Tech giants and massive CBEC platforms like Alibaba, Tencent and JD.com, as well as the e-commerce business of social media platforms Tiktok and Xiaohongshu, have expanded their footprints in emerging markets. They are especially prominent in Southeast Asia, profiting from booming local digital economies and young populations. According to a 2022 report on the Southeast Asian digital economy jointly released by
Google, Temasek and Bain, total Southeast Asian e-commerce transaction volume reached $131 bn in 2022, growing by 16 percent y-o-y, and expected to reach $211 bn by 2025.
Nevertheless, the ASEAN e-commerce market is getting overcrowded with ever more intense competition among local and PRC e-commerce platforms, but its logistics services present huge market potential. After entering the regional market seven years ago, JD.com shut down its e-commerce businesses in Indonesia and Thailand at the beginning of 2023, but its local storage and logistics arm remains active. Alibaba’s presence in ASEAN is run by AliExpress and Lazada, a local e-commerce platform acquired by Alibaba in 2016 with the local delivery network. Currently, Cainiao Logistics and Lazada co-run over 400,000 square metres of bonded warehouses covering 6 ASEAN countries.
The lack of adequate transportation infrastructure, modern digital payment methods and a skilled labour force are outstanding challenges facing PRC e-commerce logistics expansion in Southeast Asia.
On the other hand, the effectiveness of RCEP (Regional Economic Partnership Agreement) in January 2022 presents Chinese CBEC firms with new opportunities with regard to China-ASEAN trade
- reduced tariffs on imported raw materials and intermediate goods
- unified rules of origin, customs procedure, quarantine and inspection
requirements and technical standards, etc.
- streamlined cross-border logistics via simplified customs clearance and authorised economic operator (AEO) mutual recognition; will face little competition from nascent local logistics industries
- comprehensive IP regulations and dispute settlement mechanisms
In addition, emerging markets in Latin America, Middle East and Southeast Asia, such as Brazil, Mexico, Gulf countries, Kenya, etc, have been targeted by PRC e-commerce giants and logistics firms as the next growth points, given e-commerce saturation in some North American and European countries. Jitu Express 极兔速递, China’s top express delivery firm, has set up in Brazil in May 2022, providing local delivery services to all Brazilian states. Its international services network offers customs clearance overseas storage and “last mile” delivery services to Chinese CBEC sellers with independent websites.