- merce (60%) and digitalization (40%). po rs i erne n on
pu n t t m pti
delay in warehousing and extending loitte’ survey in 2021, 37% of millenni- over, promote logistics sharing among Specifically, the development level of o u of
10 latio tal ns
Co scale -
order fulfillment time. As a result, the als and 40% of Gen Z believe that more multiple channels, and reduce logistics cross-border e-commerce is quantified % n, ss
cro der
short-term cash flow dilemma of SMEs people will be committed to addressing costs and energy consumption. In by five indicators: e-commerce market r ,
Dig bo erce
has been alleviated. environmental and climate issues after China, leading e-commerce platform size, compound growth rate of e-com- ital m m
iz co 12%
40% ation
n the wake of the epidemic, the eco- the epidemic and it is advisable to take enterprises actively attempt to build merce market size, penetration rate
Revenue Evaluation
logical development of digital trade has actions such as improving recycling, green supply chains. For example, Alib- of e-commerce users, consumption from
marched into the speedway, creating a encouraging the use of public trans- scale of cross-border e-commerce, and
system for
aba Group has made various efforts to network
sound business environment for SMEs. port and changing eating and shopping infrastructure digital trade in
reduce emissions, such as optimizing the proportion of cross-border e-com- Cro
10% Asia ss- Pen
etra
After entering the global value chain habits. Both millennials and Gen Z also algorithms, increasing the use of clean merce in overall e-commerce. Digitali- b
e-c orde ra tion
system through cross-border e-com- insist on choosing a pattern of con- energy sources, and reducing carbon zation is measured by four indicators: om
m
r e-co te of
60% erce mm
merce platforms, SMEs are expected to sumption that matches their value, and emissions in the logistics link. In 2021, internet penetration rate, network rate, use erce
ita rs
12% ,
find and develop more “blue oceans”. more than a quarter of millennials and Alibaba has proposed “green GMV” for revenue from network infrastructure, c ap of
r e n
Gen Z express that the impact (posi- the first time, and disclosed its carbon and per capita volume of transaction Pe lum ctio
vo nsa a ,
1.4 Green and sustainable devel- tive or negative) of businesses on the emission reductions of online orders7. on e-payment platform. i nt
tra v me
Co row of
opment is a key theme of digital environment will affect their purchase It is expected that more e-commerce The primary data of all indicators are y
pa %
mp th
e- 10
g e
e-c rke 015
6
trade decisions. enterprises will actively improve the converted to fractional values from 0 to
rat mer ze
ou
ma 21-2
om t si )
mark erce
(20 12%
nd
12% e
On the other hand, the income level greening of products in terms of pack- 100 first before comparing the scores
et siz
m
1.4.1 Green and sustainable de- of consumers in the Asia Pacific re- aging, logistics, warehousing, and other of cross-border e-commerce and digi-
ce
E-com
velopment is an important goal of gion has continuously improved in aspects in a bid to reduce the environ- talization. Finally, the combined scores
Asia Pacific economies recent years. Stronger purchasing mental impact of the full life cycle of of each country will be obtained ac-
“Carbon neutrality” represents an im- power makes them willing to pay more online shopping behaviors. cording to the weight of the two dimen-
portant phased requirement in the premiums for green and environmen- sions. The countries will be grouped Data source: Data Reportal, Speedtest, Statista, Deloitte
2030 Agenda for Sustainable Develop- tally-friendly products or packaging, based on their rankings. The higher a
ment of the United Nations. Asia Pacific and green shopping has also gained country's score, the better its perfor-
economies have clear emission reduc- in popularity. Against that backdrop, mance in digital trade.
tion targets: China pledges to strive enterprises have keenly captured the
to achieve carbon neutrality by 2060, growing green consumption preference 2.2 Development of digital trade in
Japan, South Korea, and New Zealand on the markets to offer more environ- the Asia Pacific region and market Among them, mature markets mainly
put forward the target of becoming mentally-friendly products to a wider grouping include China, South Korea, Singapore
carbon neutral by 2050, and Singapore range of consumers via cross-border In light of the above-mentioned evalu- and Japan; developing markets include
also takes carbon neutrality as the ul- e-commerce platforms. ation system, major Asian economies Thailand, Malaysia, Indonesia, Vietnam
timate goal of its long-term strategies. can be mainly divided into mature and the Philippines; and early-stage
In the meantime, two thirds of RCEP 1.4.3 Green development of e-com- markets, developing markets and markets include Myanmar, Cambodia,
members submitted new Intended merce companies is constantly ap- early-stage markets in terms of their Laos and Brunei.
Nationally Determined Contributions preciated development level of digital trade.
(INDCs) in 2020. Additionally, due to The e-commerce industry is actively ex-
closer international cooperation in the ploring the formation of a resource-sav-
context of RCEP, some member states, ing and environmentally-friendly devel-
including Indonesia, Thailand and Ma- opment model. Take China, the largest
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