The E-commerce Transition and Economic Development
- William Laraque, Managing Director at US-International Trade Services
- 15.02.2016 07:00 am undisclosed
E-Commerce is about to undergo some important transitions which will affect global trade in general and economic development in particular. While short-termers are happy to box-in e-commerce's trajectory and to maintain it on a retail commerce path, its horizons are much broader in my opinion. In its evolution, e-commerce will transition into a principal means of trade in capital goods. This will of course require a complementary application of a deep knowledge of such disciplines as export controls, compliance with export and import regimes and regulations, knowledge of the complementary disciplines of export credit insurance, export credit agency guaranties, financing, pre-export financing, trade agreements, logistics, Incoterms, ICC regulations, banking procedures, SWIFT, etc.
The sale of retail goods involves relatively "mild" concerns about violations of intellectual property, counterfeiting and the like. The sale of capital goods, the direction that e-commerce is heading in, is more serious and involves laws and regulations the violation of which subject offenders to significant fines and imprisonment. Welcome to the big leagues, where professionals sail a following sea and amateurs quickly run aground.
Economic Development
I expect that there will be some head-scratching at my conflation of e-commerce and economic development. E-commerce represents an opportunity for both developed and emerging economies to engage in global trade. $85 trillion in global trade flows and opportunities exist by 2025. E-commerce and its complementary trade facilitation and trade financing support services represent a level playing field in global trade. Full service e-commerce does not favor oligopolies, monopolies, or multinational corporations over SMEs and everyone can play as long as they know and play by the rules. E-commerce rules are not enacted by plutocrats, autocrats or other crats and so the provision of a level playing-field stands a fair chance. I have heard one person advocate for SMEs using e-commerce for global trade and the fact that this advocate is Jack Ma is certainly reassuring. SoftBank is presently scanning the U.S. landscape for complementary talent and enterprises and this process will accelerate the growth and transition of e-commerce.
Alibaba Group Holding Ltd. said in a Friday filing that it owned 33 million shares of Groupon Inc., a Chicago deal purveyor, as of Dec. 31. The 5.6 percent stake made Alibaba the fourth-largest stake holder in Groupon, according to the regulatory filing.
The Chinese e-commerce giant picked up stakes in other U.S. enterprises, such as online retailer Jet.com, augmented-reality provider Magic Leap and ride-hailing app Lyft, as part of its strategy to learn more about the U.S. market as it expands internationally, Bloomberg reported.
“They don’t want to have their own operations, so they are investing in other companies to help them learn and pave the way for more robust activity down the road,” Gil Luria, an analyst at Wedbush Securities Inc., told Bloomberg.
"Petit a petit l'oiseau fait son nid." Little by little Jack Ma builds his nest.
Transition
This e-commerce transition in global trade is taking place at a time when extraordinary events are taking place:
• U.S. and Canadian oil producers are losing $350 million a day
• Ford will soon build more compact cars in Mexico than it will in Detroit. Will Donald Trump's wall reverse this trend?
• The surest way to reverse fortunes in the oil patch is for emerging market economies to grow. Engaging in bilateral and multilateral trade among SMEs is a viable and sustainable way to economic growth. Since emerging markets now account for the greatest share of trade in oil, the economic revival of the SME which trades globally is the surest way to revive all economies, particularly if they depend on oil exports.
