E-Commerce Crossing the Borders at the Click of

E-Commerce: Crossing the Borders at the Click of a Mouse Yunnan International E-commerce Company Li Jiming Deputy Director General of Yunnan Department of Commerce PRC, June 2011

The US Is No Longer the Center of the Online Universe Source: com. Score World Metrix, October 2010

U. S. E-Commerce Dollar Sales Growth ($ Billions) Source: com. Score e-Commerce Measurement

E-Commerce Growth Exceeds Growth of Total Retail

Lower Income Segment is the Strongest Rebound e-Commerce Sales by Income Segment ($ Billions) Growth vs. YA Source: com. Score e-Commerce Measurement

Distribution of Internet Users, Age 15+ Source: com. Score Media Metrix, December 2010

Growth of Mobile Market Enablers in EU 5 Source: com. Score Mobi. Lens, Dec-2009 -Dec-2010 (3 Month Average)

In Comparison: % Adults in EU Making Online Purchases

South Korea: E-Commerce • South Korea is the third largest e. Commerce market in the Asia-Pacific region, after Japan and China • On the global stage, it has higher online penetration, broadband penetration, and mobile penetration than the United States – and is recognized as a leader in mobile payments and virtual goods

South Korea: E-Commerce • The number of Internet users in South Korea reached 36 million in 2009, accounting for 74% of the total population • E-Commerce growth in South Korea is higher than expected - projected to reach approximately USD 17 billion in 2009 • Payment cards are the dominant online payment tender in South Korea and are used for approximately two-thirds of online purchases

E-Commerce Takes Off in Japan • Revenues from ecommerce in Japan have expanded every year by around 17% since 2005, and are expected to grow at nearly 10% a year for the next five years

Online Audience Sizes in Southeast Asia Source: com. Score Media Metrix, December 2009 to December 2010

Emerging Internet Markets in Southeast Asia Skew Very Young Source: com. Score Media Metrix, December 2009 to December 2010

Online Retail is Growing Rapidly in Southeast Asia Source: com. Score Media Metrix, December 2009 to December 2010

Top Retail Sites are Almost Exclusively Local Unique Visitors (000) Top 5 Retail Sites per Country

Half of Asia Internet Users Are in China • Until the end of 2010, the number of internet users in China has taken up 23. 2% of that in the world, and 55. 4% of that in Asia

E-Commerce: Increased Retail Sales Share

Fragmented Market Grows Online Shopping • Unlike in the US, the traditional retail market in China is highly fragmented

China Online Retailers Stand Out • E-commerce saves online retailers store operating costs, lowers their marketing expenses, and improves their inventory turnover, allowing them to offer competitive prices – Chinese consumers often enjoy 30 -40% discounts when shopping online, relative to shopping at the traditional retail stores – Most online retailers offer free door-to-door delivery within days

ADB: Why e-Commerce Important* • Internet is dramatically changing the way goods and services are produced, delivered, sold and purchased • Internet technologies have the potential to empower SME • Potential benefits of e-commerce for developing world are immense - any company can enter global markets where size and location become rather irrelevant * Asavin Chintakananda, Senior Advisor, Asian Development Bank, Page 6 of “Financing E-Commerce While Fighting Poverty” Presentation

China: The Engine of GMS Trade • Continuous price rise in China as well as the protectionist measures in the US and the EU are motivating Chinese firms to move into neighboring ASEAN region Source: United Nations Commodity Trade Statistics Database and Author‟s Calculation.

China: Trading Across Border Costs

Phase 1: B 2 B Trial in ASEAN-China FTA • AMSs may consider to make reference and utilize ASEAN-China FTA B 2 B Platform – Targeting lower entry costs and barriers for ASEAN enterprises – Access exciting yet fragmented markets • B 2 B for ASEAN Member Countries and China to promote inter-regional trade – More support coming targeting Cross-Border online settlement and e-Port • Currently running a trial with Malaysia – lesson learned: government support is critical to success

B 2 B: Homepage

B 2 B: Trade Workflow

Rationale for Trial • Accelerate adoption of e-commerce trade • Continuous building of infrastructure, legal framework and increase awareness in e-trade on costs and benefits • Targeting trade opportunities between ASEAN Member Countries and China as a priority in the early trial – worth consideration • Domestic B 2 C and C 2 C markets when ready • Effective utilization of transportation infrastructure upgraded in recent years

Phase 2: B 2 B 2 C Through Established Partners • Utilize and make use of an established electronic shopping mall at Newegg and other established channels in the U. S. – Leapfrog bypassing ground zero – Shorten learning curve – Access vast middle class consumer segment • Accelerate trading with China through Newegg platform in China • Currently running a trial with Malaysia

Phase 3: Domestic B 2 C/C 2 C • Consider to utilize Newegg and other available Public e-Commerce Platforms – – Consider not to re-invent certain basics Reduce learning curve Lower start-up and entry costs Tailor-made to specific needs • Government support from each country is critical – Relevant ASEAN Secretariat involvement and coordination very important – Comprehensive planning but small wins through trials utilizing an established channel is recommended

Conclusion • Global e-commerce spending is projected to increase more than 90% by 2014 • Majority of the growth will be in Asia Pacific region especially from China • f • Leverage on the existing platform for faster and easy entry into the e-commerce market • Utilization of FTA B 2 B platform to increase inter-regional trades

Keys to Success • Adequate e-commerce infrastructure in place • Policy and regulatory framework • Common platform: wheels not made here • B 2 B before B 2 C in certain countries • International and local collaborators

http: //www. asean-cn. org http: //www. cn-asean. org JUNE 2011 Yunnan Department of Commerce PRC