Chinese entrepreneurs turn to e-commerce to beat foreign trade slump

As China's foreign trade slows, entrepreneurs are turning to online sales to push their products across borders.

"We are selling our products on both aliexpress.com, a subsidiary of Alibaba, and eBay, with online sales revenue accounting for 20 percent of our total output in 2014," Bao Chengbin, deputy manager of Chinahanji Power Co., Ltd., a manufacturer of diesel engine parts in southeastern Fujian Province, told Xinhua over the weekend.

The company's turnover surpassed 200 million yuan (about 33 million U.S. dollars) last year with exports accounting for about half, said Bao.

"Social networks, including apps and online chat tools like Wechat, have helped us communicate promptly with customers abroad and cut costs since we don't have to make overseas phone calls as we did before," said Bao.

As more companies seek to expand their presence in foreign markets through e-commerce, new business opportunities have emerged for companies like ISoftStone, an online service provider that helps small- and medium-sized enterprises (SMEs) do cross-border business.

"We aim to bring SMEs together to improve their ability to bargain with foreign customers on price and ask banks to provide better service," said Wang Shaokai, general manager of IsoftStone Fujian.

The local government is also encouraging companies to strengthen themselves through opportunities in cross-border e-commerce, said Wu Hairui, deputy chief of the Bureau of Commerce in Putian, a city in Fujian Province.

Chinese Premier Li Keqiang chaired a State Council executive meeting in June to promote cross-border e-commerce as China's foreign trade continues to decline.

Total foreign trade dropped 6.9 percent year on year to 11.53 trillion yuan (1.89 trillion U.S. dollars) in the first six months of 2015, slipping further from a 6-percent decline in the first quarter, according to data from the General Administration of Customs (GAC).

More than 200,000 companies are running cross-border e-commerce businesses in China with more than 5,000 online shopping platforms, Wu said, quoting official data.

The trade volume for China's cross-border e-commerce pilot cities surpassed 3 billion yuan by the end of 2014, the GAC data showed. E-commerce exports totaled 2.04 billion yuan in 16 pilot cities, including Shanghai and Beijing, in the 18 months starting in July 2013, while imports totaled 1.01 billion yuan.

Cross-border e-commerce has grown substantially since the GAC established a pilot program offering preferential policies in 2012 to import businesses in seven Chinese cities, including Shanghai, Chongqing, Hangzhou, Guangzhou and Shenzhen.

GAC spokesperson Zhang Guangzhi said at the start of this year that the authority was promoting a national unified system for e-commerce trade clearance to improve efficiency and cut costs.

Alibaba Group has already prepared payment platforms for cross-border transactions and the local government of Putian is drafting a plan to help local enterprises take advantage of the platforms, according to Wu, who had just returned from a business trip to the e-commerce giant's Hangzhou headquarters.

"I believe the boom for cross-border e-commerce is around the corner, thanks to concerted efforts from both the government and the private sector," said Wu.

Cross-border e-commerce, which brings the Internet together with foreign trade, will help expand consumption, promote the upgrade of the export-oriented economy and create new economic growth, according to a statement released by the Chinese cabinet.

Although the market is promising, bottlenecks still exist. More talent and capital are needed and the efficiency of customs should be improved, said local entrepreneurs in Fujian.

China will improve customs clearance processes, offer tax reductions and exemptions, and encourage cross-border electronic payments to boost the industry's development, the State Council announced in a statement in June.