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November 8, 2016

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Home » City specials » Hangzhou

Expanding trade on the ‘Online Silk Road’

By Xu Wenwen | November 8, 2016, Tuesday | Print Edition

FROM the Netherlands, cans of milk powder are transported to Hangzhou and stored here in a bonded warehouse, exempt from tax. A young mother somewhere in east China orders the milk online. It is cleared by customs and then delivered to her within 24 hours.

Every day, almost 100,000 similar orders occur in the Cross-Border E-Commerce Pilot Zone in Xiasha, Hangzhou. Goods imported from across the globe are bought by shoppers across China.

On November 11 — the online shopping extravaganza called Single’s Day (Double 11) — the zone is braced for an onslaught of orders. Last year, the 24-hour event raked in total nationwide sales of US$14.3 billion. Single’s Day was turned into the world’s biggest shopping event by Alibaba, the e-commerce giant based in Hangzhou.

“Hangzhou aims to be an international center of e-commerce,” Hangzhou Party Secretary Zhao Yide told the recent International E-business Expo.

Hangzhou was the first city in China to receive approval from the State Council, the nation’s cabinet, to establish a cross-border pilot zone specializing in e-commerce. The idea is to encourage foreign trade and industrial restructuring.

In addition to Alibaba, related digital businesses headquartered in Hangzhou include kaola.com, Netsun, and Mogujie.

“Hangzhou is the starting point of the ‘Internet Silk Road,’” Hangzhou Vice Mayor Xie Shuangcheng said during a forum at the expo, which was organized by the Hangzhou Commission of Commerce.

Last year, Alibaba racked up retail online sales of almost 3 trillion yuan (US$443 billion). In Hangzhou, there are more than 1.9 million people employed in some form of e-commerce, including logistics giants STO Express, YTO Express, ZTO Express and Yunda Express.

E-commerce is being hailed as the economic driver of the future. It is moving into realms beyond just online retailers and shoppers.

At the recent expo, JD.com aired a video of three “unmanned strategies,” including fully automated warehouses where goods are sorted by robots, driverless cars and even delivery drones.

“Unmanned delivery vehicles are now seen on bicycle lanes in Beijing, and delivery drones are already being used in rural areas in several provinces,” according to Zhang Zhitong from JD.com.

Alibaba is expanding into outlying urban areas. Its Countryside Taobao project was launched to help villagers shop online, with the project expanding to include other services, such as education courses, loan services and telemedicine.

Many consumers in China want foreign products, which they can now afford and which they consider to be of higher quality than domestic offerings.

Formerly, if a Hangzhou resident purchased a product from a foreign e-commerce website, the transaction involved hefty tariffs, transportation fees and often a lengthy wait for delivery.

That began changing last year with the opening of the cross-border, e-commerce online-to-offline center in the Xiasha Industrial Park in Jianggan District.

For example, the Japanese smart toilet lid favored by Chinese people is now made by Panasonic in Xiasha.

Since the park’s opening, a Hangzhou resident need wait only a day for delivery of a Panasonic toilet lid, from a bonded warehouse in the park next to the factory.

The Hangzhou arm of Panasonic purchases many popular products, such as shavers, from its Japanese parent, stores them in the park, and then delivers them when orders come in.

“It is not only faster but also cheaper because renting a warehouse in China costs less,” said Zhao Zongzhi, from the park’s office.

The cross-border business is thriving, with business-to-business online platforms ordering sought-after foreign products and wholesaling them.

Since 2013, Zhejiang Materials Industry International Co has been buying cosmetics and appliances from Japan and South Korea. The goods are stored in bonded warehouses in Xiasha or Shanghai’s Pudong New Area, and then delivered to the warehouses of JD.com and Vipshop (vip.com).

For small businesses that don’t have warehouses, Alibaba Group operates 1688.com, a wholesale platform serving small Taobao merchandisers and real grocery stores.

“Grocery store owners can now stay home and click on their smartphones to get goods delivered straight to their shelves,” said Lu Li, a marketing manager at Alibaba.

WeChat is also a popular site for online business. Supported by Renrendian software, WeChat users can do business via the instant messenger tool.

Underpinning government support for e-commerce, a new law on regulation of online businesses is expected to be announced by the end of next year.

“China does not have many industries that are internationally competitive, but e-commerce is one realm that is, and a most powerful one,” said Lu Zushan, former provincial governor of Zhejiang and currently a member of the panel drafting the law.

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