Tag Archives: cross-border e-commerce

Shenzhen to stay ‘neutral’ in Amazon dispute

Shenzhen’s city government has apparently decided to not intervene in the blowup that has been taking place between Chinese cross-border e-commerce firms and Amazon, the American giant.

According to sources quoted by SCMP, the city has been turning down requests to back thousands of vendors’ legal actions against the US company. The same official told the merchants that the government cannot help their cause if they cannot prove that no rules of the US e-commerce platform were violated, these sources said. The government, however, will assist the affected merchants by introducing them to legal counsel.

What the report does not mention is that the city government has been massively supporting all of these companies while they were busy building up their businesses on Amazon, providing subsidies, cheaper office and warehousing space, and export rebates. It does note, however, that once the storm broke over how these companies had been flooding Amazon with fake user reviews, the city government decided to grant them a subsidy of 2 million yuan for each independent online store.

Shenzhen is home to more than 40,000 firms involved in cross-border e-commerce, accounting for about 35 per cent of the entire sector across mainland China.

Bullish on the GBA? Check out Amazon

China bulls have been grabbing headlines this week. Top bank executives have declared their faith in the country’s longer-term economic potential, and their love of Hong Kong’s role in the rise of the Greater Bay Area. Heads of major funds have described regulatory crackdowns as “noise” and said they are buying dips. The Stock and Bond Connect taps have been gushing. Crackdowns on internet gaming, vaping, and extravagant celebrities have likely been but minor distractions for these titans of finance.

And why should they be anything but? Such men are not in the business of investing in “sin industries”. They are here to take wealth from people living in the GBA who would prefer to have it managed by experienced, worldly, friendly others, who know what to do with a hard currency. These men need not care that the US-China relationship is deteriorating by the day. It could even be said that the more the fear, the better for Hong Kong’s banks and other offshore wealth managers.

New US weapons sales to Taiwan or Chinese Foreign Minister Wang Yi’s rant at an Asean forum might not have made it into the daily news clippings of people like Bill Winters, head of Standard Chartered Bank, or Credit Suisse’s Thomas Gottstein. Ditto for Asoka Woerhmann, chief executive of the €859bn German asset manager, DWS. All believe that China’s growth story remains intact and will continue to follow the trajectory it has been on for the past 40 years, give or take a few squiggles.

They might be right. China is opening its wealth management industry, and now could be the time when centuries of historical precedent are erased as the Chinese government forgets the national security implications of allowing rivers of silver to flow into the hands of foreigners.

Then again, they might want to look into what is happening at Amazon. If they don’t, they could miss signs that the foundation on which the GBA’s prosperity is based – foreign trade ­– is wobbling and could soon head into structural decline.

Continue reading Bullish on the GBA? Check out Amazon

Amazon crackdown hits cross-border traders

Crackdowns against unscrupulous businesses aren’t only happening on one side of the Pacific. In China, more than 300 companies are reeling from bans placed on them by Amazon this week, as this insightful article from Pandaily explains.

The news is likely to have sent shockwaves through the Greater Bay Area, which is the biggest and fastest growing region in China for cross-border e-commerce. As recent recruitment data shows, Guangdong firms engaged in direct sales outside of China have been by far the country’s biggest recruiters in this space. Moreover, cross-border e-commerce has been seen as a growth driver for the economy in both the short term, as foreign buyers cannot attend trade fairs in China, and over the longer term, as China seeks to use technology to transform its economic structure.

The companies in question were banned for violating Amazon’s rules on fake reviews.

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