Seize the benefits of RCEP’s overseas expansion! We will take stock of the development trends and market characteristics of cross-border e-commerce in Southeast Asia for you

Take advantage of RCEP's overseas expansion with our help in understanding Southeast Asia's cross-border e-commerce trends and market characteristics

Introduction: With the acceleration of global environment and RCEP policy, there are huge opportunities for cross-border e-commerce export in Southeast Asian market. In 2021, the number of internet users in Southeast Asia increased by 40 million, reaching a scale of 440 million, of which more than 90% of buyers will continue to consume and purchase online.

What are the development trends of cross-border e-commerce between China and Southeast Asia?

The transaction space of cross-border e-commerce is gradually expanding

The RCEP agreement has designed a series of trade facilitation clauses. Through paperless trade, pre-arrival processing and other means, the transaction constraints between China and Southeast Asian countries in cross-border e-commerce are gradually reduced, and the transaction volume is further expanded. Various dairy products, fruits, vegetables, meats and eggs can also be transferred online, further stimulating the development of cross-border e-commerce trade.

▲ Changes in cross-border e-commerce trade between China and Southeast Asia

Tariff exemptions and preferences further increase

Currently, in the process of formulating the import and export tariff policies for cross-border e-commerce, our country has certain preferential policies for the tariff policies in certain regions, but the overall analysis shows that the intensity of preferential policies is still relatively small, mainly suitable for some small-scale and low-frequency trades.

The tariff exemption clauses in the RCEP agreement can promote the development of e-commerce. This policy can achieve zero tariffs for more than 90% of goods traded, and contracting parties can achieve free trade of goods based on their own development needs within 10 years. Through research and analysis, it is expected that before 2035, more than half of the trade volume between China and Southeast Asian countries will be realized through cross-border e-commerce in the trading process.

Live streaming e-commerce is becoming increasingly popular

The live streaming market on e-commerce platforms in Southeast Asia is growing rapidly. According to statistics, the live streaming time on e-commerce platforms in Malaysia and Singapore has increased by 200%, and 60% of brands in the Philippines will use live streaming to attract customers.

In addition, from January to June 2020, the GMV of live streaming e-commerce in Vietnam, Thailand, Singapore, and the Philippines increased by 306%.

There is a significant traffic dividend in digital marketing

According to data from We Are Social, the year-on-year growth rate of digital marketing spending in Southeast Asian countries is between 9% and 16%.

In terms of marketing methods, the main promotion method is search bidding ranking on channels such as Google. Additionally, targeted advertising on social media channels such as Facebook, YouTube, or Instagram is also constantly developing.

From a cost perspective, the advertising display cost in Southeast Asia is only 30%-40% of that in Europe and the United States, indicating significant traffic dividend space.

The catalysis of the pandemic has made Southeast Asia, with a population of 670 million, a new blue ocean for cross-border e-commerce. The positive development trend brought by RCEP has also brought new opportunities for foreign trade personnel to expand the Southeast Asian e-commerce market. The market characteristics of the major trading countries in Southeast Asia are the primary objects of knowledge for foreign trade personnel ↓↓↓

Market characteristics of the major trading countries in Southeast Asia

Vietnam · Vietnam

▼ Market characteristics

China is the largest supplier of capital goods and intermediate products to Vietnam. Vietnam mainly imports machinery, equipment accessories, computer electronic components, textiles, leather shoe materials, telephones and electronic components, as well as transportation vehicles from China.

▼ Customer characteristics

In Vietnam, business dealings heavily rely on personal relationships. It is important to invest in building relationships with decision-makers by establishing emotional connections.

If it takes longer than expected for Vietnamese people to make decisions, don’t be disappointed because slow decision-making is a characteristic of Vietnamese people. Experienced businessmen believe that if 75% of the itinerary can be completed as planned in a trip to Vietnam, it is considered successful.

Thailand · Thailand

▼ Market characteristics

Hardware and electromechanical products occupy half of the total amount of imports from China to Thailand. Non-ferrous metals and products, chemical products, and plastic and rubber products are the second, third, and fourth largest categories of imported goods.

▼ Customer characteristics

Thailand is a Buddhist country, and it is important to have a Buddhist mindset when dealing with Thai people.

Thai customers are willing to try new products. Therefore, Thai customers will try new products in order to gain market acceptance. However, popular styles are still the most successful.

Indonesia · Indonesia

▼ Market characteristics

The potential products for export to Indonesia include: watches and accessories, personal care and cosmetics, clothing and accessories, electronics, maternity and baby products, lighting, home appliances, and other products.

▼ Customer characteristics

Most Indonesians are Muslims, and some are Christians and Catholics. Do not talk about local politics, socialism, and foreign aid.

Indonesian businessmen emphasize the spirit of mutual assistance in the industry, are very polite to others, and do not speak ill of others, but it is difficult to become close friends with them. Once a close relationship is established, cooperation becomes easier and more reliable.

Indonesia is a traditional and hierarchical country that values face-saving. This means that visitors from countries that promote equality and informality may encounter some difficulties when communicating with locals, so it is important to avoid public arguments and blaming your negotiating party.

Malaysia · Malaysia

▼ Market Characteristics

Electronic and electrical products, machinery equipment and accessories, and chemical products are important import products in Malaysia. In the field of agricultural product imports, grain products (including unprocessed wheat, barley, and corn) are the most important import products. In the field of mineral and mineral fuel imports, crude oil and refined petrochemical products are imported more.

▼ Customer Characteristics

Islam is the national religion of Malaysia. Yellow and black are both unwelcome colors, and the numbers 0, 4, and 13 are taboo. The most taboo animal is the horse, and the consumption of pork and dogs is also taboo, especially pork.

Negotiations with Malaysian customers usually start with small talk that is unrelated to the topic, with each party saying some flattering words about each other’s country, weather, and products, before indirectly entering the main topic of the meeting.

Malaysian customers are likely to want one or two copies of the materials so that they can show them to their partners. Being too calculative will not lead to successful business in Malaysia.

Singapore ·

▼ Market Characteristics

Singapore is the wealthiest country in Southeast Asia. Its economy is export-driven, and its main imports include machinery, chemicals, minerals, plastics, rubber, and instruments.

▼ Customer Characteristics

As “the country of ethnic Chinese,” Singaporeans have a strong sense of their local culture, and many are interested in doing business with their ancestral homeland. When doing business with overseas Chinese, using dialects in negotiations can sometimes play a unique role and help with successful negotiations. Singapore is a civilized country where courtesy has become a way of life. When negotiating business deals in Singapore, it is important to be polite, otherwise it may harm the chances of closing a deal. For example, sitting with one’s legs crossed and showing the soles of one’s shoes to the client during negotiations will leave a bad impression on Singaporean businessmen.

Philippines ·

▼ Market Characteristics

The top five imports to the Philippines are machinery, special trade goods and uncategorized goods, minerals, chemicals, and non-precious metals and products.

▼ Customer Characteristics

Philippine businessmen have a good command of English, and there are many Chinese businessmen, making it a relatively easy market to tap into. Many of their customs are similar to those of Americans. When doing business in the Philippines, it is important to work with reputable and strong shipping companies to prevent unscrupulous freight forwarders or shipping agents from colluding with dishonest businessmen to defraud goods.

In the post-epidemic era,

how to expand cross-border e-commerce in Southeast Asia?


Transition to refinement and branding

Due to the impact of the epidemic, the costs of cross-border e-commerce operations have increased, and management needs to quickly transition from extensive to refined.

In the increasingly fierce market competition, a first-class brand image is particularly important. At present, the commercial models of cross-border e-commerce mainly include generalist sellers, boutique brand merchants, and independent platform websites. Sellers with brand advantages, category advantages, or team advantages have more opportunities to grow.

To achieve a successful transition to branding, the following should be considered: first, choose or cultivate a brand with high brand premium capability; second, establish corresponding brand values to carry its added value space, which is also the key to establishing a deep connection with customers; finally, prioritize highly vertical and horizontally expandable product categories, find differentiated positioning, and enter emerging markets.


Seize the new opportunity of the “stay-at-home economy” under the epidemic

Due to the impact of the COVID-19 epidemic, consumers have gradually shifted their consumption behaviors online. In addition to epidemic prevention supplies such as masks, the sales of product categories such as furniture, small appliances, and office chairs have increased significantly during the epidemic period. In the post-epidemic era, the demand for the “stay-at-home economy” will be further released, and “stay-at-home economy” products will become an important selection dimension for cross-border e-commerce platforms as an important channel for consumer procurement.


Utilizing the advantages of overseas warehouses

An overseas warehouse refers to a warehouse established by cross-border e-commerce enterprises in their target overseas markets. Cross-border e-commerce sellers transport domestic goods to the warehouse. When a customer orders a related product, the cross-border e-commerce seller sends a shipping instruction to the overseas warehouse, allowing the product to be shipped directly from the warehouse in the consumer’s country and delivered to the consumer’s hands.

By taking advantage of the lower cost, convenient shipping and receiving, and easy returns and exchanges of overseas warehouses, Chinese cross-border e-commerce enterprises can better implement local operations strategies for overseas warehouses and capture local markets in Southeast Asia.

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