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The Development and Current of Cross-border E-

commerce
Wanxin Xue
Management School, Beijing Union University, Beijing, 100101, China, [email protected]

Dandan Li
Management School, Beijing Union University, Beijing, 100101, China ;Business School, University of International Business
and Economics, Beijing, 100029, China, [email protected]

Yilei Pei
Management School, Beijing Union University, Beijing, 100101, China, [email protected]

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Proceedings. 53.
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The Fifteenth Wuhan International Conference on E-Business－E-Business and Digital Innovation 131

The Development and Current of Cross-border E-commerce

Wanxin Xue1, Dandan Li1,2*, Yilei Pei1
1
Management School, Beijing Union University, Beijing, 100101, China
2
Business School, University of International Business and Economics, Beijing, 100029, China

Abstract: It is the new period of rapid development of cross-border e-commerce, which could make distance shorten
between product and market in time and space. It will be the main mean of promoting trade a facilitation, upgrade trade
development and promote the effective implementation of national policy. There is a new development of cross-border
e-commerce and it also spawned a new ecological model. It will help cross-border ecommerce develop better through
building a new ecosystem based on cross-border e-commerce business model. In this paper, we analyze the opportunities and
challenges facing cross-border e-commerce first. Then, based on the above analysis and the development of cross-border
e-commerce, the business model and ecosystem of cross-border e-commerce is built in this paper. So, there are some
bottleneck and development of cross-border e-commerce. We must first carry out a rational market position, the goal is to
occupy the terminal markets, then to the global market and integration of the value chain. We also should build the value
chain, carding and supplement. Furthermore, synthesized service platform of cross-border e-commerce should be built to
train young backbone of the business, and they should master the skills of cross-border e-commerce to service all of the
people very well.
Keywords: cross-border e-commerce, trade, import, trade deficit

1. OPPORTUNITIES AND CHALLENGES OF CROSS-BORDER E-COMMERCE

Cross-border e-commerce generally refers to transactions between different countries or regions who
communication via the Internet, email or other forms. It is a new international trade patterns which is smaller,
more often and faster than before. Currently, China's e-commerce is in a period of great development.
cross-border e-commerce in China whose main body is center enterprise is developing well, and with its strong
vitality growing. Cross-border e-commerce is a new pattern of cross-border trade which takes electronic as
means. It is very young and has incomparable advantages. But it is the same with other new things, there are
some problems and bottlenecks. How to solve these problems is a better electronic the basic requirements for
business. The financial crisis is becoming a catalyst for the development of e-commerce. The development of
cross-border e-commerce in China plays a role as a forerunner. A lot of experience and models are cross-border
e-commerce can directly reference.
In recent years, development of cross-border e-commerce has attracted the close attention of the
community. The government is also took highly concerned about the future development of China's cross-border
e-commerce, and actively guides enterprises to participate in cross-border e-commerce. The rapid development
of cross-border trade is inseparable from promoting e-commerce platform. Currently, there are some platform
which could provide service of cross-border e-commerce in China, including ebay, Alibaba's AliExpress. There
are many hands to build the core national policy promoting reform, such as the Belt and Road, Free Trade
Area(FTA), the internationalization of RMB, Chinese manufacturing 2025, Internet + and the coordinated
development of regional economy. Cross-border e-commerce could make distance shorten between product and
market in time and space. It will be the main mean of promoting trade a facilitation, upgrade trade development
and promote the effective implementation of national policy. Expansion of national policy will gradually solve
the problems of cross-border e-commerce which are clearance, settlement, billing, logistics, financing, taxation

*
Corresponding author. Email: [email protected] (Dandan Li). [email protected] (Wanxin Xue), [email protected]
(Yilei Pei).
132 The Fifteenth Wuhan International Conference on E-Business－E-Business and Digital Innovation

and open up new markets and avoid trade barriers and a series of bottlenecks.
The implement and carry out of cross-border e-commerce will help drive policy. On the external hand,
cross-border e-commerce strategy is from trade to investment to gradual currency. On the internal hand,
cross-border e-commerce strategy is simplifying administration and decentralization, optimize investment
environment, upgrading of industrial structure fully and optimize production capacity. Linkage between inside
and outside is for cross-border trade facilitation and deepening economic ties. We could output the excess
products and access to obtain resource and market. Through these two processes to promote the RMB as an
international settlement currency, and ultimately enhance the international influence of Chinese economy.

2. DEVELOPMENT OF CROSS-BORDER E-COMMERCE

Currently, the global trade is undergoing profound changes. Cross-border e-commerce has become the
main way trade growth. Trade accounts for 14 percent of China's total import and export trade, and 23% of
exports, 3.9% of imports. Cross-border e-commerce growth rate is 16 times the general trade, export 7.3 times,
98 times that of imports. Business to Business (B2B) accounts 88 percent of cross-border e-commerce.
Cross-border B2B refers to the small customize and wholesale business through e-commerce between different
borders businesses. The rapid growth of cross-border B2B business described in the global information flow,
logistics, capital flow increasingly demand convenience and differentiation, the background of rising costs,
fragmentation of trade, trend apparent terminal. The enterprises who follow the trend would have the
opportunity to integrate the value chain and market terminal, and form a new competitive advantage. Conversely,
the enterprises who could not restructuring timely would be replaced.
Cross-border e-commerce retail exports account for 37% of global market share in China. There are obvious
manufacturing capacity advantages on “made in China”, but the development space is still big to the industry.
Cross-border e-commerce is export-oriented whose outlet is 6.8 times to the amount of imports. It is dual
results of market supply and demand relationship and the policy-oriented. From the actual market situation, the
current cross-border e-commerce is limited categories of imports, which is focusing on maternal, Beauty and
light extravagance and luxury. Because China is a manufacturing power country, most of the production and
living necessities domestic supply to meet the market demand. From a regulatory perspective, China’s
regulatory authorities, the same as the other importing countries, have to meet the impact of natural sources of
revenue (import duty, excise duty and VAT(value added tax)) and import industry from cross-border
e-commerce. At the same time, it is responsible for product safety regulatory responsibilities. Regulatory
authorities, while promoting imports to meet consumption, must also be keeping guard at the door, so take a
relatively cautious reforms are necessary.
In 2014, there is a rapid growth on cross-border e-commerce business scale of the cross-border
e-commerce. There is total 3.75 trillion, and increasing 39%, of which exports is 3.27 trillion, and increasing
37%, of which imports is 0.48 trillion, and increasing 59%. Cross-border retail is 0.45 trillion, an increase of 44
percent, in of which exports 0.32 trillion, an increase of 30% and imports 0.13 trillion, an increase of 60%.
China's major trading partners are the United States, Britain, Australia and Brazil.

3. CROSS-BORDER E-COMMERCE BUSINESS MODEL AND ECOSYSTEM CONSTRUCTION

Cross-border e-commerce is the Internet + International Trade & multinational mode of operation of fusion,
which can be seen as the integration of Chinese-made terminals to the global market and value chain, and could
achieve corner beyond the entry point. The nature of cross-border e-commerce is to benefit people's livelihood,
promote consumption, forcing the transition, and then to eliminate price discrimination, boost consumption. At last,
Cross-border e-commerce can Forced Chinese consumer goods manufacturing and distribution companies to upgrade.
Business ecosystem theory was first proposed by James Moore, who was an American scholar, which is
The Fifteenth Wuhan International Conference on E-Business－E-Business and Digital Innovation 133

published in 1996 of "The Decline and Fall of competition: the era of leadership and business ecosystem
strategy". In his book, Moore observed and described the business activities of the market economy by
ecological point of system biology, and introduced the concept as well as the law of evolution to the company's
business ecosystem systematically.
The so-called business ecosystem is the economic union of organizations and individuals, including
members of the core business, consumers, market intermediaries, suppliers, competitors and other stakeholders
as well. They constitute a business ecosystem value chain or value network together. In addition, in 1988, Moore
believes that "business ecosystem is an extension system which is organized by a mutual support organization
constituted. And this system includes a customer base, supplier base, industrial tie those groups, investors,
financiers, business partners, standard setters , trade unions, government, and the unit has a government
functions, as well as other communities of interest. All of these units organized together through shared interests
and even some occasional ways. In 2004, Marco Lansiti and Roy Levien who is belonged to Harvard Business
School published a book named “The key advantage: a new business ecosystem of strategy, innovation and
sustainability mean anything”. They summarized their successful experience of business ecosystem through
following-up study of IBM and other large companies. Members of the business ecosystem are divides into
three kinds which are the backbone of enterprises, enterprises dominate and slit enterprise in this book. They
also proposed how to choose compete strategy according to business ecosystem, which are productivity, vitality
and creativity of the market segments evaluation.
According to Moore's theory, there are several important features. First, the composition of the business
ecosystem should be kept separate position in the ecosystem. That is, in the business ecosystem, companies and other
enterprises should be different from needs of survival skills, core competencies should to be different, too. Secondly,
members of the ecosystem should maintain diversity. In addition, the internal evolution of the business ecosystem is
functioning. The constantly changing of business, so does the business ecosystem change and timely adjust. The
members evolution themselves would positive effect on the ecological system. In Eve Mitleton-Kelly’s opinion, there
are some following characteristics: self- organization, emergence, relevance, interdependence, feedback, far from
equilibrium, the possibility of space, co-evolution, time-dependent, path dependence.
The export model of cross-border e-commerce is shown in Figure1. It involves multiple departments to
participate in the completion of outlet mutual of cross-border e-commerce.

Figure 1. The export model of cross-border e-commerce

134 The Fifteenth Wuhan International Conference on E-Business－E-Business and Digital Innovation

Cross-border e-commerce service platform is shown in Figure 2.

Figure 2. Cross-border e-commerce service platform

The exit of cross-border e-commerce is clearance, tax, logistics, service features and financing.
Clearance refers to complete the declaration of each national port customs, commodity inspection through
the platform. Tax rebates is that, the general taxpayers bill to customers directly. Tax rebates can be obtained
after the export. Small-scale enterprises could also enjoy the tax rebates when their upstream factories can
provide domestic value-added tax invoices. Logistics refers to the domestic and international shipping and port
handling which could coordinate the cooperation between transport and services such as inspection,
warehousing, apply to customs etc. Financing of cross-border e-commerce refers to the export through credit,
collection and letters of credit. The model of financing of cross-border e-commerce is shown in Figure 3.

Figure 3. The model of financing of cross-border e-commerce

The purpose of cross-border e-commerce is the trade balance imports and realize the “The five Regulations”
of imports of consumer goods, then Sea Change ADS should be changed to domestic consumption. Cross-border
e-commerce can reduce import tariffs; adjust consumption tax, import unreasonable charges to clean up; additional
restore duty-free shops; consumer entry facilitation, optimized inspection and quarantine policies; promote Chinese
The Fifteenth Wuhan International Conference on E-Business－E-Business and Digital Innovation 135

manufacturing quality and brand.

The import mode of cross-border e-commerce is shown in Figure 4.

Figure 4. The import mode of cross-border e-commerce

4. DEVELOPMENT BOTTLENECK OF CROSS-BORDER E-COMMERCE

The problems facing both exports and imports is a single window, and it is still hard to realize information
exchange, mutual recognition of regulatory, law enforcement mutual aid. Talent of cross-border e-commerce is
shortage, and the tax contribution is small. Problems faced by cross-border e-commerce exports are mainly
about price competition and shrinking profit. Otherwise, it is hard to parcel tax rebates, overseas warehouse
construction costs are high and stocking financial pressure. Financing is very difficult to cross-border
e-commerce enterprises. Marketing cost is high for independent website overseas. The markets are disturbed by
speculative mentality, fake, sub-standard, not the integrity of transactions. Problems faced by cross-border
e-commerce imports are mainly about the impact of existing sources of tax revenue and circulation systems, it is
more controversial. Regulatory pressure is big for sea Amoy direct mail. The contradiction among bonded
stocking, aging and security. Electronic fence needs highly information technology for businesses and regulatory
departments. These are no doubt problems which stop the development of cross-border e-commerce.

5. FREE TRADE AREA(FTA) DEVELOPMENT PATTERN OF CROSS-BORDER ELECTRICITY

SUPPLIER
Cross-border e-commerce can shorten the distance between the product and the market in time and space,
through the information flow, capital flow and logistics efficient integration. It will become the main means of
promoting trade facilitation, upgrade trade development mode. Under the conditions of Free Trade Agreement
(FAT), there are three characteristics of cross-border e-commerce as following.
(1) Financial innovation could facilitate settlement regularization of cross-border e-commerce export
operations, which could enhance corporate finance capabilities, and could drive business to establish a fully
functional global headquarters in the FTA.
(2) Supervision innovation could promote the localization consumption of cross-border e-commerce, can
improve convenience, strengthen rights protection. At last, it could force business to upgrade domestic brands,
136 The Fifteenth Wuhan International Conference on E-Business－E-Business and Digital Innovation

stable and expanding domestic consumer market.

(3) Export and import business is mixed in cross-border e-commerce industry. In order to improve the
utilization rate of funds, storage facilities and human resources and the fluctuation risk of hedge currency, some
of the cross-border e-commerce companies will carry out both import and export business.
From trade to investment to gradual currency, in order to deepen cross-border trade economic ties,
facilitation is used to expand domestic demand and benefit people's livelihood. Capacity and capital will be
output through investing to get resource and markets. The process of RMB as an international settlement
currency will be promoted through these two processes, and ultimately enhance the international influence of
Chinese economy.

6. THE DEVELOPMENT TREND OF CROSS-BORDER E-COMMERCE

To start cross-border e-commerce business well, we must first carry out a rational market position, the goal
is to occupy the terminal markets, then to the global market and integration of the value chain. We also should
build the value chain, carding and supplement. Furthermore, synthesized service platform of cross-border
e-commerce should be built to train young backbone of the business, and they should master the skills of
cross-border e-commerce.
Cross-border e-commerce is facing opportunities and challenges. And there is a huge space for
development and potential. In the future, there will be mainly five trends of cross-border e-commerce to develop
as following.
(1) Role in promoting of national strategies for cross-border e-commerce
With the commencement of national policy, China will strive to the right of leading of international rules
and speak of cross-border e-commerce. China will also support the promotion of the Belt and Road (B & R) and
some related regions to do the infrastructure construction of cross-border e-commerce. This will gradually solve
the problems of which cross-border e-commerce is facing, including clearance, settlement, billing, logistics,
financing, taxation, explore new markets and avoid trade barriers and a series of bottlenecks.
(2) Cross-border e-commerce localization is forced by the strengthen supervision
With the influx of a large number of countries through cross-border e-commerce commodities manner, the
problems of source of revenue, product quality and consumer protection are shown. Some governments have
attracted the attention. In 2014, Russia increase imported goods tax policy of cross-border e-commerce greatly,
which makes China meet very large impact. Countries strengthen the supervision of cross-border e-commerce.
And the -border e-commerce business will be forced to develop localization, and the "sea Amoy" to combine
online and offline "local" e-commerce businesses.
(3) Value chain of cross-border e-commerce business is extension by market demand-driven
With the growing of global consumer cross-border shopping, the demand of timeliness, type and offline
services is increasing, too. Currently, packet-based direct mail business model could only sale the products of
both volume and weight small, and without the need of a large number of offline services. If we want to meet
the demand of consumers, the cross-border e-commerce companies need to move logistics chain to domestic,
then increase big-ticket goods, improve distribution efficiency and reverse logistics processing capabilities.
Offline experience and service centers should be established to improve service and customer experience by the
way of 020.
(4) Trade enterprises will become the new force of cross-border e-commerce business
Foreign trade enterprises in their respective areas have the advantage ability to control supply chain. They
are familiar with foreign regulatory approach, and have a certain financial strength, have the advantage in terms
of cross-border B2C business. Meanwhile, cross-border B2B will become a major marketing channel of
The Fifteenth Wuhan International Conference on E-Business－E-Business and Digital Innovation 137

traditional foreign trade enterprises. Advantage in marketing of internet will be used by foreign companies to
cross the intermediate links to end distributors, retailers or service providers directly. This could improve
income and reinforce the ability to respond to changes in market demand.
(5) Comprehensive services of cross-border e-commerce will rise up
Foreign trade enterprises will be converged with integrated services cross-border e-commerce platform,
forming a comprehensive cross-border e-commerce services. It is a realistic way of sustained, healthy and rapid
development for cross-border e-commerce. Integrated services of cross-border e-commerce is developing to
payment, logistics, credit, product quality insurance and finance other direction based on the existing
information and transaction services through the integration of industrial chain, trade chain, chain of custody
and data link. It provides a full range of integrated services for whole process of cross-border online trade, and it
could push comprehensive services to promote integration and development of traditional processing trade and
cross-border e-commerce.
In logistics, cloud computing, networking and other new generation of information technology is used in
cross-border e-commerce, which will enhance the information level of logistics and efficiency, reduce logistics
costs.
In terms of credit, relying on resources and modern information technology, large-scale e-commerce
platform opens up new avenues for the credit system.
In terms of Internet financial, relying on the big data resources, for example transaction, logistics and
payment, e-commerce platform understands credit conditions and operating conditions of foreign trade
enterprises deeply. It could provide supply chain finance, reduce the cost of financing for small and micro
enterprises, and promote foreign trade enterprises to enhance overall competitiveness.

7. CONCLUSIONS
To start cross-border e-commerce business well, we must first carry out a rational market position, the goal
is to occupy the terminal markets, then to the global market and integration of the value chain. We also should
build the value chain, carding and supplement. Furthermore, synthesized service platform of cross-border
e-commerce should be built to train young backbone of the business, and they should master the skills of
cross-border e-commerce.

8. ACKNOWLEDGEMENT
This research was supported by the Cross-cutting project under Grant 11103JA1416 and H2015sk033,
Beijing Union University New Start project under Grant zk10201502 and Beijing Union University Project
12205561105-073，Project PXM _2016 000001_00202756_FCG.

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