HKECIC Trade with Confidence Series: EP2 Unleashing the Lucrative Potential of Cross-border E-commerce for Hong Kong Traders

The Hong Kong Export Credit Insurance Corporation (HKECIC) and Hong Kong Trade Development Council (HKTDC) jointly released a research study, titled "Unleashing the Lucrative Potential of Cross-border E-commerce for Hong Kong Traders". The study revealed that 90% of surveyed companies anticipated that cross-border e-commerce could drive significant sales growth in the business in the next two years. However, the market-related challenges continue to persist, including intense market competition, complex customs clearance procedures and the management of returns and refunds. In light of these challenges, experts recommend developing appropriate online marketing and sales strategies, enhancing risk management and adopting efficient logistics and delivery practices to better seize the opportunities presented by cross-border e-commerce.

Driving significant sales growth in the next two years

As network technology has become more widespread, while electronic payment services are now ubiquitous and e-commerce platforms have come to offer an ever-expanding range of services, even new entrants and smaller businesses can easily develop cross-border e-commerce operations on a global basis. 90.0% of surveyed companies anticipated that cross-border e-commerce could raise their total sales revenue in the next two years. The surveyed companies in general indicated that cross-border e-commerce positively impacts their expansion plans whether via broader sales channels (69.0%), new market opportunities (50.3%), or enhanced brand awareness (48.9%)

Coping with online and offline challenges

Cross-border e-commerce operators must confront a variety of practical issues relating to both online and offline procedures, including goods delivery, platform charges, exchange rates and refunds as well as market, regulation and financing issues. Of the companies surveyed, 38.4% said that customs clearance procedures in Mainland China and foreign markets are complex, with 31.3% indicating that product returns involve complicated procedures and / high costs, and 29.8% finding it difficult to manage practical issues, such as the international delivery of small orders. Regarding the issues of platform charges, exchange rates and refunds, the high commission rates charged by third-party e-commerce platforms and long payment periods were identified as challenges by 51.1% of respondents. Meanwhile, 46.6% said fluctuating exchange rates or high exchange costs were problems they faced during their cross-border e-commerce operations. 28.4% were concerned about the expansive costs about refund policy. In addition, companies must contend with a wide range of difficulties. Majority of the surveyed companies (84.9%) noted that developing cross-border e-commerce presented market-related challenges, such as keen market competition. Meanwhile, 54% indicated regulatory issues, and 41.2% encountered financial challenges.

Leveraging Hong Kong's advantages to unlock global e-commerce opportunities

In addition to the questionnaire, the survey also included the interviews of a number of companies engaged in cross-border e-commerce or related businesses. According to expert’s opinion, though the mainland market is huge in scale, the competition is keen. Overseas opportunities abound, such as the advanced economies of Europe and America have mature online shopping markets and e-commerce markets in Southeast Asia. In addition, online sales strategies tailored to target markets are of prime importance, including the collaboration with KOL or influencers and using short-form videos to attract consumers. The study also highlighted Hong Kong's excellent logistics capabilities and extensive air cargo network as well as its well-developed financial markets and diverse financing services, which are well-suited to meeting the financial needs of e-commerce. Meanwhile, Hong Kong serves as an ideal gateway for foreign products entering Mainland China, with the Hong Kong brand enjoying a competitive edge in the region.

This article is provided by the HKECIC. For more details about export credit insurance solutions, please contact the HKECIC at marketingunit@hkecic.com.  

References:

HKECIC – HKTDC Joint Research Report "Unleashing the Lucrative Potential of Cross-border E-commerce for Hong Kong Traders"
https://www.hkecic.com/cms/sites/default/files/inline-files/HKTDC%20research%20report_en_pf4.pdf

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