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 tactical and strategic lessons in "how to do it right."  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. It is interesting to compare the development of e-commerce in cross-border trade in China and India. In one day, Singles Day, Alibaba sold $14.3 billion on its platforms. This is nearly the equivalent of all that was sold on Indian E-commerce platforms (Flipcart,  Amazon, SNAPDEAL), from 2009-2014. Between 2009 and 2014, the Indian e-commerce industry registered a compound annual growth rate of 34% to reach $16.4 billion.

India's 3 largest e-commerce platforms recorded losses of Rs 5,052 (crore) in fiscal 2016. A crore is 10,000,000 rupee.

 

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 intellectual property violation problem, which features Chinese counterfeiters who have used its platforms and undermined its credibility. 

The US SEC is examining Alibaba's accounting practices, its relationship with Cainaio; its logistics arm. Alibaba's investors are not happy that Ant Financial, the derivative of lucrative Alipay, was spun off into an entity owned personally by Jack Ma. Ant Financial is valued at $60 billion. 

Alibaba employs more than 30,000 people on 30 campuses throughout China. 

 

 

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 alternatives to finance SMEs wishing to engage in importing, exporting and investing. 

 

 

As far as regulations are concerned, almost 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. 

 

 

 Saudi Arabia is fully engaged in a contest of influence with Iran. This contest is for political, religious and economic hegemony over the Middle East and beyond. To the Saudi leadership's credit, it recognizes that youth unemployment is the greatest breeder of discontent and terrorism everywhere in the world. 

 

Saudi Arabia, through its public fund, just invested $3.5 billion in Uber. The kingdom recognizes that e-commerce provides for economic diversification and employment, including the employment of women. As the crown prince of Saudi Arabia said in announcing these and other diversification efforts; "changes are coming."

 

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.