E-Commerce as an Economic Development Tool

E-Commerce as an Economic Development Tool

William Laraque

Managing Director at US-International Trade Services

Views 550

E-Commerce as an Economic Development Tool

06.06.2016 08:15 am
E-commerce can be an extraordinary job and economic development tool Regrettably the initial cross-border forays of Amazon and Alibaba have been debacles but they provide valuable, strategic lessons in "how to do it right." I expect that some will question my judgement relative to e-commerce debacles. The 50 biggest global e-commerce platforms have produced $4.6 trillion in profits in the past 4 years, 80% of which ended up in the US. 
 
Amazon which fell on its sword in China, hopes to invest $2 billion in India and has yet to make a profit there. Alibaba and Jack Ma, China's poster boy for e-commerce platform expansion, has successfully marshaled Chinese SMEs in using its platform for global expansion. Alibaba has also made superb use of logistics to supply the 200 lesser cities of China. Alibaba is plagued by a pesky counterfeit problem, where Chinese counterfeiters have used its platforms and undermined its credibility. The US SEC is examining Alibaba's accounting practices, its relationship with Cainaio; its logistics arm and Ant Financial, a spinoff of lucrative Alipay which Ma owns personally. Ant Financial is valued at $60 billion. 
 
Economic Development
 
The US, Europe and other nations have not capitalized on e-commerce as an avenue for a full participation in global trade by their SMEs. Very little has been done to develop the trade finance structure and capital goods trade settlement infrastructure of e-commerce platforms so that these provide the full array of financial alternatives for SMEs wishing to engage in importing, exporting and investing. 
 
Regulations
 
As far as regulations are concerned, nothing has been done to reconcile e-commerce modes of trading with global trade regulations; with SWIFT and ICC rules. The major e-commerce platform providers have been thus far given carte blanche to self-regulate. 
 
E-commerce is a very powerful tool for global trade engagement. It touches on banking, on SWIFT's TSU, BPO, Supply Chain Finance,  the processes of export credit agencies and export credit insurance agencies. It touches on the work of the US Ex-Im Bank, on that of the US Commerce Dept. The prevailing ignorance regarding these relationships and a greater regard for the much-hyped blockchain, IoT, virtual reality, 3-D manufacturing and artificial intelligence developments, have eclipsed what has been a very lucrative cross-border enterprise for a relatively few providers and participants.

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