Recently, the Executive Meeting of the State Council reviewed and approved “Opinions on Expanding Cross-border E-commerce Exports and Promoting Overseas Warehouse Construction”. The conference pointed out that developing new forms of foreign trade, such as cross-border e-commerce and overseas warehouses, is conducive to promoting the optimization of foreign trade structure and scale stability, and to creating new advantages in international economic cooperation.

Guotai Jun An pointed out that the “Opinion” is in line with the previous policy, confirming that the policy supports cross-border e-commerce and overseas warehouses to continue to increase. Cross-border overseas travel is still booming, and attention is being paid to overseas warehouse layout and cost improvement expectations.

The cross-border e-commerce market has grown dramatically, and policies promote the construction of overseas warehouses

In recent years, against the backdrop of a weak global economy, cross-border e-commerce has shown a trend of contrarian growth. According to data from the General Administration of Customs, in 2023, China's total cross-border e-commerce import and export volume was 2.38 trillion yuan, a year-on-year increase of 15.6%, setting a new record. Among them, the export amount was 1.83 trillion yuan, a sharp increase of 19.6%. In the first quarter of this year, China's cross-border e-commerce imports and exports increased 9.6%, of which overseas warehouse exports of cross-border e-commerce increased by 11.8%.

As Internet technology continues to advance in international trade, cross-border e-commerce has become a major incremental contributor to China's import/export trade of goods. The share of cross-border e-commerce transactions in China's total imports and exports of goods trade gradually increased from 16% in 2014 to 42% in 2023.

In addition, iResearch data shows that the cross-border e-commerce market has a compound annual growth rate of 25.1% from 2017 to 2022, and the market size is expected to exceed 10 trillion yuan by 2025.

The so-called “overseas warehouse” means that domestic enterprises transport products to target market countries in the form of bulk transportation, establish warehouses and store products locally, and then directly sort and ship products from local warehouses according to local sales orders. Because of their advantages such as reducing logistics costs and improving supply chain efficiency, they are highly respected by cross-border e-commerce companies.

Zheshang Securities pointed out that overseas warehouses act as “front warehouses” to localize cross-border e-commerce logistics services such as delivery, returns, etc., to improve transportation time and ensure a stable user experience. At the same time, overseas warehouses are also important overseas nodes for cross-border e-commerce. They are a new type of foreign trade infrastructure and an important platform for driving the growth of foreign trade to achieve high-quality development. The country has introduced policies and measures in the field of overseas warehouses, which will continue to promote the construction and development of overseas warehouses.

China's four major cross-border e-commerce platforms AliExpress, SHEIN, TEMU, and TikTokShop are also making continuous efforts to explore overseas markets. Among them, Temu uses the US market as a starting point to carry out a global layout. Through a full hosting model, the number of downloads & GMV grew rapidly; the TikTok Shop US site was officially launched in September 2023, accumulating user base and interest in e-commerce consumption through short videos. As of November, the number of small stores had exceeded 30,000.

Previously, the B2B model dominated China's cross-border e-commerce for a long time, but in recent years, due to factors such as changes in the macro environment and the development of new cross-border e-commerce platforms, the B2C model has rapidly emerged. In 2022, B2C accounted for 32.2% of China's cross-border e-commerce exports. The future growth of B2C export business should not be underestimated as the pandemic has accelerated the shift in online consumption tendencies of global consumers, and various parties such as Temu and TikTokShop have increased this track.

Tianfeng Securities said that at present, the cross-border e-commerce industry is facing multiple benefits. Various aspects such as easing Sino-US relations and improving the competitive pattern of the industry will all help China's cost-effective products go overseas. Furthermore, under the multiple benefits of clear supply, increased demand, and AI empowerment, China is expected to seize the opportunities of the times in the context of clear space for cross-border e-commerce growth.

At the same time, local governments are also sending gift packages to optimize the business environment. For example, Shanghai supports the joint construction of shared overseas warehouses, encouraging micro, small and medium-sized enterprises in cross-border e-commerce to rent overseas warehouses to “go overseas in groups”; Chengdu, Sichuan has a maximum reward of 5 million yuan, “real money” to support the high-quality development of cross-border e-commerce; Zhejiang Hangzhou encourages cross-border e-commerce enterprises to strengthen intellectual property protection, etc.

Which concept stocks will benefit?

With policy support to promote the construction of overseas warehouses, the cross-border e-commerce market has welcomed significant benefits. Futu Information has sorted out some cross-border e-commerce concept stocks for reference by bullies.

Internet e-commerce platform:$Alibaba (BABA.US)$,$JD.com (JD.US)$,$PDD Holdings (PDD.US)$.

Shipping and Ports:$COSCO SHIP HOLD (01919.HK)$,$OOIL (00316.HK)$,$COSCO SHIP ENGY (01138.HK)$,$SITC (01308.HK)$,$SINOTRANS (00598.HK)$,$COSCO SHIP DEV (02866.HK)$,$PACIFIC BASIN (02343.HK)$,$COSCO SHIP INTL (00517.HK)$,$COSCO SHIP PORT (01199.HK)$,$CHINA MER PORT (00144.HK)$,$QINGDAO PORT (06198.HK)$.

Logistics service providers:$GigaCloud Technology (GCT.US)$,$ZTO Express (ZTO.US)$,$JD LOGISTICS (02618.HK)$,$LC LOGISTICS (02490.HK)$,$YTO INTL EXP (06123.HK)$.

Global Retailers:$MINISO (MNSO.US)$.

editor/tolk